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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
________________________
COMMERCIAL INTERTECH CORP.
(NAME OF SUBJECT COMPANY)
COMMERCIAL INTERTECH CORP.
(NAME OF PERSON(S) FILING STATEMENT)
________________________
COMMON SHARES, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
201709 10 2
(CUSIP NUMBER OF CLASS SECURITIES)
________________________
Gilbert M. Manchester
Vice President and General Counsel
Commercial Intertech Corp.
1775 Logan Avenue
Youngstown, OH 44501
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
COPIES TO:
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<S> <C> <C>
Stuart Z. Katz, Esq. Herbert S. Wander, Esq. Leigh B. Trevor, Esq.
Fried, Frank, Harris, Shriver & Jacobson Katten, Muchin & Zavis Jones, Day, Reavis & Pogue
One New York Plaza 525 West Monroe Street - Suite 1600 North Point
New York, New York 10004 Chicago, Illinois 60661-3693 901 Lakeside
(212) 859-8000 (312) 902-5200 Cleveland, Ohio 44114
(216) 586-7247
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The subject company is Commercial Intertech Corp., an Ohio corporation
(the "Company"). The address of the principal executive offices of the Company
is 1775 Logan Avenue, Youngstown, Ohio 44501. The title of the class of equity
securities to which this Statement relates is the common shares, par value $1.00
per share (the "Common Shares"), of the Company, together with the associated
preferred share purchase rights (the "Rights") issued pursuant to the
Shareholder Rights Agreement, dated as of November 29, 1989 (the "Rights
Agreement"), between the Company and The Mahoning National Bank of Youngstown,
as Rights Agent (the Common Shares, together with the Rights, are hereinafter
referred to as the "Shares").
ITEM 2. TENDER OFFER OF OAC AND UNITED DOMINION.
This Statement relates to the tender offer previously announced by
Opus Acquisition Corporation, a Delaware corporation ("OAC") and an indirect
wholly owned subsidiary of United Dominion Industries, Ltd., a Canadian
corporation ("United Dominion"), to purchase all outstanding Shares at a price
per Share of $27.00, net to the seller in cash, without interest (the "Offer").
The address of the principal executive offices of OAC and United
Dominion is 2300 One First Union Center, Charlotte, North Carolina 28202.
ITEM 3. IDENTITY AND BACKGROUND.
(A) Name and Business Address of Person Filing This Statement.
The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(B) (1) Arrangements with Executive Officers, Directors or Affiliates of
the Company.
Certain information with respect to certain contracts, agreements,
arrangements or understandings between the Company and certain of its executive
officers, directors and affiliates is set forth in pages 10-28 of the Company's
Notice of Annual Meeting of Shareholders and Proxy Statement dated January 18,
1996 for the Company's 1996 Annual Meeting of Shareholders held on March 27,
1996 (the "Proxy Statement"). Copies of the foregoing pages are attached as
Exhibit 99.3 to this Statement and are incorporated herein by reference.
Pursuant to the terms of the Company's Stock Option and Award Plan of
1989, the Stock Option and Award Plan of 1993 and the Stock Option and Award
Plan of 1995 (collectively, the "Plans"), the
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Compensation Committee of the Board may provide, upon a change of control (as
defined in the Plans and which would include the consummation of the Offer),
that (1) any and all stock appreciation rights outstanding on the date that such
change of control is determined to have occurred and any and all stock options
awarded under the Plans not previously exercisable and vested shall become fully
exercisable and vested and (ii) restrictions applicable to any and all
restricted stock and performance share awards shall lapse and such shares and
awards shall be fully vested.
Similarly, pursuant to the terms of the Company's form of Option
Agreement which is attached as Exhibit 99.18, the options granted thereunder and
not yet exercisable shall become exercisable and vested upon a change of control
or a potential change of control (as both terms are defined in the Option
Agreement and which would include the consummation of the Offer).
In addition to certain severance agreements summarized in the Proxy
Statement, on September 28, 1989, the Company entered into separate severance
agreements with each of Gilbert M. Manchester, William W. Cushwa, Steven J.
Hewitt, Robert A. Calcagni, Edward J. Barnard, Kenneth W. Marcum and Patrick C.
Reardon. In addition, on February 29, 1996, Hubert Jacobs van Merlen entered
into a severance agreement with the Company. The terms and change of control
provisions thereof are substantially the same as those for Messrs. Kacher,
Wheatley and Gilchrist, which are summarized in the Proxy Statement.
Pursuant to an employment letter dated May 18, 1992, the Company
agreed that upon Mr. Wheatley's retirement at the age of 65, the Company would
credit Mr. Wheatley for 25 years of service under the Company's supplemental
employee retirement plan.
(B) (2) Arrangements with United Dominion, OAC and their Respective
Executive Officers, Directors or Affiliates.
There are no contracts, agreements, arrangements or understandings or
actual or potential conflicts of interest between the Company and its
affiliates, on the one hand, and United Dominion or OAC and their respective
executive officers, directors and affiliates, on the other hand.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Background and Recommendation.
On May 10, 1996, at the request of William R. Holland, the Chief
Executive Officer of United Dominion, Mr. Holland met with Paul J. Powers, the
Chairman and Chief Executive Officer of the Company, in Youngstown, Ohio.
During this meeting, Mr. Holland expressed the view that a combination of the
Company with United Dominion would be attractive and suggested a price of $27
per share. Mr. Powers indicated that the Company has a policy of independence,
and that he believed the Company's prospects on a stand-alone basis were strong.
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On June 27, 1996, Mr. Holland of United Dominion faxed to Mr. Powers
the following letter, which was released to the news media by United Dominion on
the same date:
Dear Paul:
I enjoyed our meeting on May 10 and appreciated your time and
hospitality. I have been pondering the situation since then and would
certainly like to see our discussions proceed further. I was
disappointed that you did not share my desire to move forward. I am
convinced that the combination of our two companies would make an
extremely strong industrial enterprise.
Accordingly, United Dominion Industries is offering to acquire
Commercial Intertech pursuant to a negotiated merger transaction in
which your shareholders would receive $27.00 per share in cash for all
common shares of Commercial Intertech, or approximately $500 million
in total consideration, including assumption of debt. This price
represents approximately a 40% premium to Commercial Intertech's
current share price. Given United Dominion's strong financial
condition, the proposed transaction would not be subject to a
financing condition and we do not anticipate any anti-trust problems.
We believe that this is a full and fair price that presents an
attractive opportunity for the shareholders of Commercial Intertech.
We obviously would honor outstanding commitments to your employees and
would be pleased to discuss in depth how our companies could best be
combined.
As you know, United Dominion does about $2 billion in sales -- all in
manufacturing -- and earned $77.3 million in 1995. We have a balance
sheet that is about 25% leveraged and have significant financial
resources available to us. We have enjoyed an excellent record of
growth the last five years and have returned, over that time, about a
24% compounded annual return to our shareholders.
Some of the features of the combined company would be:
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. Astron and Varco-Pruden would create one of the largest and
strongest metal building companies in the world, with sales of
approximately $450 million, capturing the benefits of geographical
reach and substantial synergies;
. Cuno and Flair would, in our judgment, likewise create significant
synergies. This combination would create an operation doing
approximately $450 million in sales, making it one of the largest
filtration businesses in the world; and
. Our Compaction operations (Bomag and Hypac) use approximately $50
million a year in hydraulics. I would expect that these units would
become a significant customer of your hydraulics operation.
In short, Paul, we believe that the combination of United Dominion and
Commercial Intertech (with sales exceeding $2.5 billion) would produce
a strong company with a bright future.
As our preference is to consummate a negotiated transaction, we would
be pleased to advance our discussions at the earliest practicable time
after you have had an opportunity to discuss this offer with your
directors.
We are experienced in acquiring manufacturing companies and, with our
advisors, we can bring the transaction to a speedy conclusion.
Sincerely,
/s/
W.R. Holland
cc: Board of Directors
Commercial Intertech
On June 28, 1996, the Company retained Goldman, Sachs & Co. ("Goldman
Sachs") as its financial advisor with respect to United Dominion's proposal.
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At a meeting on June 29, 1996, the Board of Directors of the Company
discussed United Dominion's June 27 letter. On June 30, 1996, the Company
issued the following press release:
Commercial Intertech Corp. (NYSE: TEC) said today that the proposal
received on June 27, 1996 from Canadian-based United Dominion
Industries, Ltd. to acquire the Company was unsolicited, that it
represents a unilateral effort by United Dominion and, contrary to the
suggestion in United Dominion's letter, did not arise out of any
negotiations between the companies.
The Board of Directors of Commercial Intertech, at an initial meeting
on June 29, 1996, reaffirmed the Company's long-standing objective of
creating shareholder value as an independent public company and noted
that the Company achieved record financial performance in fiscal 1995.
The Board also indicated that it will review the United Dominion
proposal in consultation with its legal and investment advisers.
As part of its ongoing strategic plans to enhance shareholder value,
the Company is preparing a public offering of up to 20% of the stock
of Cuno Incorporated, its wholly-owned filtration subsidiary. In that
connection, Mr. Paul J. Powers, Chairman of Commercial Intertech
Corp., noted that Schroder Wertheim, United Dominion's financial
adviser, had been aware of the confidentially-proposed Cuno stock
offering, having been offered the opportunity of participating as co-
manager within the last two weeks.
Also, as part of its strategic plan, on June 28, Commercial Intertech
acquired Component Engineering Company, a manufacturer of cartridge-
type hydraulic valves based in Chanhassen, Minnesota.
Commercial Intertech is a multi-national manufacturer of Hydraulic
Systems, Building Systems and Metal Products, and Fluid Purification.
Employing more than 4,000 men and women around the world, the Company
has 35 manufacturing facilities in 10 countries.
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According to an article in The Wall Street Journal on July 1, 1996,
United Dominion responded to the Company's release by stating that "We are
pleased to learn that Commercial Intertech's board of directors will be
reviewing United Dominion's proposal and will welcome the opportunity to discuss
all aspects of the proposal with them."
On July 8, 1996, the Board of Directors of the Company met to review
United Dominion's unsolicited proposal of June 27, 1996 with its financial and
legal advisors. The Board of Directors determined to meet again with its
financial and legal advisors on July 11, 1996.
On July 10, 1996, at the direction of the Company's Board of
Directors, representatives of Goldman Sachs met with representatives of Schroder
Wertheim & Co. Incorporated ("Schroder Wertheim"), the financial advisor to
United Dominion. At that meeting, the Goldman Sachs representatives indicated
that the Company's Board of Directors would be meeting soon to consider United
Dominion's proposal of June 27, 1996 and asked whether Schroder Wertheim had any
information which they wished to communicate to the Board of Directors of the
Company. The Schroder Wertheim representatives indicated that they had no
further information to add to United Dominion's June 27, 1996 letter and were
eager to begin negotiations with respect to a transaction.
Later on July 10, 1996, Mr. Holland attempted to reach Mr. Powers by
telephone. Mr. Powers returned Mr. Holland's call on the evening of July 10.
During their conversation, Mr. Holland again communicated United Dominion's
interest in a transaction with the Company. Mr. Holland did not discuss making
an unsolicited tender offer for the Company.
On July 11, 1996, the Board of Directors of the Company met with its
legal and financial advisors to complete its review of United Dominion's
proposal of June 27, 1996. During this meeting, the Board of Directors learned
that United Dominion had issued a press release announcing that it was
commencing the Offer.
The text of United Dominion's press release is set forth below:
United Dominion Announces $27 Per Share Tender Offer for Commercial
--------------- ----------
Intertech Common Stock
---------
CHARLOTTE, N.C. -- (BUSINESS WIRE) -- July 11, 1996
-- United Dominion Industries (NYSE, TSE: UDI), a manufacturer of
---------------
diversified engineered products, today announced that its board of
directors has authorized commencement of a cash tender offer for all
the outstanding
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common shares, including associated preferred share purchase rights,
of Commercial Intertech Corp. (NYSE: TEC) at $27 net per share and
-------------------------
associated right. The offer will be subject to terms and conditions
contained in United Dominion's offer to purchase.
---------------
Schroder Wertheim & Co. Incorporated will serve as dealer manager for
the offer, and MacKenzie Partners, Inc. will serve as information
agent.
William R. Holland, chairman and chief executive officer, said that
the decision by United Dominion's board to proceed with a tender offer
---------------
follows unsuccessful attempts to open dialogue with Commercial
----------
Intertech.
---------
"Clearly, our preference would be to negotiate the terms of a mutually
acceptable acquisition with Commercial Intertech's management and
--------------------
board," Mr. Holland said. "We regret that we have not yet received a
formal response to our June 27 offer to acquire the company. To
clarify our intentions and to demonstrate the seriousness of our
offer, we are now taking that offer directly to Commercial Intertech's
--------------------
shareholders," he said.
Mr. Holland said that United Dominion's board endorsed the take-over
---------------
bid at a special meeting here today. Including the assumption of
Commercial Intertech's debt, the value of the acquisition is
--------------------
approximately $500 million. The $27 per share offer, detailed in a
June 27 open letter to Commercial Intertech's chairman and chief
--------------------
executive officer, is 41 percent higher than TEC's closing stock price
that day.
"We believe the combination of Commercial Intertech and United
-------------------- ------
Dominion will create a strong manufacturing enterprise with $2.5
--------
billion in revenues derived from market-leading industrial and
building products sold worldwide," Mr. Holland said.
At the July 11, 1996 Board of Directors' meeting, the Board of
Directors unanimously concluded that the Offer is inadequate and not in the best
interests of the Company, its shareholders, employees, customers, suppliers,
labor organizations, the communities in which the Company does business and its
other constituencies, and does not adequately reflect the long-term value or
prospects of the Company. At that meeting,
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the Board of Directors unanimously determined not to proceed with a planned
public offering of up to 20% of the stock of the Company's Cuno Incorporated
fluid filtration and purification subsidiary ("Cuno"), but to proceed with a
previously considered plan to spin off 100% of the stock of Cuno to the
Company's shareholders (the "Spin-Off"), subject to customary conditions,
including the receipt of an opinion of counsel with respect to the tax-free
nature of the Spin-Off (however, the Company does not anticipate that the Spin-
Off would be subject to shareholder approval). The Board also unanimously
approved a program to repurchase up to 2,500,000 Shares in open market and
privately negotiated transactions (the "Repurchase Program"). THE BOARD
UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS REJECT THE OFFER AND NOT
TENDER THEIR SHARES PURSUANT TO THE OFFER.
A copy of a letter to shareholders communicating the Board's
recommendation and a form of press release announcing such recommendation are
filed as Exhibits 99.1 and 99.2 hereto, respectively, and are incorporated
herein by reference.
On July 12, 1996, United Dominion and OAC published a notice
announcing the Offer in The Wall Street Journal. According to the notice, the
Offer is conditioned upon, among other things, (1) there being validly tendered
and not properly withdrawn prior to the expiration of the Offer a number of
Shares which, when added to the Shares beneficially owned by OAC and its
affiliates, constitutes at least two-thirds of the total voting power of all
shares of capital stock of the Company outstanding on a fully diluted basis on
the date of purchase, (2) the Rights having been redeemed by the Board of
Directors of the Company or OAC being satisfied, in its sole discretion, that
the Rights have been invalidated or are otherwise inapplicable to the Offer and
the proposed merger of OAC with the Company, (3) the supermajority vote
requirement set forth in Article SIXTH of the Amended Articles of Incorporation
of the Company (the "Articles") having been eliminated from the Articles or OAC
otherwise being satisfied, in its sole discretion, that such supermajority vote
requirement will not be applicable to the proposed merger of OAC with the
Company, (4) the acquisition of Shares pursuant to the Offer being authorized by
the shareholders of the Company pursuant to the Ohio Control Share Aquisition
Law or OAC being satisfied, in its sole discretion, that the Ohio Control Share
Acquisition Law is invalid or inapplicable to such acquisition of Shares and (5)
OAC being satisfied, in its sole discretion, that the restrictions contained in
the Ohio Business Combination Law will not be applicable to the acquisition of
Shares pursuant to the Offer or to the proposed merger of OAC with the Company.
(b) Reasons for the Recommendation.
In reaching the conclusions referred to in Item 4(a), the Board of
Directors considered numerous factors, including but not limited to the
following:
(i) the Board's familiarity with the business, financial
condition, prospects and current business strategy of the Company, the
nature of the businesses in which the Company operates and the Board's
belief that the Offer does not reflect the long-term values inherent in the
Company;
(ii) the Company's financial performance in recent years,
including its record results for its 1995 fiscal year and three consecutive
years of improving operating results, including strong improvements in
operating performance and profitability by Cuno;
(iii) the Company's long-term strategic plan to build value for
its shareholders by growing its core businesses;
(iv) the Company's plan to proceed with the Spin-Off, in light of
the belief of the Board of Directors and management that:
-- the Spin-Off should enhance the abilities of the managements
of the Company and Cuno to focus more closely on the objectives of their
respective businesses, enhance the two companies' ability to create
incentives that align the interests of their management and employees with
the performance of their respective companies, and permit Cuno to use its
publicly traded stock as a currency for expansion through acquisitions; and
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-- the Spin-Off should enable shareholders of the Company to
benefit in the near term from the value of a high-growth, high-multiple
business, which has not previously received appropriate market recognition
because of the Company's mix of industrial businesses, which typically
trade at lower multiples. The Board of Directors took into consideration
that there is some risk that the tax-free nature of the Spin-Off could be
impacted, with attendant adverse tax consequences to the Company and
certain of its shareholders, in the event of an acquisition of the Company
by certain third parties (including United Dominion) following a spin-off;
(v) the Board of Directors' belief that the Repurchase Program
will provide investors who desire to obtain liquidity for their investment
in the Company with an opportunity to sell all or a portion of their
investment in the Company; these shareholders may be more likely to support
actions that would make it more difficult for the Company to resist an
inadequate bid, which in the view of the Board of Directors would not be in
the best interests of the Company, its shareholders and its other
constituencies; accordingly, the Repurchase Program may stabilize the
Company's base of long-term shareholders and may give long-term
shareholders who desire to participate in the benefits of the Spin-Off and
the future growth of the Company and Cuno a greater opportunity to do so;
the Board of Directors also considered the fact that the Repurchase Program
is expected to be accretive to the Company's earnings per Share;
(vi) the Board of Directors' belief, in light of the Company's
strategic plan and its plan to proceed with the Spin-Off, that this is not
the appropriate time to sell the Company;
(vii) the Board of Directors' belief that the interests of the
Company, its shareholders and other constituencies would best be served by
the Company continuing as an independent entity, proceeding with its plans
to effect the Spin-Off, and effecting the Repurchase Program;
(viii) the opinion of Goldman Sachs, the Company's financial
advisor, after reviewing with the Board of Directors many of the factors
referred to above and other financial criteria used in assessing an offer,
that the Offer is inadequate; and
(ix) the disruptive effect consummation of the Offer would have
on the Company's employees, suppliers, customers and the communities where
the Company operates.
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ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated June 28, 1996 (the "Letter
Agreement"), the Company has retained Goldman Sachs as financial advisor with
respect to the Offer and certain other possible transactions. Pursuant to the
Letter Agreement, the Company has agreed to pay to Goldman Sachs:
(a) a fee of $250,000 payable on the date of the Letter Agreement;
(b) an additional fee of $250,000 in the event of the commencement by
United Dominion or any affiliate or other party of a tender offer, payable upon
the commencement of the tender offer;
(c) if 15% or more of the outstanding Shares of the Company are
acquired by United Dominion or any other person or group (including the
Company), in one or a series of transactions or if all or substantially all of
the assets of the Company are transferred, in one or a series of transactions,
by way of a sale, distribution or liquidation, an additional fee equal to
0.85% of the aggregate value of all such transactions (in the event at least 50%
of the outstanding Shares of the Company are acquired by United Dominion or any
other person or group, including the Company, such aggregate value shall be
determined as if such acquisition were of 100% of the Shares of the Company);
(d) if the Company or any other entity formed or owned in substantial
part or controlled by the Company or one or more members of senior management of
the Company or any employee benefit plan of the Company or any of its
subsidiaries effects certain recapitalization transactions not covered by
subparagraph (c), a fee (to be negotiated) equal to between 0.85% and 1.0% of
the aggregate value of such transaction;
(e) in the event that the Company acquires the securities or assets of
another company or sells, distributes or liquidates all or a portion of the
assets of the Company, including any pension-related assets, or sells or
distributes securities of the Company, whether such distribution is made by
dividend or otherwise, and no fee has become payable to Goldman Sachs with
respect to such transaction pursuant to subparagraphs (c) and (d) above,
additional fees customary to such transactions based on the aggregate value of
the transaction; and
(f) subject to certain conditions, in the event no transaction of the
type described in subparagraphs (c) and (d) has been consummated by January 1,
1997, a fee of $500,000 on each such date as of which no transaction has been
consummated: January 1, 1997, April 1, 1997, July 1, 1997, October 1, 1997,
January 1, 1998 and April 1, 1998 less any amounts paid under subparagraphs (a)
and (b) above.
Any fees paid pursuant to subparagraphs (a), (b) and (f) above shall
be credited against any fees payable pursuant to subparagraphs (d) and (e)
above.
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Pursuant to the Letter Agreement, if the Company becomes the subject
of, or is threatened with, a contested proxy or consent solicitation by United
Dominion or any other party, Goldman Sachs will act as the Company's exclusive
financial advisor with regard to such proxy or consent solicitation.
The Company has also agreed to reimburse Goldman Sachs periodically
for its reasonable out-of-pocket expenses, including the fees and disbursements
of its attorneys, plus any sales, use or similar taxes (including additions to
such taxes, if any) arising in connection with any matter referred to in the
Letter Agreement. In addition, the Company has agreed to indemnify Goldman
Sachs against certain liabilities, including liabilities under federal
securities laws.
The Company also has retained Kekst and Company as public relations
advisor in connection with the Offer and has retained Morrow & Co., Inc. to
assist the Company in connection with communications with shareholders and to
provide other services in connection with the Offer. The Company will pay Kekst
and Company and Morrow & Co., Inc. reasonable and customary fees for their
services, reimburse them for their reasonable expenses and provide customary
indemnities.
Except as described above, neither the Company nor any person acting
on its behalf has retained any other person to make solicitations or
recommendations to security holders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for purchases pursuant to the Repurchase Program as set
forth in Annex 1, there have been no transactions in the Shares during the past
60 days by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company, except that
Paul J. Powers exercised an option to purchase 15,000 Shares at an exercise
price of $9.8333 per Share on May 28, 1996 and satisfied the exercise price for
such Shares by surrender of 7,151 Shares to the Company, John M. Galvin
purchased 1,000 Shares at $20.875 per Share on May 28, 1996, Mark G. Kachur sold
487 Shares at $19.25 per Share on June 27, 1996, and except for routine
purchases under the Company's Dividend Reinvestment Plan.
(b) To the best of the Company's knowledge, none of its executive
officers, directors, affiliates or subsidiaries currently intends to tender,
pursuant to the Offer, any Shares beneficially owned by such persons. The
foregoing does not include any Shares over which, or with respect to which, any
such executive officer, director, affiliate or subsidiary acts in a fiduciary or
representative capacity or is subject to the instructions of a third party with
respect to such tender.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) - (b) For the reasons discussed in Item 4 above, the Board of
Directors of the Company has concluded that the Offer is inadequate and not in
the best interests of the Company and its shareholders and that, in light of the
Company's future
11
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prospects, the interests of the shareholders will be best served by the Company
remaining an independent entity. Except with respect to the Spin-Off and the
Repurchase Program, the Company is not now engaged in any negotiations in
response to the Offer that relate to or could result in one or more of the
following or a combination thereof: (i) an extraordinary transaction, such as a
merger or reorganization, involving the Company or any of its subsidiaries; (ii)
a purchase, sale or transfer of a material amount of assets by the Company or
any of its subsidiaries; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
The Board of Directors may in the future engage in negotiations in
response to the Offer that could have one of the effects specified in the
preceding paragraph and it has determined that disclosure with respect to the
parties to, and the possible terms of, any transactions or proposals of the type
referred to in the preceding paragraph might jeopardize any discussions or
negotiations that the Company may conduct. Accordingly, the Board of Directors
has adopted a resolution instructing management not to disclose the possible
terms of any such transactions or proposals, or the parties thereto, unless and
until an agreement in principle relating thereto has been reached or, upon the
advice of counsel, as may otherwise be required by law.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(A) Rights Agreement.
On November 29, 1989, the Board declared a dividend distribution of
one right for each outstanding Common Share to shareholders of record (the
"Record Date") on December 13, 1989 (the "Rights"). As a result of a 3 for 2
stock split effective as of September 1, 1994, two-thirds of one Right is
attached to each outstanding Common Share. When exercisable, each full Right
entitles the holder thereof to purchase one one-hundredth of a share of Series A
Participating Preferred Shares, no par value, at $75 per share, subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The Mahoning National
Bank of Youngstown, as Rights Agent.
The Rights are currently attached to all Common Share certificates
representing Shares outstanding and no separate Rights certificates have been
distributed. On the earlier of (i) a public announcement that, without the
prior approval of the Company, a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired or obtained the right to acquire
the beneficial ownership of securities having 20% or more of the voting power of
all outstanding voting securities of the Company or (ii) 10 days (unless such
date is extended by the Board of Directors) following the commencement of, or a
public announcement of an intention to make, a tender offer or
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exchange offer which would result in any person or group of related persons
becoming an Acquiring Person (the earlier of such date, the "Distribution
Date"), the Rights become exercisable. Once exercisable, the Rights will be
evidenced, with respect to any of the Common Shares certificates outstanding as
of the Record Date, by such Common Share certificate together with the Summary
of Rights attached as Exhibit C to the Rights Agreement. The Rights Agreement
provides that, until the Distribution Date, the Rights will be transferred with
and only with Common Share certificates. From as soon as practicable after the
Record Date and until the Distribution Date (or earlier redemption or expiration
of the Rights), new certificates for Common Shares issued after the Record Date
upon transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for Common Shares outstanding as of the Record Date (with or
without the Summary of Rights attached) will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution
Date, and the separate Rights Certificates alone will evidence the Rights. The
Company anticipates that, in connection with the Offer, the Board of Directors
will extend the Distribution Date to a date shortly prior to the expiration date
of the Offer.
If an Acquiring Person becomes such, holders of Rights have, for a
period of 60 days, the right to receive upon exercise that number of Common
Shares having a market value of two times the exercise price of the Right, to
the extent available, and then a Common Share equivalent having a market value
of two times the exercise price of the Right (such Rights collectively, the
"Subscription Rights").
After the public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such (the date of such announcement, the
"Share Acquisition Date"), if (i) a merger or other business combination occurs
in which the Common Shares are exchanged or changed (other than a merger with a
person or group who acquired Common Shares pursuant to a Permitted Offer (as
defined below) and is offering in the merger not less than the price paid
pursuant to the Permitted Offer and the same form of consideration paid) or (ii)
50% or more of the Company's assets or earning power are sold in one transaction
or a series of transactions, each holder of a Right (other than such Acquiring
Person) has the right to receive upon exercise that number of Common Shares of
the acquiring company having a market value of two times the exercise price of
the Right.
A "Permitted Offer" means a tender offer or exchange offer for all
outstanding shares of Common Shares at a price and on terms determined, prior to
the purchase of such shares under such tender offer or exchange offer, by at
least a majority of the members of the Board of Directors who are not officers
of the Company, to be both adequate and otherwise in the best interests of the
Company, its shareholders (other than
13
<PAGE>
the person on whose behalf the offer is being made) and other relevant
constituencies that the Board may consider under Ohio law, including, without
limitation, the constituencies described in Section 1701.59(E) of the Ohio
Revised Code. However, in the event that a majority of the Board of Directors is
comprised of (i) persons elected at a meeting of shareholders or by shareholder
action by written consent who were not nominated by the directors in office
immediately prior to such meeting or action by written consent and/or (ii)
successors of such persons elected to the Board of Directors for the purpose of
either facilitating a transaction with an Interested Person (as defined below)
or circumventing directly or indirectly the provisions of the Rights Agreement
(such majority, an "Interested Majority"), then for a period of 180 days
following the effectiveness of such action no offer by an Interested Person may
be deemed a Permitted Offer. "Interested Person" with respect to a transaction
means (x) any person who (i) is or will become an Acquiring Person if the
transaction were to be consummated without regard to any required approval of
the Company and (ii) directly or indirectly proposed or nominated a director of
the Company which director (or a successor of such person elected to the Board
for the purpose of either facilitating a transaction with such Interested Person
or circumventing directly or indirectly the provisions of the Rights Agreement)
is in office at the time of consideration of the transaction in question, or (y)
an affiliate or associate of such person. In the event that a majority of the
Board is comprised of an Interested Majority, then for 180 days following the
effectiveness of such action, the Company may not exclude from the definition of
an Acquiring Person any Interested Person who acquires 20% or more of the
Company's outstanding Common Shares.
At any time prior to the earlier of (i) a person becoming an Acquiring
Person or (ii) the expiration of the Rights, the Company may, upon action by the
Board of Directors in their sole discretion, redeem the Rights, in whole but not
in part, at a price of $.01 in cash per Right (the "Redemption Price"), which
redemption shall be effective upon action of the Board of Directors in the
exercise of their sole discretion. In addition, following the Shares
Acquisition Date, the Company may redeem the then outstanding Rights in whole,
but not in part, at the Redemption Price provided that such redemption is (i) in
connection with a merger or other business combination transaction or series of
transactions involving the Company in which all holders of Common Shares are
treated alike, but not involving an Acquiring Person or any person who was an
Acquiring Person or (ii) following an event giving rise to, and the expiration
of the exercise period for, the Subscription Rights, if and for as long as no
person beneficially owns securities representing 20% or more of the voting power
of the Company's voting securities. However, if a majority of the Board of
Directors is an Interested Majority, then (x) the Rights may not be redeemed for
180 days after such election if such redemption is reasonably likely to have the
purpose of facilitating a transaction with an Interested Person and (y) the
Rights may not be redeemed if during the 180 day period the Company
14
<PAGE>
enters into any agreement reasonably likely to facilitate a transaction with an
Interested Person and the redemption is reasonably likely to facilitate such a
transaction.
The Rights expire on the earlier of (i) November 29, 1999, (ii)
consummation of a merger transaction with a person or group who acquired Common
Shares pursuant to a Permitted Offer, and is offering in the merger the same
form of consideration and not less than the price per share paid pursuant to the
Permitted Offer or (iii) redemption by the Company.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or receive dividends.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, defect or inconsistency, or to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person). However, if the majority of
the Board is an Interested Majority, then for a period of 180 days following the
effectiveness of such action the Rights Agreement may not be amended or
supplemented in any manner reasonably likely to have the purpose or effect of
facilitating certain business combination transactions with an Interested
Person.
In the event that United Dominion or any affiliates or associates of
United Dominion, acting as group, acquire beneficial ownership of 20% or more of
the Common Shares pursuant to the Offer or otherwise, such persons will be an
Acquiring Person as defined in the Rights Agreement and a Share Acquisition
Date will have occurred.
(B) Litigation.
Ohio "Control Share Acquisition" Law
Under Section 1701.831 of the Ohio Revised Code, unless a
corporation's articles of incorporation or regulations provide otherwise, the
acquisition by any person (as used in that section, an "acquiring person") of
voting shares of a corporation giving the acquiring person voting power within
any of the following ranges would constitute a "control share acquisition": (a)
one-fifth or more but less than one-third of such voting power; (b) one-third or
more but less than a majority of such voting power; or (c) a majority or more of
such voting power. An acquiring person may make a control share acquisition
only if the shareholders of the target corporation who hold shares entitling
them to vote in the election of directors authorize such acquisition at a
special meeting held for that purpose at which a quorum is present by an
affirmative vote (i) of a majority of the voting power of such corporation in
the election of directors represented at such
15
<PAGE>
meeting in person or by proxy, and (ii) of a majority of the portion of such
voting power excluding the voting power of "interested shares" (as defined
below). A quorum shall be deemed to be present at such special meeting if at
least a majority of the voting power of such corporation in the election of
directors, and a majority of the portion of such voting power excluding the
voting power of "interested shares", are represented at such meeting in person
or by proxy. Any such acquisition must be consummated, in accordance with the
terms so authorized, no later than 360 days following shareholder authorization
of the control share acquisition. "Interested shares" means the shares of such
corporation in respect of which any of the following persons may exercise or
direct the exercise of the voting power of such corporation in the election of
directors: (i) the acquiring person, (ii) any officer of such corporation
elected or appointed by the directors of such corporation, or (iii) any employee
of such corporation who is also a director of such corporation. "Interested
shares" also means any shares of the corporation acquired, directly or
indirectly, by any person from the holder or holders thereof for a valuable
consideration during the period beginning with the date of the first public
disclosure of a proposed control share acquisition (or any proposed merger,
consolidation, or other transaction that would result in a change of control) of
such corporation or all or substantially all of its assets, and ending on the
date of any special meeting of such corporation's shareholders held thereafter
for the purpose of voting on a control share acquisition proposed by an
acquiring person, if either of the following applies: (A) the aggregate
consideration paid or given by the person who acquired the shares, and any other
person acting in concert with him, for all such shares, exceeds $250,000 or (B)
the number of shares acquired by the person who acquired the shares, and any
other persons acting in concert with him, exceeds one-half of one percent of the
outstanding shares of the corporation entitled to vote in the election of
directors. The Company has not opted out of the Ohio control share acquisition
law.
Ohio Take-Over Act
Ohio law further requires, pursuant to Section 1707.041 of the Ohio
Revised Code, that any offeror making a "control bid" for any securities of a
"subject company" pursuant to a tender offer must file information specified in
the Ohio Securities Act with the Ohio Division of Securities when the bid
commences. The Ohio Division of Securities must then decide whether it will
suspend the bid under the statute within three calendar days. If it does so, it
must initiate hearings on the suspension within 10 calendar days of the
suspension date, and make a determination of whether to maintain the suspension
within 16 calendar days of the suspension date. For this purpose, a "control
bid" is the purchase of, or an offer to purchase, any equity security of a
subject company from a resident of Ohio that would, in general, result in the
offeror acquiring 10% or more of the outstanding shares of such company. A
"subject company" includes any company with both (a) its principal place of
business or principal executive office located in Ohio or assets it owns or
controls located in Ohio with a fair market value of at least $1.0 million and
(b) more than 10% of its record or beneficial equity security holders residing
16
<PAGE>
in Ohio, more than 10% of its equity securities owned of record or beneficially
by residents in Ohio, or more than 1,000 of its record or beneficial equity
security holders residing in Ohio.
To avoid continued suspension of its bid in Ohio, an offeror must
comply with three requirements: (a) the information required by the statute
must be provided to the Ohio Division of Securities, (b) all material
information regarding the control bid must be provided to the offerees, and (c)
there may be no material violation of any provision of the Ohio Securities Act.
Ohio Business Combination Law
The Ohio Business Combination Law provides that an issuing public
corporation shall not engage in certain business combinations (including
mergers) with an "Interested Shareholder" (generally, a person entitled to
control 10% or more of the outstanding voting shares of the issuing public
corporation in the election of directors) for a period of three years following
the date such person became an Interested Shareholder (the "three year period").
This restriction does not apply if, prior to the date such person became an
Interested Shareholder, the board of directors of the issuing public corporation
approved either the business combination or the transaction which resulted in
the Interested Shareholder becoming an Interested Shareholder. The Ohio
Business Combination Law further provides that after the expiration of the three
year period, an issuing public corporation may not engage in a business
combination with an Interested Shareholder unless either: (i) the business
combination is approved by both (x) the holders of at least a majority of all
shares and (y) the holders of at least a majority of the disinterested shares or
(ii) the consideration used in such business combination, both in price and
form, meets certain statutory tests.
On July 11, 1996, plaintiffs United Dominion and OAC filed suit in the
United States District Court for the Southern District of Ohio, Eastern
Division, against the Company, its directors, the acting Ohio Commissioner of
Securities, the Ohio Director of Commerce, and the State of Ohio. Plaintiffs
seek declarations that (i) Ohio's Take-Over Act and Section 1701.01(CC)(2) of
Ohio's Control Share Acquisition Law are unconstitutional because they are
claimed to conflict with the United States Constitution, (ii) the Company's
Rights Agreement and the Rights are invalid, unlawful, null and void, and (iii)
the Company's preferred shares have one vote and that any attempt to increase
the voting power thereof is invalid. Plaintiffs also seek, among other things,
to enjoin (i) the enforcement of the Ohio Take-Over Act and Sections
1701.01(CC)(2) and 1701.831(E) of Ohio's Control Share Acquisition Law, (ii) the
Company's directors from taking any action to enforce or amend the Company's
Rights Agreement (other than to redeem the Rights or to amend certain provisions
that limit the ability of the Company to redeem the Rights), (iii) the Company
from treating its preferred shares as having one and
17
<PAGE>
one-half votes per share, and (iv) the Company from commencing or prosecuting in
any court other than the court in which the action was filed, any action or
proceeding relating to the plaintiffs' tender offer. Further, the plaintiffs
seek an order to compel the Company to redeem the Rights and to amend certain
provisions of the Rights Agreement that limit the ability of the Company to
redeem the Rights.
According to the complaint filed by the plaintiffs in the above-
described action, United Dominion and OAC are taking steps to solicit
appointments of designated agents to call a special meeting of the Company's
shareholders. According to the complaint, United Dominion and OAC intend to
propose, among other things, resolutions calling on the current directors of the
Company to redeem the Rights, seeking to remove the present directors in favor
of nominees of United Dominion and OAC, seeking to amend the Company's Code of
Regulations if necessary to provide that the Ohio Control Share Acquisition Law
does not apply to the Company, and otherwise seeking to remove claimed defensive
barriers to the Offer.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit 99.1 Letter to Shareholders of the Company dated July 12, 1996*
Exhibit 99.2 Text of Press Release dated July 12, 1996 issued by the Company
Exhibit 99.3 Pages 10-28 of the Notice of Annual Meeting of Shareholders and
Proxy Statement dated January 18, 1996
Exhibit 99.4 Employment Agreement, dated July 27, 1994, between the Company
and Paul J. Powers
Exhibit 99.5 Employment Agreement, dated May 18, 1992, between the
Company and Bruce C. Wheatley
Exhibit 99.6 Employment Agreement, dated December 3, 1993, between the
Company and Mark G. Kachur
Exhibit 99.7 Severance Compensation and Consulting Agreement, dated February
15, 1988, between the Company and Paul J. Powers
Exhibit 99.8 Severance Compensation Agreement, dated June 25, 1992, between
the Company and John Gilchrist
Exhibit 99.9 Severance Compensation Agreement, dated July 20, 1992, between
the Company and Bruce C. Wheatley
Exhibit 99.10 Severance Compensation Agreement, dated March 25, 1995, between
the Company and Mark G. Kachur
Exhibit 99.11 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Gilbert M. Manchester
Exhibit 99.12 Severance Compensation Agreement, dated September 28, 1989,
between the Company and William W. Cushwa
Exhibit 99.13 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Steven J. Hewitt
18
<PAGE>
Exhibit 99.14 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Robert A. Calcagni
Exhibit 99.15 Severance Compensation Agreement, dated February 29, 1996,
between the Company and Hubert Jacobs van Merlen
Exhibit 99.16 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Edward J. Barnard
Exhibit 99.17 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Patrick C. Reardon
Exhibit 99.18 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Kenneth W. Marcum
Exhibit 99.19 Stock Option and Award Plan of 1989
Exhibit 99.20 Stock Option and Award Plan of 1993
Exhibit 99.21 Stock Option and Award Plan of 1995
Exhibit 99.22 Form of Option Agreement
________________________________
* Included in copies mailed to shareholders
19
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
By: /s/ Gilbert M. Manchester
--------------------------
Name: Gilbert M. Manchester
Title: Vice President and General Counsel
Dated: July 12, 1996
20
<PAGE>
ANNEX 1
-------
The following table lists purchases of Shares by the Company on
July 12, 1996, up to 3:30 p.m. on that date. Except as set forth in this
Annex, the Company has not effected any transactions in the Shares during the
past 60 days.
Number of Shares Purchased Price Per Share
--------------------------- ---------------
7,000 $ 28 1/8
400 $ 28 1/8
20,200 $ 28 1/4
25,000 $ 28 3/8
75,000 $ 28 3/8
100,000 $ 28 1/2
105,300 $ 28 1/2
27,700 $ 28 5/8
50,000 $ 28 5/8
5,000 $ 28 5/8
10,000 $ 28 5/8
12,000 $ 28 5/8
67,500 $ 28 5/8
2,000 $ 28 5/8
50,000 $ 28 3/4
200 $ 28 3/4
33,000 $ 28 7/8
21,000 $ 28 7/8
19,500 $ 28 7/8
40,700 $ 28 7/8
21,000 $ 28 3/4
94,400 $ 28 3/4
23,600 $ 28 3/4
27,000 $ 28 3/4
10,100 $ 28 3/4
--------
847,600
<PAGE>
EXHIBIT INDEX
Exhibit 99.1 Letter to Shareholders of the Company dated July 12, 1996*
Exhibit 99.2 Text of Press Release dated July 12, 1996 issued by the Company
Exhibit 99.3 Pages 10-28 of the Notice of Annual Meeting of Shareholders and
Proxy Statement dated January 18, 1996
Exhibit 99.4 Employment Agreement, dated July 27, 1994, between the Company
and Paul J. Powers
Exhibit 99.5 Employment Agreement, dated May 18, 1992, between the
Company and Bruce C. Wheatley
Exhibit 99.6 Employment Agreement, dated December 3, 1993, between the
Company and Mark G. Kachur
Exhibit 99.7 Severance Compensation and Consulting Agreement, dated
February 15, 1988, between the Company and Paul J. Powers
Exhibit 99.8 Severance Compensation Agreement, dated June 25, 1992, between
the Company and John Gilchrist
Exhibit 99.9 Severance Compensation Agreement, dated July 20, 1992,
between the Company and Bruce C. Wheatley
Exhibit 99.10 Severance Compensation Agreement, dated March 25, 1995,
between the Company and Mark G. Kachur
Exhibit 99.11 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Gilbert M. Manchester
Exhibit 99.12 Severance Compensation Agreement, dated September 28, 1989,
between the Company and William W. Cushwa
Exhibit 99.13 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Steven J. Hewitt
Exhibit 99.14 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Robert A. Calcagni
Exhibit 99.15 Severance Compensation Agreement, dated February 29, 1996,
between the Company and Hubert Jacobs van Merlen
Exhibit 99.16 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Edward J. Barnard
Exhibit 99.17 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Patrick C. Reardon
Exhibit 99.18 Severance Compensation Agreement, dated September 28, 1989,
between the Company and Kenneth W. Marcum
Exhibit 99.19 Stock Option and Award Plan of 1989
Exhibit 99.20 Stock Option and Award Plan of 1993
Exhibit 99.21 Stock Option and Award Plan of 1995
Exhibit 99.22 Form of Option Agreement
________________________________
* Included in copies mailed to shareholders
<PAGE>
Exhibit 99.1
July 12, 1996
Dear Fellow Shareholders:
After careful consideration, Commercial Intertech Corp.'s Board of Directors has
voted unanimously to recommend that shareholders reject as inadequate the
unsolicited $27 per share tender offer by United Dominion Industries, Ltd. At
the same time, your Board reaffirmed the Company's strategic plan and approved
an accelerated initiative to spin off to shareholders 100% of its wholly-owned
Cuno, Incorporated fluid filtration and purification subsidiary. In addition,
the Board unanimously approved a program to repurchase up to 2.5 million of its
15.5 million common shares currently outstanding.
The Board determined that United Dominion's unsolicited tender offer is
inadequate and not in the best interests of Commercial Intertech, its
shareholders and other important constituents, and does not adequately reflect
the long-term value or prospects of the Company. In making its determination,
the Board considered the Company's long-term strategic plan to build value for
its shareholders by growing its core businesses and establishing a separate
public market for Cuno. In connection with its determination, the Board
considered the opinion of its financial advisor, Goldman, Sachs & Co., that the
United Dominion offer is inadequate.
Together these initiatives are designed to provide a balanced package of long-
term and short-term value that responds to shareholders with different
investment objectives and more accurately reflects the Company's underlying
worth. The share repurchase program will provide immediate liquidity to those
holders who wish to sell some or all of their shares, while enabling continuing
holders to benefit both from the ongoing growth of the Company and Cuno, as well
as from the fewer shares that will remain outstanding. The share repurchase
program is expected to be accretive to Commercial Intertech's earnings per
common share.
We are optimistic about Commercial Intertech's continued strong financial
performance, as evidenced by the record results we achieved in fiscal 1995, and
by the past three straight years of improved performance. We believe the steps
we are announcing today, combined with the continued implementation of our long-
term strategic plan, will best protect and enhance value for our shareholders
and serve the interests of all of our constituencies.
The Company's directors and officers do not intend to sell any shares in
connection with the repurchase program, nor to tender to the United Dominion
offer. WE STRONGLY RECOMMEND THAT SHAREHOLDERS NOT TENDER THEIR SHARES TO THE
UNITED DOMINION TENDER OFFER.
<PAGE>
- 2 -
The enclosed Schedule 14D-9 describes your Board's decision to reject the United
Dominion Offer and contains other important information relating to its
decision. We urge you to read it carefully.
Your Board of Directors and I greatly appreciate your continued support and
encouragement.
Sincerely,
Paul J. Powers
Chairman and Chief Executive Officer
<PAGE>
EXHIBIT 99.2
Contact: Bruce C. Wheatley Jim Fingeroth/Ruth Pachman/
Commercial Intertech Andrea Bergofin
330-740-8580 Kekst and Company
212-593-2655
FOR IMMEDIATE RELEASE
COMMERCIAL INTERTECH BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS REJECT UNITED DOMINION TENDER OFFER;
COMPANY TO SPIN OFF CUNO UNIT TO SHAREHOLDERS,
INITIATES 2.5 MILLION SHARE REPURCHASE
Youngstown, Ohio: July 12, 1996 -- Commercial Intertech Corp. (NYSE: TEC)
announced today that its Board of Directors has voted unanimously to recommend
that shareholders reject as inadequate the unsolicited $27 per share tender
offer by United Dominion Industries, Ltd., and has reaffirmed the Company's
strategic plan which now includes an accelerated initiative to spin off to
shareholders 100% of its wholly-owned Cuno Incorporated filtration subsidiary.
In addition, the Board unanimously approved a program to repurchase up to 2.5
million of its 15.5 million common shares currently outstanding.
The Board concluded, in light of the Company's long-term strategic plan, its
future prospects and other factors, that this is not the time to sell the
Company. Therefore, the Board strongly recommends that shareholders not tender
their shares to the United Dominion tender offer.
The Board determined that United Dominion's unsolicited tender offer is
inadequate and not in the best interests of Commercial Intertech, its
shareholders, employees, customers, suppliers, labor organizations, the
communities in which it does business, and its other constituencies, and does
not adequately reflect the long-term value or prospects of the Company. In
making its determination, the Board considered the Company's long-term strategic
plan to build value for its shareholders by growing its
<PAGE>
core businesses and establishing a separate public market for Cuno. In
connection with its determination, the Board considered the advice of its
financial advisor, Goldman, Sachs & Co.
Paul J. Powers, Chairman and Chief Executive Officer of Commercial Intertech,
said, "We are disappointed that United Dominion has seen fit to pursue its
inadequate offer in this precipitous manner. Our Board firmly believes that the
United Dominion offer is inadequate and that the interests of Commercial
Intertech, our shareholders and our other constituencies would best be served by
continuing as an independent public company to focus on our strategic plan,
proceeding with an accelerated initiative to establish a separate identity and
trading market for Cuno, and repurchasing some of our shares," Mr. Powers
continued.
"Together, these initiatives are designed to provide a balanced package of long-
term and short-term value that responds to shareholders with different
investment objectives and more accurately reflects the Company's underlying
worth. The share repurchase program will provide immediate liquidity to those
holders who wish to sell some or all of their shares, while enabling continuing
holders to benefit both from the ongoing growth of the Company and Cuno, as well
as from the fewer shares that will remain outstanding. We believe these actions
offer significantly better value for our shareholders than does the alternative
of selling the Company today.
"The spin-off should enhance the abilities of the managements of Commercial
Intertech and Cuno to focus more closely on the objectives of their respective
businesses, enhance the two companies' ability to create incentives that align
the interests of their managements and employees with the performance of their
respective companies, and permit Cuno to use its publicly traded stock as a
currency for expansion through acquisitions," stated Mr. Powers.
2
<PAGE>
"Cuno has achieved strong improvements in its operating performance and
profitability in recent years and is poised to capitalize upon its status as one
of the world's leading filtration companies," Mr. Powers continued. "Our Board
has been considering, together with Goldman, Sachs & Co., for a number of
months either a 100 percent spin-off or a public offering of up to 20 percent of
the stock of Cuno as a first step toward a subsequent spin-off. The Board has
now decided to accelerate this process and proceed with a 100 percent spin-off,
thereby seeking to provide more direct and immediate value to Commercial
Intertech shareholders. This action should enable our shareholders to benefit in
the near-term from the value of a high-growth, high-multiple business, which has
not previously received appropriate market recognition because of Commercial
Intertech's mix of industrial businesses, which typically trade at lower
multiples.
"We are also optimistic about Commercial Intertech's continued strong financial
performance, as evidenced by the record results we achieved in our 1995 fiscal
year, and by the past three straight years of continued improvement in our
results. We believe the steps we are announcing today, combined with the
continued implementation of our long-term strategic plan, will best enhance
value for our shareholders and serve the interests of all of our
constituencies," Mr. Powers concluded.
Following the spin-off, Cuno will be led by an experienced management team,
which will include Mark G. Kachur as President, and Michael Croft as Senior Vice
President. Mr. Powers will be Chairman of the Board. Cuno will be headquartered
in Meriden, Connecticut. Following the spin-off, shareholders of Commercial
Intertech will hold shares in both Commercial Intertech and Cuno. Cuno is
expected to apply for listing of its common stock on the NASDAQ National Market.
The implementation of the spin-off is subject to customary conditions, including
the receipt of an opinion of counsel regarding the tax-free nature of the
transaction.
3
<PAGE>
The repurchase program will provide investors who desire to obtain liquidity for
their investment in the Company with an opportunity to sell all or a portion of
their investment in the Company. These shareholders may be more likely to
support actions that would make it more difficult for the Company to resist an
inadequate bid, which in the view of the Board of Directors would not be in the
best interests of the Company, its shareholders and its other constituencies.
Accordingly, the repurchase program may stabilize the Company's base of long-
term shareholders and may give long-term shareholders who desire to participate
in the benefits of the spin-off and the future growth of the Company and Cuno a
greater opportunity to do so.
To finance the share repurchase plan, the Company has executed a bridge credit
agreement with Mellon Bank. N.A. providing for an unsecured revolving credit
facility of up to $60 million, of which $55 million can be used to repurchase
shares. In addition, the Company has signed a commitment letter with Mellon for
a refinancing credit facility of up to $190 million, subject to customary
conditions, to refinance the bridge facility and other outstanding indebtedness,
and for other general corporate purposes. The balance of any necessary funds to
purchase shares may be drawn down under this refinancing facility.
The share repurchase is expected to be accretive to Commercial Intertech's
earnings per common share.
Commercial Intertech has indicated that its directors and officers do not intend
to sell shares in connection with the repurchase program, nor to tender to the
United Dominion offer.
Mr. Powers also noted that United Dominion has filed litigation in the United
States District Court in Columbus, Ohio, seeking a variety of relief, including
an injunction aqainst certain Ohio takeover statutes and Commercial Intertech's
4
<PAGE>
shareholder rights plan. "We have reviewed the matter and intend to defend this
action aggressively," Mr. Powers said.
Commercial Intertech is a multi-national manufacturer of Hydraulic Systems,
Building Systems and Metal Products, and Fluid Purification. Employing more
than 4,000 men and women around the world, the Company has 35 manufacturing
facilities in 10 countries.
# # #
5
<PAGE>
EXHIBIT 99.3
12
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten-percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended October 31, 1995 all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten-percent beneficial owners were complied with; except that, inadvertently,
one report of two transactions was filed late by Charles B. Cushwa III and one
report of three transactions was filed late by William W. Cushwa.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overall Policy and Administration
The Company's executive compensation program, as developed by the Compensation
Committee, is designed to preserve and enhance shareholder value. Within a
strategy that links executive and shareholder financial interests, the executive
compensation program is designed to:
- -- Motivate executives toward long term strategic management of the
Company's assets and operations through stock programs that focus
executive attention on increasing shareholder value;
- -- Recognize and reward individual contributions and achievements as well
as overall business performance via annual incentives which are
tied to annual operating, financial and strategic objectives;
- -- Provide a competitive salary structure to attract and retain the
executive talent necessary to ensure the Company's continued
profitable growth.
The executive compensation program is administered by the Compensation
Committee of the Board of Directors of the Company (the Committee), which is
comprised of five independent directors, none of whom has interlocking or other
relationships which might be considered conflicts of interest. The Committee
establishes salaries for corporate officers and administers the Company's Senior
Management Target Incentive Plan (SMTIP), Salaried Employee Incentive Plan
(SEIP) and Stock Option and Award Plans. In its decision-making process, the
Committee utilizes independent compensation consultants and may periodically
seek input from appropriate Company executives.
10
<PAGE>
13
To further the Committee's strategy of linking executive and shareholder
financial interests, in recent years the Committee has adjusted the mix of an
executive's overall compensation components to increase the emphasis on
performance based (annual cash incentive awards; stock options; performance
shares) versus fixed (base salary and restricted stock) compensation.
Base Salaries
In establishing base salaries of Company executives, the Committee generally
targets market median (50th percentile) compensation levels of senior executives
and other corporate officers in comparably sized durable goods manufacturing
companies. Other factors such as availability of talent, the recruiting
requirements of the particular situation, experience and anticipated performance
are considered in determining individual base salary compensation levels and may
result in salaries above or below the stated target.
The Committee uses data from several executive compensation surveys. The
number of participant companies appearing in these surveys is more extensive
than the peer group established for performance graph purposes, reflecting the
broader group of companies with which the Company competes for executive talent.
Any adjustments in the base salaries of senior executives and other corporate
officers are normally effective as of January 1 each year and are dependent upon
such factors as the executive's current responsibilities and experience,
competitive compensation practices at comparably sized durable goods
manufacturing companies, and the Committee's judgment regarding the performance
of the executive.
Annual Incentive Compensation
Beginning in fiscal 1995, the Committee administers two annual incentive
plans. The SMTIP was approved by shareholders in 1995 and is a performance-based
plan in which payouts are set in accordance with the requirements of Internal
Revenue Code Section 162(m). These requirements are:
- -- The compensation must be payable on account of the attainment of one or
more pre-established objective performance goals;
- -- The performance goals must be established by a Compensation Committee
of the Board of Directors that is comprised solely of two or more
"outside directors";
- -- The terms of the compensation and the performance criteria must be
disclosed to and approved by shareholders before payment;
- -- The Compensation Committee must certify in writing that the performance
goals have been satisfied before payment.
In addition, the Committee also administers the SEIP which provides
compensation that is not performance-based as defined in Code Section 162(m),
but which is based on both objective and subjective evaluations of individual
executive performance.
11
<PAGE>
14
The Senior Management Target Incentive Plan
The SMTIP provides annual incentive compensation to the Company's eight senior
executives based solely on the achievement of predetermined financial
performance objectives, including group operating income and corporate net
income, return on group sales and return on group assets. Target awards, as a
percent of salary, range from 22.5 to 52.5 percent.
The Salaried Employee Incentive Plan
The SEIP provides senior and top managers an opportunity to earn annual cash
payments (target incentive awards) based primarily on the achievement of
important financial goals (operating and net income, return on sales, and return
on assets) as well as individual objectives. A threshold level of net income
must be achieved before any payments are made.
Selection of participants by the Committee, which in 1995 totaled 145
individuals, and accompanying target award ranges (from 7.5 to 30 percent of
base salary) are determined according to individual responsibility levels,
business judgment and market median data for comparably sized durable goods
manufacturing companies.
To enhance the Company's objectives of encouraging additional executive stock
ownership and increasing Company cash flow, about one-half of participants in
the SEIP may elect to receive their earned awards in cash or stock or a
combination of the two. If the participant elects to receive all or part of an
earned award in restricted stock, the Company increases the stock award by a
fixed percentage. The vesting period associated with the stock award is three
years, and in the event a participant voluntarily leaves the Company or is
terminated "for cause," the shares are forfeited.
The Stock Option and Award Plans
The Company's Stock Option and Award Plans allow for the grant of a variety of
stock incentive instruments, including nonqualified (i.e., not tax-preferred)
and incentive stock options, stock appreciation rights, restricted stock and
performance shares. For many years, the Company has granted stock options to
its key executives to create a direct link between shareholder and executive
interests. In the past the Company has also periodically granted time-lapse
restricted stock to its key executives.
The performance share program, first initiated in fiscal 1993, is a longer-
term incentive program designed to motivate key executives whose efforts result
in the achievement of sustained financial results leading to increased
shareholder value. Designed to replace substantially the restricted stock grants
previously made to key executives, the Committee believes performance shares
better align executive and shareholder financial interests. The Committee
selected 63 executives throughout the Company for participation in the
performance share program.
Depending on responsibilities within the Company, performance shares are
earned based on average corporate and/or group Return On Equity (ROE),
divisional operating income and, for certain executives, individual specific
objectives over a three-year performance period. In future years, the Committee
may
12
<PAGE>
15
consider other measures of shareholder value and performance periods, as
appropriate, in light of the Company's strategic objectives. Threshold levels
of ROE and, in certain cases, operating income must be achieved before any
distributions are made.
Historically the Company has granted stock options on an annual basis while
performance shares are granted every other year. In determining stock option
awards, the Committee considers such factors as median competitive award levels,
the size of previous stock option awards and Company and individual performance.
The Company has modified its practice of awarding restricted stock to key
executives. Restricted stock is now used only in special circumstances, such as
to attract new key executives for employment with the Company and in other
similar non-recurring circumstances.
Chief Executive Officer Compensation
Mr. Powers' annual base salary for 1995 was $481,667. This rate was based on
the Committee's judgment regarding his performance, his service to the Company
and competitive compensation levels for CEOs of comparably sized durable goods
manufacturing companies. For performance in fiscal 1995, Mr. Powers received a
payment under the SMTIP of $331,013. This payment was based on a predetermined
formula based on corporate net income set by the Committee and certified by the
Committee in accordance with the provisions of Code Section 162(m). In
addition, Mr. Powers received a payment from the SEIP of $218,987 based on the
Committee's judgment on Mr. Powers' achievement of personal goals and objectives
during 1995.
Mr. Powers received options to purchase 34,000 shares of Common Stock in 1995.
In determining this grant, the Committee considered Company and individual
performance, the size of previous awards and market median long-term incentive
statistics.
Internal Revenue Section 162(m)
A 1993 Internal Revenue Code amendment caps the allowable federal income tax
deduction for compensation paid to each of the proxy-reported officers of a
public company. The deduction limit, which was effective in 1994, does not
apply to compensation paid under a plan that meets certain requirements for
performance-based compensation. It is the Committee's general policy to
structure the major components of the Company's incentive compensation programs
to satisfy the requirements of performance-based compensation and preserve the
deductibility of compensation paid to executive officers on an ongoing basis.
To implement the above policy, the Company asked for and received shareholder
approval of the Stock Option and Award Plan of 1995. Such approval preserved
the full tax deductibility of Stock Options, Performance Shares and Annual
Incentive Awards awarded to the Company's executive officers. The Stock Option
and Award Plan of 1995 links compensation to the attainment of key financial
objectives leading to increases in shareholder value.
By: The Compensation Committee
Neil D. Humphrey, Chairman Gerald C. McDonough
John M. Galvin C. Edward Midgley
Richard J. Hill
13
<PAGE>
16
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- Awards
------------
Secu-
rities
Other Restricted Under-
Annual Stock lying
Name and Salary Bonus Compensa Awards Op-
------ ----- tion tions All Other
Principal Position Year ($) ($) ($) ($)(4) (#) ($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul J. Powers 1995 481,667 440,000 -0- 131,995 34,000 15,810(5)
Chairman, President, 1994 461,667 400,000 -0- 835,634 37,500 15,876
Chief Executive 1993 434,500 165,000 -0- -0- 36,000 16,105
Officer and Chief
Operating Officer
Mark G. Kachur (1) 1995 247,500 135,000 38,414 24,008 15,000 -0-
Senior Vice President- 1994 134,300 120,000 -0- 174,375 15,000 -0-
Fluid Purification 1993 - - - - - -
Group
Bruce C. Wheatley 1995 223,833 90,000 -0- 36,002 7,500 8,075(6)
Senior Vice President- 1994 216,500 50,000 -0- 59,996 7,500 5,428
Administration 1993 207,500 45,000 4,539 -0- 7,500 -0-
Philip N. 1995 201,125 112,000 -0- -0- -0- 7,394(7)
Winkelstern(2) 1994 256,167 51,250 -0- 184,499 15,000 9,704
Former Senior Vice 1993 235,167 68,000 -0- -0- 15,000 10,073
President and Chief
Financial Officer
Hubert Jacobs van 1995 204,777 67,200 7,193 20,152 7,500 1,085(8)
Merlen (3) 1994 - - - - - -
Senior Vice President 1993 - - - - - -
and Chief Financial
Officer
John Gilchrist 1995 194,167 30,000 -0- 11,995 7,000 6,930(9)
Group Vice President 1994 160,000 75,000 -0- 29,998 7,500 5,913
1993 132,500 25,000 -0- -0- 7,500 5,506
</TABLE>
14
<PAGE>
17
(1) Mr. Kachur became an employee of the Company on April 11, 1994.
(2) Mr. Winkelstern retired from the Company on August 1, 1995.
(3) Mr. Jacobs van Merlen became Senior Vice President and Chief Financial
Officer of the Company on August 1, 1995.
(4) This column shows the market value of restricted share awards on the date
of award. The aggregate holdings/value of Restricted Stock held on October 31,
1995 by the individuals listed in this table, not including awards which were
earned after the end of the fiscal year as part of the SEIP and were elected to
be taken in the form of restricted stock, as described in the Compensation
Committee Report on Executive Compensation, are: Paul J. Powers - 75,059
shares/$1,266,621; Mark G. Kachur - 11,250 shares/$189,844; Bruce C. Wheatley -
7,154 shares/$120,724; Philip N. Winkelstern - 17,218 shares/$290,554; Hubert
Jacobs van Merlen - 2,413 shares/$40,719; and John Gilchrist - 2,302
shares/$38,846. Regular quarterly dividends are paid on Restricted Stock held by
these individuals.
(5) Includes Company matching contributions pursuant to the Non-Qualified Stock
Purchase Plan in the amount of $10,475; Company matching contributions pursuant
to the 401(k) Plan in the amount of $3,975; and Company contribution pursuant to
the Employee Stock Ownership Plan in the amount of $1,360.
(6) Includes Company matching contributions pursuant to the Non-Qualified Stock
Purchase Plan in the amount of $2,740; Company matching contributions pursuant
to the 401(k) Plan in the amount of $3,975; and Company contribution pursuant to
the Employee Stock Ownership Plan in the amount of $1,360.
(7) Includes Company matching contributions pursuant to the Non-Qualified
Stock Purchase Plan in the amount of $3,184; Company matching contributions
pursuant to the 401(k) Plan in the amount of $2,850; and Company contribution
pursuant to the Employee Stock Ownership Plan in the amount of $1,360.
(8) Includes Company matching contributions pursuant to the Non-Qualified Stock
Purchase Plan in the amount of $1,085.
(9) Includes Company matching contributions pursuant to the Non-Qualified Stock
Purchase Plan in the amount of $1,850; Company matching contributions pursuant
to the 401(k) Plan in the amount of $3,720; and Company contribution pursuant to
the Employee Stock Ownership Plan in the amount of $1,360.
15
<PAGE>
18
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (2)
----------------- -------------------
% of
Number of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees Price Expira-
Granted (#) in Fiscal ($/Share) tion 5% 10%
Name (1) Year (1) Date ($) ($)
---- --- ---- --- ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Paul J. 34,000 29.1% $19.375 1/24/05 $414,354 $1,050,048
Powers
Mark G. 15,000 12.8 19.375 1/24/05 182,803 463,256
Kachur
Bruce C. 7,500 6.4 19.375 1/24/05 91,402 231,628
Wheatley
Philip N. -0- - - - - -
Winkelstern
Hubert Jacobs 7,500 6.4 18.50 7/31/05 87,274 221,168
van Merlen
John 7,000 6.0 19.375 1/24/05 85,308 216,186
Gilchrist
</TABLE>
(1) The options listed in the above table were granted subject to a three-year
vesting period, with 50% of the options granted becoming exercisable on the
second anniversary of the grant date and 50% on the third anniversary. No SARs
were granted. The exercisability of the options may be accelerated in the event
of a change in control or a potential change in control.
(2) Potential Realizable Value is presented net of the option exercise price
but before any federal or state income taxes associated with exercise. These
amounts represent certain assumed rates of appreciation only. Actual gains are
dependent on the future performance of the Company's Common Stock and the option
holders' continued employment throughout the vesting period. The amounts
reflected in the table may not necessarily be achieved.
16
<PAGE>
19
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End FY-End (1)
(#) ($)
Shares --- ---
Acquired Value
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- --- --- ------------- -------------
<S> <C> <C> <C> <C>
Paul J. Powers 15,000 $118,125 115,500/89,500 $532,437/$205,810
Mark G. Kachur -0- -0- -0-/30,000 -0-/20,625
Bruce C. Wheatley 7,500 61,562 3,750/18,750 13,906/41,718
Philip N. Winkelstern 18,000 153,000 60,000/-0- 259,999/-0-
Hubert Jacobs van -0- -0- -0-/7,500 -0-/-0-
Merlen
John Gilchrist -0- -0- 8,862/18,250 39,253/41,718
</TABLE>
(1) The value per option is calculated by subtracting the exercise
price from the October 31, 1995 closing price of the Company's
Common Stock on the New York Stock Exchange of $16.875.
17
<PAGE>
20
LONG-TERM INCENTIVE PLAN AWARDS TABLE
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Estimated Future Payouts
-------------------------
Under Non-Stock Price Based Plans
---------------------------------
Number of Performance or
Shares, Other Period
Units or Other Until
Rights Maturation or Threshold Target Maximum
Name (#) Payout(1) (#) (#) (#)
---- --- --------- --- --- ---
<S> <C> <C> <C> <C> <C>
Paul J. Powers 42,750 1/25/98 21,375 42,750 64,125
Mark G. Kachur 12,000 1/25/98 6,000 12,000 18,000
Bruce C. Wheatley 7,000 1/25/98 3,500 7,000 10,500
Philip N. Winkelstern -0- - - - -
Hubert Jacobs van Merlen 6,000 1/25/98 3,000 6,000 9,000
John Gilchrist 6,000 1/25/98 3,000 6,000 9,000
</TABLE>
Payouts of awards are tied to achieving specified levels of return on equity
("ROE") over a three-year period. At Threshold ROE, 50% of shares will be
distributed. 100% of award will be paid at Target and 150% of award at Maximum.
The Compensation Committee of the Board of Directors may, at or after grant,
accelerate the vesting of all or part of any Performance Share Award.
(1) The date in the column represents the date on which award payments will be
made. The amounts of the awards are based on the three-year performance period
ending October 31, 1997.
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<PAGE>
21
RETIREMENT BENEFITS
Employees may retire from the Company with unreduced benefits under the
Company's retirement plans at age 65 or later with 25 or more years of service.
The table below shows the estimated annual pension benefits provided under the
Company's defined benefit retirement plans for employees in higher salary
classifications retiring at age 65 or later.
ESTIMATED TOTAL ANNUAL RETIREMENT BENEFITS UNDER THE PENSION PLAN FOR
SALARIED EMPLOYEES AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$ 150,000 $40,684 $54,245 $67,806 $71,196 $74,587
200,000 55,684 74,245 92,806 97,446 102,087
250,000 70,684 94,245 117,806 123,696 129,587
300,000 85,684 114,245 142,806 149,946 157,087
400,000 115,684 154,245 192,806 202,446 212,087
500,000 145,684 194,245 242,806 254,946 267,087
600,000 175,684 234,245 292,806 307,446 322,087
700,000 205,684 274,245 342,806 359,946 377,087
800,000 235,684 314,245 392,806 412,446 432,087
900,000 265,684 354,245 442,806 464,946 487,087
</TABLE>
Benefits under the plans are calculated generally under a formula of 50% of the
participant's final average compensation reduced by 50% of the participant's
estimated social security benefits, reflected in the table in the form of a
straight life annuity. The compensation covered by the pension plan is base
salary as set forth in the Salary column of the Summary Compensation Table on
page 14. The compensation covered by the supplemental executive retirement
plans is also base salary for those executives participating other than the
Chief Executive Officer, for which the compensation covered is base salary plus
bonus as set forth in the Summary Compensation Table. As of November 30, 1995,
the following executive officers had the following credited years of service
with the Company; Mr. Powers, 13; Mr. Kachur, 1; Mr. Wheatley, 3; Mr. Jacobs
van Merlen, 8; Mr. Gilchrist, 28.
19
<PAGE>
22
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG COMMERCIAL INTERTECH CORP., NYSE
AND DOW JONES INDUSTRIAL DIVERSIFIED INDUSTRY GROUP INDICES
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ---
<S> <C> <C> <C> <C> <C> <C>
TEC 100.00 116.93 149.81 167.04 240.07 215.23
NYSE 100.00 131.75 140.72 166.94 173.15 203.26
DJID 100.00 139.82 151.60 189.82 195.39 220.73
</TABLE>
20
<PAGE>
23
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (CONT.)
Assumes $100 invested on October 31, 1990.
Total return assumes reinvestment of dividends.
Data as of October 31 of each year.
In accordance with SEC guidelines, the New York Stock Exchange (NYSE) Index was
selected as the broad market indicator because Commercial Intertech (TEC) shares
are traded on the NYSE.
The Dow Jones Industrial Diversified (DJID) Index was selected as the industry
index because TEC is included in said index along with a number of competitors
and other companies involved in two or more industries or whose products are
used in many different industries.
EMPLOYMENT AGREEMENTS
On July 27, 1994, the Company entered into an Employment Agreement with Paul J.
Powers. Mr. Powers' Employment Agreement expires on February 28, 2000. The
Employment Agreement provides for the payment of a base salary which can be
increased at the discretion of the Company. Additionally, Mr. Powers shall be
eligible to (1) receive cash bonuses as part of the Company's SEIP; and (2)
participate in other incentive, stock option, profit sharing and similar plans
maintained by the Company for the benefit of its executives. In addition, the
employment agreement with Mr. Powers provides that in the event of his
termination without cause (as defined in his employment agreement), Mr. Powers
shall receive a lump sum payment equal to two and one-half times his most recent
annual cash compensation. Finally, Mr. Powers will be included in all other
employee benefit plans to the extent that he is eligible. Such plans include,
but are not limited to, group life insurance plans, hospitalization and medical
plans and long-term disability plans.
On May 18, 1992, the Company entered into an Employment Agreement with Bruce C.
Wheatley and on December 3, 1993, the Company entered into an Employment
Agreement with Mark G. Kachur. Mr. Wheatley's Employment Agreement is for a
term of three years and Mr. Kachur's Employment Agreement is for a term of three
years. The Employment Agreement with Mr. Wheatley provides for a base salary of
$200,000 and Mr. Kachur's Employment Agreement provides for a base salary of
$240,000. Both employment agreements provide for participation in the Company's
SEIP as well as other Company benefit programs, including group life insurance,
hospitalization and medical plans. The Employment Agreements also provide for
the grant of stock options under certain stock option plans, subject to vesting
requirements, and also provide for participation in a supplemental deferred
compensation arrangement. In the event of a change in control of the Company,
the Employment Agreements provide for a lump sum severance payment in the amount
of two years' cash compensation as well as continued participation in Company
benefit programs for two years following termination.
21
<PAGE>
24
The base salary and cash bonuses payable under all these Employment Agreements
are included in calculating the cash compensation paid to Messrs. Powers, Kachur
and Wheatley, respectively, as reported in the Summary Compensation Table on
page 14.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual retainer fee in
the amount of $16,000, plus $1,000 for attending each meeting of the Board of
Directors. They also receive $750 for attending each committee meeting.
Directors who are employees of the Company do not receive compensation for
serving as directors.
Non-employee directors who retire with at least ten years of non-employee Board
service will be paid a retirement benefit consisting of an annual amount equal
to the Board retainer being paid to such directors at the time of retirement.
Retiring directors with less than ten years of non-employee Board service will
receive proportionally decreased amounts. Non-employee directors are entitled
to receive automatically a non-qualified stock option to purchase 2,250 shares
of Common Stock upon the outside director's election to a new three-year term
during the term of the Stock Option and Award Plan of 1995.
Mr. Don E. Tucker, former Senior Vice President and Chief Administrative Officer
of the Company, provides consulting services to the Company. Fees paid for
those services during fiscal 1995 were $48,000.
TERMINATION BENEFITS
On February 15, 1988, the Company entered into a Severance Compensation and
Consulting Agreement with Paul J. Powers. On June 25, 1992, the Company entered
into a Severance Compensation Agreement with John Gilchrist, on July 20, 1992
with Bruce C. Wheatley, and on March 25, 1995 with Mark G. Kachur. The Severance
Compensation and Consulting Agreement and the Severance Compensation Agreements
are referred to collectively as the "Agreements." The Agreements were the
result of a determination by the Board of Directors that it is appropriate and
in the best interest of the Company and its shareholders that, in the event of a
possible change in control of the Company, the stability and continuity of
management would be maintained, free of the distractions incident to any change
in control.
For purposes of the Agreements, a "change in control" shall be deemed to have
occurred if (i) there shall be consummated (a) any consolidation or merger of
the Company in which the Company is not the continuing surviving corporation or
pursuant to which shares of the Company's Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's Common Stock immediately prior to the merger have
substantially the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (b) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of the Company, or (ii) the shareholders of the
Company shall approve any plan or proposal for the liquidation or dissolution of
the Company, or (iii) any person [as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")], other than the Company or a subsidiary or any employee benefit plan
sponsored by the Company or a subsidiary, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of securities of the
Company representing 30% or more of the
22
<PAGE>
25
combined voting power of the Company's then outstanding securities ordinarily
(and apart from rights accruing in special circumstances) having the right to
vote in the election of directors, as a result of a tender or an exchange offer,
open market purchases, privately negotiated purchases or otherwise, or (iv) at
any time during a period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company shall
cease for any reason to constitute at least the majority thereof, unless the
election or the nomination for election by the Company's shareholders of each
new director during such two-year period is approved by a vote of at least two-
thirds of the directors then still in office who were directors in the beginning
of such two-year period.
Benefits are payable under the Agreements only if a change in control has
occurred and within two years after such change in control the officer's
employment is terminated involuntarily without cause or voluntarily by the
officer for reasons such as demotion, reduction in base salary, relocation, loss
of benefits or other changes. The principal benefits to be provided to Mr.
Powers under his Agreement are (i) a lump sum payment equal to two times his
annual cash compensation (base salary and incentive compensation), (ii)
continued participation in the Company's employee benefit programs for three
years following termination, and (iii) a consulting fee equal to his annual cash
compensation in consideration for consulting services over a one-year period
after termination. The principal benefits to be provided to Messrs. Kachur,
Wheatley, and Gilchrist under the Agreements are (i) a lump sum payment equal to
two times the officer's annual cash compensation (base salary and incentive
compensation) and (ii) continued participation in the Company's employee benefit
programs for two years following termination. If the officer's termination
occurs after age 62, separation payments are reduced by a factor based upon the
number of months remaining until the officer reaches age 65. The Agreements are
not employment agreements, and do not impair the right of the Company to
terminate the employment of the executive with or without cause prior to a
change in control, or the right of the executive to voluntarily terminate his
employment. Each Agreement generally terminates on the earlier of the date on
which the officer reaches age 65 or five years from the date of the Agreement,
provided that the term of the Agreement will be automatically extended for
additional one-year periods until the officer reaches age 65 or the Company or
the officer determines not to extend the Agreement.
Effective August 15, 1995, Mr. Kipton C. Kumler resigned from his positions as
an executive officer and director of the Company and its subsidiaries. In
connection with such resignation, the Company and Mr. Kumler entered into a
consulting agreement pursuant to which Mr. Kumler will receive approximately
$14,600 per month and health insurance coverage for a period of 24 months and
was paid a lump sum of $332,500. The Company also agreed to pay certain amounts
relating to the relocation of Mr. Kumler and his family, including moving
expenses and certain amounts relating to his Ohio house and property.
23
<PAGE>
26
SECURITY OWNERSHIP OF MANAGEMENT
The directors, nominees for the office of director, the Chief Executive
Officer, the four other highly-compensated executive officers, a former
executive officer and all directors and executive officers as a group were the
beneficial owners of the Company's voting shares, as of December 31, 1995, as
set forth below:
<TABLE>
<CAPTION>
Amount and Nature Percent
Name of Beneficial of Beneficial of Voting
Owner Ownership Shares
----- --------- ------
<S> <C> <C>
William J. Bresnahan 300 *
Charles B. Cushwa III 206,770 (1)(4)(5) 1.3%
(8)(12)(16)
William W. Cushwa 226,250 (1)(2)(3)(4)(6)(7) 1.4%
(8)(10)(13)
(14)(16)
John M. Galvin 3,000 (8) *
John Gilchrist 33,227 (8)(9)(10)(14) *
Richard J. Hill 9,535 (8)(9) *
Neil D. Humphrey 5,829 (8)(9) *
Hubert Jacobs van Merlen 13,410 (17) *
Mark G. Kachur 25,026 *
William E. Kassling 0 -
Gerald C. McDonough 3,750 (8) *
C. Edward Midgley 10,000 *
John Nelson 14,573 (1)(8) *
Paul J. Powers 322,424 (2)(8)(10)(14) 1.9%
George M. Smart 2,000 *
Don E. Tucker 137,724 (1)(2)(11)(14) *
</TABLE>
24
<PAGE>
27
<TABLE>
<CAPTION>
Amount and Nature Percent
Name of Beneficial of Beneficial of Voting
Owner Ownership Shares
----- --------- ------
<S> <C> <C>
Bruce C. Wheatley 30,301 (8)(15) *
Philip N. Winkelstern 176,518 (1)(2)(3)(8) 1.1%
(10)(14)
All Directors and
Executive Officers as a Group
(21 people) 1,329,534 7.9%
</TABLE>
*less than 1%
(1) Does not include Common Stock owned by the members of the above-
mentioned directors' families who share their homes, as follows: of Mr. Charles
Cushwa -2,147 shares; of Mr. William Cushwa - 26,548 shares; of Mr. Nelson -
28,675 shares; of Mr. Tucker - 1,146 shares; of Mr. Winkelstern - 5,479 shares.
Beneficial ownership thereof is disclaimed by the respective directors.
(2) Includes the beneficial interest in Common Stock (fractional shares
not shown) credited to the accounts of the above-mentioned beneficial owners by
the Trustee acting under the provisions of the Company's Employee Savings and
Stock Purchase Plan, as follows: Mr. William Cushwa - 4,254 shares; Mr. Powers -
1,595 shares; Mr. Tucker - 9,243 shares; and Mr. Winkelstern - 8,529 shares.
(3) Includes Common Stock held by the directors as custodians for their
minor children as follows: minor children of Mr. William Cushwa - 4,011 shares;
and minor grandchildren as follows: minor grandchild of Mr. Winkelstern - 750
shares.
(4) Charles B. Cushwa III and William W. Cushwa are two of three
beneficiaries of a trust, of which they are not trustees, which consists of
294,000 shares of Common Stock the income from which will be paid to the
beneficiaries equally during their lives. These shares are not included in the
amounts shown in the table.
(5) Includes 46,500 shares of Common Stock held in trust, in which the
children of Charles B. Cushwa III have a remainder interest, and of which
National City Bank, N.E. and Charles B. Cushwa III are co-trustees. Beneficial
ownership thereof is disclaimed by Mr. Charles B. Cushwa III.
(6) Does not include 11,250 shares of Common Stock held in trust, of
which William W. Cushwa is not a trustee, for the benefit of his child and of
which beneficial ownership is disclaimed by Mr. William W. Cushwa.
(7) Includes 44,000 shares of Common Stock held in trust, in which the
children of William W. Cushwa have a remainder interest, and of which National
City Bank, N.E. and William W. Cushwa are co-trustees. Beneficial ownership
thereof is disclaimed by Mr. William W. Cushwa.
25
<PAGE>
28
(8) Includes shares of Common Stock acquirable within 60 days of
December 31, 1995 upon exercise of options issued under the Company's Stock
Option and Award Plans as follows: Mr. Charles Cushwa - 1,500 shares; Mr.
William Cushwa -10,125 shares; Mr. Galvin - 1,500 shares; Mr. Gilchrist - 12,612
shares; Mr. Hill - 1,500 shares; Mr. Humphrey - 1,500 shares; Mr. McDonough -
1,500 shares; Mr. Nelson - 1,500 shares; Mr. Powers - 134,250 shares; Mr.
Wheatley - 7,500 shares; and Mr. Winkelstern - 60,000 shares.
(9) Includes shares of Common Stock (fractional shares not shown)
credited to the accounts of the above-mentioned beneficial owners by the
administrator of the Company's Automatic Dividend Reinvestment Plan, as follows:
Mr. Gilchrist -1,448 shares; Mr. Hill - 3,035 shares; and Mr. Humphrey - 1,429
shares.
(10) Includes in each case 232 shares of Series B Preferred Stock
(fractional shares not shown) and the following number of Common Stock
(fractional shares not shown) credited to the accounts of the above-mentioned
beneficial owners by the Trustee acting under the provisions of the Company's
401(k) plan: Mr. William Cushwa - 762 shares; Mr. Gilchrist - 270 shares; Mr.
Powers - 4,432 shares; and Mr. Winkelstern - 270 shares.
(11) Includes 190 shares of Series B Preferred Stock (fractional shares
not shown) and 4,919 shares of Common Stock (fractional shares not shown)
credited by the Trustee acting under the provisions of the Company's 401(k)
plan.
(12) Includes 39,244 shares of Common Stock held in trust, in which the
children of Charles B. Cushwa III have a remainder interest, and of which
National City Bank, N.E. and Charles B. Cushwa III are co-trustees. Beneficial
ownership thereof is disclaimed by Mr. Charles B. Cushwa III.
(13) Includes 61,000 shares of Common Stock held in trust, in which the
children of William W. Cushwa have a remainder interest, and of which National
City Bank, N.E. and William W. Cushwa are co-trustees. Beneficial ownership
thereof is disclaimed by Mr. William W. Cushwa.
(14) Includes in each case one share of Common Stock (fractional shares
not shown) as a result of participation in the Commercial Intertech Employee
Stock Ownership Plan and the following number of shares of Series B Preferred
Stock (fractional shares not shown) as a result of participation in the
Commercial Intertech Employee Stock Ownership Plan: Mr. William Cushwa - 266
shares; Mr. Gilchrist - 323 shares; Mr. Powers - 619 shares; Mr. Tucker - 464
shares; and Mr. Winkelstern - 604 shares.
(15) Includes 11 shares of Series B Preferred Stock (fractional shares
not shown) and 1,364 shares of Common Stock (fractional shares not shown) held
under the provisions of the Company's 401(k) plan. Includes 58 shares of Series
B Preferred Stock (fractional shares not shown) as a result of participation in
the Commercial Intertech Employee Stock Ownership Plan.
(16) Charles B. Cushwa III and William W. Cushwa are two of three
beneficiaries of a trust, of which they are not trustees, containing 48,625
shares distribution of which is dependent upon the resolution of certain probate
estate matters. The shares are not included in the amounts shown in the table.
26
<PAGE>
29
(17) Includes the beneficial interest in 123 shares of Common Stock
(fractional shares not shown) credited by the Trustee acting under the
provisions of the Company's Non-Qualified Stock Purchase Plan.
The information set forth above concerning beneficial shareholdings of
the beneficial owners is based on information received from the persons named.
None of such beneficial owners, directly or indirectly, owns beneficially any
equity securities of any subsidiary of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The name of any person or "group" (as that term is used in the Exchange
Act) known by the Company to be the beneficial owner of more than five percent
(5%) of any class of the Company's voting securities as of December 31, 1995 is
set forth below:
<TABLE>
<CAPTION>
Amount and
Title Name and Address Nature of Percent Percent of
of of Beneficial of All Voting
Class Beneficial Owner Ownership Class Shares
- ------ ---------------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Common National City Bank, N.E. 1,219,766 (1) 7.91% 7.18%
P O. Box 450
Youngstown, OH 44501
Common Norwest Corporation 1,163,153 (2) 7.55% 6.84%
6th and Marquette
Minneapolis, MN 55479
Series B Mellon Bank N.A. 1,053,508 (3) 100.00% 9.30%
Preferred P. O. Box 444
Pittsburgh, PA 15230
</TABLE>
(1) This figure includes 175,250 shares of Common Stock held in trust by
National City Bank, N.E. (trustee) for the benefit of participants in the
Commercial Intertech Corp. Employee Savings and Stock Purchase Plan.
This figure includes 3,109 shares of Common Stock held in trust by
National City Bank (trustee) for the benefit of participants in the Non-
Qualified Stock Purchase Plan of Commercial Intertech Corp.
National City Bank has sole voting power over 873,878 shares and shared
voting power over 172,029 shares. National City Bank has sole investment
power over 328,589 shares and shared investment power over 891,177
shares.
(2) Norwest Corporation holds Common Stock in a fiduciary capacity for
various institutional and personal accounts.
27
<PAGE>
30
Norwest Corporation has sole voting power over 950,703 shares and shared
voting power over 600 shares. Norwest Corporation has sole investment power
over 1,163,003 shares and shared investment power over 150 shares.
(3) This figure represents all of the outstanding ESOP Convertible Preferred
Stock Series B held of record by Mellon Bank N.A. (trustee) for the benefit of
participants in the Commercial Intertech Employee Stock Ownership Plan and the
Commercial Intertech Retirement Stock Ownership and Savings Plan. The trust for
these plans contains provisions for pass-through voting rights to the employee
participants in the plans.
Mellon Bank has shared voting power and shared investment power over all
shares of Preferred Stock Series B.
2. SELECTION OF INDEPENDENT AUDITORS
-------------------------------------
The Board of Directors has selected Ernst & Young LLP to audit the financial
statements of the Company and its consolidated subsidiaries for the fiscal year
ending October 31, 1996. Ernst & Young LLP has served the Company in this
capacity since 1921. A representative of Ernst & Young LLP is expected to be
present at the annual meeting with the opportunity to make a statement if such
representative so desires and will also be available to respond to appropriate
questions from shareholders.
Unless contrary instructions are noted on the proxy, it will be voted to ratify
the selection by the Board of Directors of Ernst & Young LLP as independent
public auditors for the fiscal year ending October 31, 1996. The affirmative
vote of the holders of a majority of the voting shares represented at the
meeting is required for such ratification.
ANNUAL REPORT TO SHAREHOLDERS
The annual report of the Company and its subsidiaries for the fiscal year ended
October 31, 1995, including financial statements reflecting the financial
position and operations of the Company and its subsidiaries for that year, is
being mailed to shareholders simultaneously with this Proxy Statement. The
annual report is not deemed to have been filed with the Securities and Exchange
Commission and is not part of this proxy solicitation.
1997 ANNUAL MEETING OF SHAREHOLDERS
The deadline for receipt of shareholders' proposals for inclusion in the
Company's 1997 proxy material is October 1, 1996.
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995, MAY BE
OBTAINED BY SHAREHOLDERS AFTER JANUARY 31, 1996 WITHOUT CHARGE, ON WRITTEN
REQUEST DIRECTED TO THE SECRETARY, COMMERCIAL INTERTECH CORP., P. O. BOX 239,
YOUNGSTOWN, OHIO 44501.
28
<PAGE>
EXHIBIT 99.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of July 27, 1994, by and between
COMMERCIAL INTERTECH CORP., an Ohio corporation (the "Company"), and PAUL J.
POWERS ("Executive").
RECITALS
WHEREAS, Executive is and has been serving as Chairman of the
Company's Board of Directors (the "Board") and Chief Executive Officer of the
Company and is an integral part of its management;
WHEREAS, Executive and the Company are parties to an employment
agreement dated February 15, 1988 (the "1988 Employment Agreement") which
provides for an original five year term with annual one-year renewals thereafter
unless either party gives to the other one year's advance notice of his or its
intention not to extend the term of the 1988 Employment Agreement;
WHEREAS, Executive will attain age 65 in February of 2000 and
presently intends to continue in the Company's employ until that time, to retire
from his full-time employment with the Company on February 28, 2000, and the
Company wishes to assure itself of Executive's continued full-time employment
through the Executive's anticipated retirement date;
WHEREAS, the Company wishes to ensure that Executive will not compete
with the Company for a period of two years after the last date on which he is
either an employee of the Company or a member of the Board; and
WHEREAS, Executive is prepared to enter into this employment agreement
with the Company and to give the Company assurances it desires;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein set forth, the parties hereto have agreed and do hereby
mutually agree as follows:
1. Employment, Contract Period. During the period specified in this
Section 1, the Company shall employ Executive, and Executive shall serve the
Company, on the terms and subject to the
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<PAGE>
conditions set forth herein. The term of Executive's employment hereunder shall
commence as of July 27, 1994 (the "Effective Date"), and, subject to prior
termination as provided in Section 6 hereof, shall continue through February 28,
2000. The term of Executive's employment hereunder is sometimes hereinafter
referred to as the "Contract Period."
2. Responsibility. At all times during the Contract Period, Executive
shall serve the Company as the Company's Chairman and Chief Executive Officer
and shall (a) devote his full business time and effort exclusively to the
performance of duties as assigned to him by the Board that are normally incident
to the office of Chief Executive Officer, and (b) use his best efforts to
promote the interests of the Company and its affiliates.
3. Remuneration. At all times during the Contract Period, the Company
shall pay to Executive compensation as provided in this Section 3.
(a) Base Salary. The Corporation shall pay Executive a base salary at
an annual rate of not less than $465,000 paid on a monthly basis. The
annual rate of base salary may be increased at the discretion of the
Compensation Committee of the Board (the "Committee"). If increased, the
annual rate of base salary may not thereafter be decreased during the term
of this Agreement.
(b) Annual Incentive Compensation. The Corporation may pay Executive
an annual cash bonus under the provisions of the Company's Management
Incentive Plan or any successor plans, but only if and when authorized by
the Committee.
(c) Performance Shares. If, while Executive remains employed pursuant
to this Agreement, the Company, in its fiscal year ending October 31, 1995,
makes grants of Performance Shares under the Company's Performance Share
Plan (with respect to the three-year performance period ending on October
31, 1997), the Company shall then grant not fewer than 28,500 of such
Performance Shares to Executive. If, while Executive remains employed
pursuant to this Agreement, the Company, in its fiscal year ending October
31, 1997, makes grants of Performance Shares under the Company's
Performance Share Plan (with respect to the three-year performance period
ending on October 31, 1999), the Company shall then grant not fewer than
28,500 of such Performance Shares to Executive.
- 2 -
<PAGE>
(d) Restricted Shares. The Company shall grant to Executive,
effective as of the Effective Date, 25,000 restricted shares of the
Company's Common Stock pursuant to the Company's Stock Option and Award
Plan of 1993 subject to the condition that Executive shall forfeit the
shares unless Executive actually remains in the active employ of the
Company through February 28, 2000.
(e) Other Compensation. Executive shall be eligible to participate in
other incentive, stock option, profit sharing, and similar plans maintained
by the Company for the benefit of its executives.
(f) Deferral. The Committee may, in its discretion, give Executive
the opportunity to defer a portion of his cash compensation.
4. Employee Benefits. Executive shall be included, to the extent
eligible thereunder with respect to the requirements applicable to all employees
eligible thereunder, (at the expense of the Company, if appropriate) under any
and all existing plans (and any plans that later may be adopted) providing
benefits for the Company's employees. These plans, include, but are not limited
to:
(a) The Company's group life insurance plan, under which Executive
shall be eligible for life insurance equal to four times his then-current
base salary as defined in Section 3(a) or the Group Replacement Insurance
Plan, at Executive's option.
(b) The Company's hospitalization and medical plans, as provided to
all Company employees.
(c) The Company's long-term disability plan, as provided to all
Company employees.
(d) Any pension, thrift plans, profit-sharing plans, stock purchase
plans, and any and all other similar or comparable benefits.
(e) The SERP and any other supplemental executive retirement plan or
excess benefit plan.
Executive shall also be provided with a suitable automobile leased by the
Company under the terms of the Company's executive automobile program, paid
vacation of at least four weeks per year, officers' and directors' liability
insurance coverage in an amount reasonably available, and estate planning
counsel.
- 3 -
<PAGE>
5. Amendment of SERP. The Company and Executive shall take such steps
as are necessary to amend the supplemental executive retirement plan applicable
to Executive (the "SERP") so that:
(a) the Executive's rights under the SERP will be scheduled to fully
vest and to be fully funded by the Company in a rabbi trust if and when
Executive attains age 65 while employed by the Company;
(b) if Executive dies after attaining age 62 but before attaining age
65, the Executive's rights under the SERP will be vested and funded by the
Company in the same manner as if he had attained age 65 while employed by
the Company;
(c) if Executive dies before attaining age 62, the surviving spouse
benefit under the SERP shall be calculated as though the SERP had been
scheduled to fully vest when Executive attained age 62 rather than when he
attained age 65 and any reduction attributable to Executive's death before
the date of full vesting shall be made on that basis; and
(d) the aggregate of payments to Executive under the SERP and under
the Company's qualified retirement plan will equal 50 percent of the
average of the high three of Executive's last 10 years of annual
compensation (base salary plus annual incentive payments).
6. Termination.
(a) On February 28, 2000. If not earlier terminated, Executive's
employment hereunder shall terminate at the close of business on February
28, 2000.
(b) Death or Disability. Executive's employment hereunder will
terminate immediately upon Executive's death. The Company may terminate
Executive's employment hereunder immediately upon giving notice of
termination if Executive is disabled, by reason of physical or mental
impairment, to such an extent that he has been unable to substantially
perform his duties under this Agreement for an aggregate of 180 days
(whether business or non-business days and whether or not consecutive)
during any period of twelve consecutive calendar months.
- 4 -
<PAGE>
(c) For "Cause." The Company may terminate Executive's employment
under this Agreement for "Cause" only on the basis of:
(i) Executive's willful and continued failure substantially to perform
his duties with the Company, after a written demand for substantial
performance is delivered to Executive by the Board, which written demand
specifically identifies the manner in which the Board believes Executive
has not substantially performed his duties, or
(ii) Executive's willful engagement in conduct materially and
demonstrably injurious to the Company.
For purposes of this Agreement, no act or failure to act on Executive's
part shall be considered "willful" unless done, or omitted to be done, by
Executive not in good faith and without reasonable belief that his action
or omission was in the best interest of the Company. Executive shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to Executive a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds of the entire membership of
the Board at a meeting of the Board called and held for that purpose,
finding that in the good faith opinion of the Board, Executive was guilty
of conduct set forth in clause (i) or clause (ii) of this subsection 6(c)
and specifying the particulars thereof in detail. No termination of
Executive's employment by the Company for "Cause" shall be effective unless
and until it is communicated by the Company to Executive by a written
notice that refers to either or both of clause (i) and clause (ii) of this
subsection 6(c) as the specific termination provision or provisions relied
upon by the Company and that sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision or provisions so indicated.
(d) Without "Cause". The Company may terminate Executive's employment
under this Agreement without "Cause" at any time, effective at such time as
the Board may specify in a motion duly adopted by the affirmative vote of
two-thirds of the members of the Board then in office.
7. Compensation and Benefits Following Termination Without "Cause".
If the Company terminates Executive's employment under this Agreement without
"Cause:"
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<PAGE>
(a) the Company shall pay to Executive, in immediately
available funds, within 10 days of the date of termination of Executive's
employment, a lump sum amount that:
(i) if the termination occurs on or before September 30, 1997, is
equal to the sum of (A) 30 months' of base salary at the highest rate
paid to Executive before the termination, plus (B) two and one-half times
the average of the annual cash bonuses, if any, received by Executive
under the provisions of the Company's Management Incentive Plan or any
successor plan with respect to each of the two most recent fiscal years
of the Company ended before the termination, or
(ii) if the termination occurs after September 30, 1997, is equal to
the sum otherwise determined under clause (a)(i), above, multiplied by a
fraction, the numerator of which is the number of calendar months all or
any part of which falls within the period beginning on the date of the
termination and ending on February 28, 2000 and the denominator of which
is 30;
(b) the restrictions on any restricted shares held by Executive
immediately before the termination of his employment shall terminate
simultaneously with the termination of his employment;
(c) any options to purchase shares in the Company held by Executive
immediately before the termination of his employment that were not
otherwise exercisable by Executive shall be exercisable by Executive at any
time during the 90 day period beginning immediately after the date of
termination of his employment; and
(d) except for the post-termination health benefits referred to in
Section 10 of this Agreement, the Company shall not be obligated to pay any
compensation, benefits, or perquisites to Executive by reason of this
Agreement after the termination of his employment.
If Executive receives any payments under this Agreement as a result of
termination of his employment following a termination without Cause, those
payments shall be in lieu of any and all other claims or rights that Executive
may have for severance, separation, and/or salary continuation pay upon that
termination of his employment. Nothing in this Section 7 shall diminish
Executive's right to receive any payment or to enjoy any benefit required to be
paid or provided by the Company to Executive under any plan, practice, or
commitment of the Company that would have
- 6 -
<PAGE>
continued after the termination of Executive's employment under this Agreement
if Executive's employment with the Company had continued through February 28,
2000 and then terminated.
8. Compensation and Benefits Following Termination on Account of
Disability. If the Company terminates Executive's employment under this
subsection 6(c) of this Agreement by reason of Executive's disability:
(a) the Company shall pay and provide to Executive, not later than 75
days after the end of the fiscal year in which the termination occurs,
that portion of the total bonus, if any, to which he would have been
entitled had he continued to be employed under this Agreement through
the end of the fiscal year in which the termination occurs, equal to
that total bonus multiplied by a fraction, the numerator of which is
the number of days in the fiscal year ending on or before the date of
Executive's termination and the denominator of which is 365;
(b) the restrictions on any restricted shares held by Executive
immediately before the termination of his employment shall terminate
simultaneously with the termination of his employment; and
(c) except for the post-termination health benefits referred to in
Section 10 of this Agreement, the Company shall not be obligated to pay
any compensation, benefits, or perquisites to Executive by reason of
this Agreement after the termination of his employment.
Nothing in this Section 8 shall diminish Executive's right to receive any
payment or to enjoy any benefit required to be paid or provided by the Company
to Executive under any plan, practice, or commitment of the Company that would
have continued after the termination of Executive's employment under this
Agreement if Executive's employment with the Company had continued through
February 28, 2000 and then terminated.
9. Miscellaneous Services following Termination of Employment.
Following termination of his full-time employment under this Agreement and for
so long as Executive remains a member of the Board, Executive shall make himself
available at all reasonable times for consultation by and with the Company's
officers and directors. If Executive is called upon to render services of this
nature, he shall, in consideration therefor and as a condition thereto, receive
reasonable
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<PAGE>
compensation for the services rendered and reimbursement for any travel or other
out-of-pocket expenses incurred in connection therewith.
10. Post-Retirement Health Benefits. If Executive remains in the
employ of the Company through February 28, 2000 or is terminated by the Company
before that date either on account of Executive's disability or without cause,
the Company shall provide to Executive, for so long as he lives and thereafter,
if she survives him, to his wife, Barbara, for her life, health benefits,
including hospitalization and medical insurance, equal to the health benefits
from time to time provided to active executive employees of the Company.
11. Benefit. This Agreement shall inure to the benefit of and be
enforceable by Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If
Executive should die while any amounts are still payable to Executive hereunder,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Executive's devisee, legatee, or other
designee or, if there be no such designee, to Executive's estate.
12. Successor to the Company. The Company shall require any successor
or assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all the business and/or assets of the
Company, by agreement in form and substance satisfactory to Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place.
13. Confidential Information and Noncompetition. Executive agrees and
acknowledges Executive's talents, skills, and experience are unique, and that
Company has invested considerable efforts and money in developing and compiling
customer lists, supplier lists, and trade and market information, in developing
business techniques and practices, and in maintaining valuable market
relationships; that such items and all other information that relates to the
business of the Company, the business of any customer or supplier of the
Company, or the business of any person, firm, or corporation that consults with
or is affiliated with the Company, constitute for purposes hereof the
"Confidential Information" of the Company; and that the Confidential Information
is valuable property of the Company and is vital to the operation and
continuation of the Company's business. Confidential Information shall not
include information so generally known as to be part of the public domain.
Executive acknowledges that the Company has and will disclose Confidential
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<PAGE>
Information to Executive and afford him access to Confidential Information in
connection with his employment with the Company. Executive agrees that he shall
use such Confidential Information solely for the benefit of the Company.
Executive further acknowledges that the grant of 25,000 restricted shares
referred to in Section 3(d) is being made by the Company in order to induce
Executive to agree to the restrictions contained in this Section 13 and that
Executive has received valuable consideration commensurate with those
restrictions. Accordingly, Executive agrees and acknowledges that:
(a) Except as required in the performance of his duties as an employee
of the Company, Executive shall not at any time, either directly or
indirectly, use, divulge, disclose, or communicate to any person, firm, or
corporation in any manner whatsoever any Confidential Information.
(b) Executive has been given access to the Company's Confidential
Information solely for purposes relating to his employment by the Company.
Executive shall have no rights in such Confidential Information or any
letters patent, copyrights, or other proprietary rights relating thereto,
and Executive hereby assigns to the Company any supplemental or additional
information relating to the Confidential Information acquired by Executive,
whether solely or in collaboration with others, that relates in any manner
to either the subject of Executive's work for the Company or any business
of the Company during the Contract Period ("Improvements"). Executive will
disclose promptly in writing to the Company all such Improvements or
information supplemental or related thereto, and such Improvements shall be
treated for all purposes as Confidential Information hereunder.
(c) During the Contract Period and thereafter, at the request of the
Company and without expense to Executive, Executive shall cooperate in the
procurement of any patent, copyright, trademark, or trade name protection
in the Company's name that may be necessary or desirable to vest, or to
perfect the record of, title to the Confidential Information in the
Company. Executive agrees to execute all documents and do all things
necessary or desirable in any controversy or otherwise to aid Company in
obtaining and enforcing proper protection of its Confidential Information.
(d) During the period commencing on the Effective Date and ending on
the second anniversary of the first date on which Executive is neither
employed by the Company nor a member of the
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<PAGE>
Board (the "Restriction Period"), Executive shall not, directly or
indirectly, own, operate, have any other than a minor financial interest
in, be employed by, or in any other manner take part in or consult with any
business that is the same as, similar to, or competitive with the business
of the Company as such business is conducted during the Contract Period.
During the Restriction Period, Executive shall not solicit (other than for
the benefit of the Company during the Contract Period) any sale or purchase
to or from any person who is or was a customer or supplier of the Company
during the term of Executive's employment by the Company, either as an
employee, agent, consultant, licensee, independent contractor, owner, or
otherwise.
(e) At any time upon request of the Company and upon termination of
his employment by the Company, Executive shall deliver to the Company, and
shall not retain for his own or another's use, any and all lists,
information, notes, memoranda, documents, devices, and any other material,
and all copies thereof, relating to Executive's work or the products or
business of the Company of which Executive had knowledge.
(f) If any provision of this Section 13 is determined by any court of
competent jurisdiction to be unenforceable by reason of its extending for
too great a period of time or over too great a geographical area, it shall
be interpreted to extend only over the maximum period of time for which it
may be enforceable, or over the maximum geographical area to which it may
be enforceable, or both; and such partial unenforceability shall not affect
any other provision of this Agreement. Executive acknowledges that, in
light of the proprietary interest of the Company in the Confidential
Information, the restrictions set forth herein are reasonable and that the
remedies at law for the breach of any provision of this Section 13 are
inadequate. Accordingly, in the event of any breach, or reasonable belief
as to the existence or imminence of a breach, of the provisions hereof, the
Company shall be entitled to injunctive relief to enjoin the breach (in
addition to any other legal and equitable remedies that the Company may
have, including an equitable accounting of gain to Executive resulting from
the breach), together with all costs and expenses, including reasonable
attorney's fees, related to the enforcement by the Company of its rights
hereunder.
14. Anti-dilution. If, at any time after the Effective Date and before
the date on which any grant of Performance Shares is to be made to Executive
pursuant to Section 3(c), above, there occurs any stock dividend, stock split,
or share combination of the shares of Common
- 10 -
<PAGE>
Stock of the Company or any reclassification, recapitalization, merger,
consolidation, other form of business combination, liquidation, or dissolution
involving the Company or any spin-off or other distribution to shareholders of
the Company (other than normal cash dividends), the number of shares of the
Company's Common Stock to be granted as Performance Shares shall be
appropriately adjusted to the extent necessary and in such manner that the
benefit to Executive of the grant of those Performance Shares is maintained
substantially as before the occurrence of the event.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Legal Fees and Expenses. The Company shall pay all legal fees and
expenses that Executive may incur as a result of the Company's contesting the
validity, enforceability, or Executive's interpretation of, or determinations
under, this Agreement.
18. Notices. All notices under this Agreement shall be in writing and
shall be deemed effective when delivered in person, or three days after deposit
thereof in the official U.S. mails, postage prepaid, for delivery as registered
or certified mail, addressed as follows:
If to the Company:
Commercial Intertech Corp.
Attention: General Counsel
1775 Logan Avenue
Youngstown, Ohio 44501
If to Executive:
Paul J. Powers
5469 Bay Hill Drive
Canfield, Ohio 44406
- 11 -
<PAGE>
In lieu of personal notice or notice by deposit in the official U.S. mails, a
party may give notice by confirmed telegram or fax. Either party may change the
address to which notice to that party may be mailed by notifying the other party
of the change in the manner contemplated in this section.
19. Effect on Existing Severance Compensation and Consulting
Agreement. Executive and the Company are parties to a Severance Compensation and
Consulting Agreement dated as of February 15, 1988, pursuant to which Executive
may become entitled to severance and consulting compensation if Executive's
employment is terminated under certain circumstances following a Change in
Control, as defined in that agreement (the "Change in Control Agreement").
Executive and the Company intend that if a Change in Control, as defined in the
Change in Control Agreement, occurs and thereafter Executive receives any
payments pursuant to Section 7 of this Agreement (any "Section 7 Payments"), the
entire amount of such Section 7 Payments will be treated as "actual damages paid
to the Executive by the Company as a result of the Company's breach of an
employment contract with the Executive" within the meaning of that phrase in
Section 4(b)(i) of the Change in Control Agreement, with the result that the
payments otherwise due under that Section 4(b)(i) will be reduced by the full
amount of the Section 7 Payments. In addition, if the amount of the Section 7
Payments exceeds the amount otherwise due under Section 4(b)(i) of the Change in
Control Agreement, any amount otherwise payable to Executive under Section 5(b)
of the Change in Control Agreement shall be reduced by the amount of that
excess. The provisions of this Section 18 shall prevail over any inconsistent
language in the Change in Control Agreement and, to the extent necessary to be
effective, shall be deemed to be an amendment to the Change in Control
Agreement.
20. Entire Agreement. This Agreement amends and restates the
Employment Agreement between Executive and the Company dated as of February 15,
1988. This Agreement expresses the entire agreement of the parties with respect
to the subject matter hereof, and all promises, representations, understandings,
arrangements, and prior agreements are merged herein and superseded hereby. No
person, other than pursuant to a resolution of the Board, shall have any
authority on behalf of the Company to agree to modify or change this Agreement
or anything in reference thereto, and any such modification or change must be in
writing and signed by both parties.
- 12 -
<PAGE>
21. Governing Law. This Agreement has been entered into in, and is
intended to be performed primarily within, the State of Ohio, and shall be
construed, interpreted, and governed in accordance with the laws of the State of
Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EXECUTIVE COMMERCIAL INTERTECH CORP.
/s/Paul J. Powers By: /s/Bruce C. Wheatley
- -------------------- -----------------------------
Paul J. Powers 12/14/1994
----------
----------
- 13 -
<PAGE>
EXHIBIT 99.5
COMMERCIAL INTERTECH
- --------------------
Don E. Tucker
Senior Vice President
May 18, 1992
Mr. Bruce C. Wheatley
7959 Oakridge Drive
Mentor, OH 44060
Dear Bruce:
This will confirm the employment offer by Commercial Intertech to you which we
discussed this week. Your base salary will be $200,000 per year and employment
will commence July 1, 1992. You will participate in Commercial's Salaried
Employee Incentive Plan with a target amount of 30% of your base salary and a
maximum annual award of 45% of that salary. For fiscal 1992, which ends October
31, 1992 you will participate pro rata, i.e., you will receive one-third of the
annual amount generated by the plan. I will discuss the details of the operation
of the plan at your convenience.
Your position with Commercial will be Vice President, reporting to Paul
Powers, Chief Executive Officer. As corporate officers must be elected by the
Board of Directors this action will be recommended to our board as soon as
practicable after your acceptance. Your responsibilities will be as explained to
you in our several conversations. Basically, these encompass the administrative
areas of the Company except legal and corporate secretarial and include employee
relations, labor relations, safety and security, salary administration, office
management, corporate communications, advertising, public relations and
shareholder relations.
Commercial will pay your initiation fees for The Youngstown Country Club and
The Youngstown Club. The stock which must be purchased in the country club in
order to be a golfing member must be paid for by you (approximately $800) and
the Certificate will be issued in your name, to be sold by you if and when you
leave the club. Dues for both clubs will also be paid by Commercial, although
assessments will be your expense.
<PAGE>
You will be eligible for an automobile pursuant to the Company's executive
leased auto program. I will also explain the details of this program at your
convenience.
A grant of 2500 restricted shares of Commercial Intertech Common stock will be
made to you conditioned only upon your continued employment by the Company for
five years. Another 2500 restricted shares, conditioned on continued employment,
but also conditioned upon the Company achieving certain objectives during the
five year restricted period, will be granted to you around the first of the
year. During the five year restricted periods you will receive dividends and
vote the shares, although the share certificates will be legended and held in
escrow by our Corporate Secretary. You will also be granted a non-qualified
stock option for 5000 shares of Commercial stock for ten years, exercisable one-
half in two years and one-half in three years. The price will be the fair
market value on the date of the grant. Both the restricted share awards and the
stock options must be authorized by the Compensation Committee of the Board of
Directors and recommendations will be made to that committee upon your
acceptance of the offer.
Commercial agrees to employ you for three years providing you liquidated
damages of one year's base salary in the event you are terminated for any reason
other than cause during that time. You also will be provided a severance
compensation agreement guaranteeing you two year's compensation in the event you
are terminated after a change in control of the Company.
You will participate in Commercial's various benefit programs as soon as your
eligibility can be established. Among these programs are our 401(k) and non-
qualified savings and stock purchase plan through which the company will match,
at $.50 per $1.00 up to six per cent of your base pay if you choose to
participate. You will be eligible for four week's vacation annually.
Supplemental pension benefits will provide you with a "full" pension at age 65
although you will at that time have accrued only 15 years of the 25 years
required under Commercial's current pension plan for a "full" pension of 50% of
salary less 50% primary social security.
You have been provided information concerning Commercial's benefits and I will
be glad to answer any questions you may have about these programs.
<PAGE>
One last point. As we discussed, it will be necessary for you to complete a
full physical examination to the satisfaction of our company physician before
you can be employed. Therefore, this offer is conditioned upon the satisfactory
completion of such a physical.
Bruce, I hope you find this proposal acceptable. I look forward to your coming
aboard.
Very truly yours,
/s/ Don E. Tucker
Accepted and agreed to this 21st day of May, 1992.
/s/ Bruce C. Weatley
<PAGE>
EXHIBIT 99.6
[LETTERHEAD OF COMMERCIAL INTERTECH]
December 3, 1993
Personal and Confidential
- -------------------------
Mr. Mark G Kachur
29 School Lane
Lloyd Harbor
Long Island, NY 11743
Dear Mark:
On behalf of Commercial Intertech S.A. of Diekirch, Grand Duchy of Luxembourg,
I am pleased to extend an offer of employment, the terms of which are detailed
as follows:
Title:
Senior Vice President-Asian Marketing, reporting to Chairman of Commercial
Intertech S.A. June 1, 1994 - Senior Vice President-Fluid Purification
June 1, 1994 - Senior Vice President-Fluid Purification Group, reporting to
Chairman of Commercial Intertech Corp.
Responsibilities:
Until June 1, 1994, your duties will include developing new markets in
hydraulics and metals directed to Asian, Far East and Pacific Rim
countries. Specifically excluded from duties are any active
--------
responsibilities in the Fluid Purification Group.
June 1, 1994 and thereafter, duties will include direction of worldwide
activities of Fluid Purification Group.
Base of Operations:
Until June 1, 1994, Diekirch, Grand Duchy of Luxembourg. June 1, 1994 and
thereafter, Meriden, Connecticut.
Length of Employment Agreement:
While it is our desire that you will finish your business career with us,
this initial employment agreement, per your request, is for a three-year
period.
<PAGE>
-2-
Compensation (base salary and bonus paid on an October 31 fiscal year-end
basis):
Fiscal Year 1 - base salary of $240,000 plus $120,000 signing bonus paid
in December 1994, salary will be prorated based upon date of employment.
Fiscal Year 2 - base salary to be adjusted in accordance with external
compensation consultants' recommendations plus second year guaranteed
signing bonus, the combined total of which will be no less than
$325,000, exclusive of participation in the salaried incentive plan
(bonus plan).
Fiscal Year 3 - base salary to be adjusted in accordance with external
compensation consultants' recommendations (no less than $265,000).
Salaried Incentive Plan:
40% of base salary target level with maximum 60% upon achievement of
performance goals; eligibility in second year of employment.
Stock Awards:
7,500 Restricted Shares granted conditioned only by continued employment
by the Company for five years. During the five-year restricted period,
you will receive dividends and vote the shares although the share
certificates will be legended and held in escrow by the Corporate
Secretary. If you should leave the employment of the Company at the end
of your three-year agreement, Commercial would waive the continued
employment requirement on 60 percent of the 7,500 shares.
Options to Purchase Shares:
Year 1 10,000
Year 2 10,000
Year 3 15,000
Non-qualified stock option grants for 10 years, exercisable one-half in
two years and one-half in three years. The price will be the fair market
value on the date of the grant.
Performance Shares - 8,000 shares to be granted in January 1995
conditioned upon the achievement of certain performance goals over a
three-year time horizon.
Relocation:
Customary key executive reimbursement for moving expenses and normal
costs associated with the purchase of residence
<PAGE>
-3-
in Connecticut and the sale of two residences (Charlottesville, Virginia
in 1994 and Long Island, New York in 1995.)
Additionally, the Company agrees to provide reasonable temporary
residence cost reimbursement, subject to final approval by the Chairman
and Chief Executive Officer, in Connecticut until June of 1995.
Automobile Allowance:
$805 per month plus use of gasoline credit card - certain guidelines on
choice of automobile apply.
Benefit Programs:
Participation in various benefit programs as soon as eligibility
requirements are fulfilled.
Such programs include salaried pension plan, 401(k), non-qualified
savings and stock purchase plan, medical, hospitalization, life,
disability, and accidental death and dismemberment insurance. Some
modest contributions on your part may be required depending upon
selected coverage levels.
Supplemental Executive Retirement Plan:
The Company agrees to provide a SERP utilizing base salary based upon
actual years of employment accrued at age 65.
Vacation:
Four weeks per year until retirement.
Indemnification:
If you join Commercial Intertech S.A. prior to May 23, 1994, Company
agrees to indemnify and defend you against costs and damages associated
with alleged breach of covenant not to compete against your former
employer, Pall Corporation.
If said former employer litigates and is successful in preventing your
employment with Commercial Intertech S.A., Company will compensate you
with your monthly base compensation until June 1, 1994, or whenever
restriction is lifted, whichever occurs first. During this restricted
period, Commercial will provide reimbursement for your medical coverage
(COBRA) as well as the monthly automobile allowance.
Covenant Not To Compete Against Commercial Intertech Corp.:
During the three-year contract and thereafter, you agree not to provide
services to any entity considered by the Company
<PAGE>
-4-
to be a competitor for no more than two years following voluntary or
involuntary termination from Company. For each year of such covenant not
to compete, you will receive a year's base compensation, appropriate
bonus and benefits. (Upon commencement of duties, you will be required
to execute the Company's standard Key Executive Agreement setting forth
confidentiality and non-competition obligations.)
Change of Control:
In the event of termination after a change of control of the Company,
you will be provided the Company's standard severance compensation
agreement guaranteeing two year's base compensation.
Mark, I hope you find this proposal acceptable. If you agree with the
terms of this letter, please sign the acceptance on a copy of the letter
and return it to me.
We look forward to your coming aboard!
Sincerely,
/s/ PAUL J. POWERS
Paul J. Powers
PJP/sms
Acceptance
----------
The above terms and conditions are accepted this 4 day of December, 1993.
/s/ MARK G. KACHUR
<PAGE>
EXHIBIT 99.7
SEVERANCE COMPENSATION AND CONSULTING
AGREEMENT dated as of February 15, 1988,
between COMMERCIAL SHEARING, INC., an Ohio corporation
(the "Company"), and PAUL J. POWERS (the Executive").
WHEREAS the Company's Board of Directors has determined that, in light of
the importance of the Executive's continued services to the stability and
continuity of management of the Company and its subsidiaries, it is appropriate
and in the best interests of the Company and of its shareholders to reinforce
and encourage the Executive's continued disinterested attention and undistracted
dedication to his duties in the potentially disturbing circumstances of a
possible change in control of the company by providing some degree of personal
financial security;
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company (a "Subsidiary"), the Company's Board of
Directors has determined that it is desirable to pay the Executive the severance
compensation set forth below if the Executive's employment with the Company or a
Subsidiary terminates in one of the circumstances described below following a
Change in Control of the Company (as defined below); and
<PAGE>
WHEREAS the Company's Board of Directors has determined that, in the event
of such a termination of the Executive's employment following a Change in
Control, it would be desirable to utilize the valuable knowledge and experience
which the Executive possesses by retaining the Executive as a consultant to the
Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the Company and the Executive agree as follows:
1. Term of Agreement. This Agreement shall commence on the date hereof and
-----------------
shall terminate, except to the extent that any obligation of the Company under
this Agreement remains unpaid as of such time, on the earlier to occur of the
date on which the Executive reaches age 65 and the date five years from the date
of this Agreement; provided that this Agreement shall continue in effect until
the earlier to occur of the date on which the Executive reaches age 65 and the
date two years beyond the date of termination of this Agreement as provided
above if a Change in Control of the Company (as defined below) shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this
Agreement shall remain unpaid).
It is further provided, however, that commencing on the date five years
after the date of this Agreement and each anniversary date of the Agreement
thereafter (unless the Executive
-2-
<PAGE>
has attained age 65), the term of this Agreement shall automatically be
extended for one additional year unless not later than 365 days prior to the
date five years after the date of this Agreement or subsequent anniversary date
the Company or the Executive shall have given written notice of intention not to
extend this Agreement.
2. Change in Control. No compensation shall be payable under this Agreement
-----------------
and the Executive shall not be retained as a consultant pursuant to Section 5
unless and until (a) there shall have been a Change in Control of the Company
while the Executive is still an employee of the Company or a Subsidiary and (b)
the Executive's employment by the Company or a Subsidiary thereafter shall have
been terminated in accordance with Section 3 of this Agreement. For purposes of
this Agreement, a "Change in Control" shall be deemed to have occurred if (i)
there shall be consummated (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of the Company's Common Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's Common Stock immediately prior to the merger have
substantially the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, of (B) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of
-3-
<PAGE>
the Company, or (ii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company, or (iii) any person
(as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other than the Company or a
Subsidiary or any employee benefit plan sponsored by the Company or a
Subsidiary, shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing in special circumstances) having the
right to vote in the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or otherwise, or
(iv) at any time during a period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the Company
shall cease for any reason to constitute at least a majority thereof, unless the
election or the nomination for election by the Company's shareholders of each
new director during such two-year period was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the beginning
of such two-year period.
3. Termination Following Change in Control.
---------------------------------------
(a) If a Change in Control of the Company shall have
-4-
<PAGE>
occurred while the Executive is still an employee of the Company or a
Subsidiary, the Executive shall be entitled to the compensation provided in
Section 4 of this Agreement upon the subsequent termination of the Executive's
employment with the Company or Subsidiary within two years of the date upon
which the Change in Control shall have occurred unless such termination is as a
result of (i) the Executive's death; (ii) the Executive's Disability (as defined
in Section 3(b) below); (iii) the Executive's Retirement (as defined in Section
3(c) below); (iv) the Executive's termination by the Company for Cause {as
defined in Section 3(d) below); or (v) the Executive's decision to terminate
employment other than for Good Reason (as defined in Section (e) below).
(b) Disability. If, as a result of the Executive's incapacity due to
----------
physical or mental illness, the Executive shall qualify for benefits under the
Company's short-term disability plan or long-term disability plan and shall have
been absent from his duties with the Company or a Subsidiary on a full-time
basis for a continuous period of six months commencing with the date of Change
in Control of the Company or the first day of such absence (whichever is later)
and if, within 30 days after written notice of termination is thereafter given
by the Company or Subsidiary, the Executive shall not have returned to the full-
time performance of the Executive's duties, the Company or Subsidiary may
terminate
-5-
<PAGE>
the Executive's employment for "Disability" without the Executive's being
entitled to the Compensation provided in Section 4.
(c) Retirement. The term "Retirement" as used in this Agreement shall
----------
mean termination by the Company or a Subsidiary or the Executive of the
Executive's employment based on the Executive's having reached age 65.
Termination based on "Retirement" shall not include, for purposes of this
Agreement, the Executive's taking of early retirement by reason of a termination
by the Executive of his employment for Good Reason.
(d) Cause. The Company or a Subsidiary may terminate the Executive's
-----
employment for Cause without the Executive's being entitled to the compensation
provided in Section 4. For purposes of this Agreement, the Company or Subsidiary
shall have "Cause" to terminate the Executive's employment only on the basis of
----
(i) the Executive's wilful and continued failure substantially to perform his
duties with the Company or Subsidiary (other than any such failure resulting
from his incapacity due to physical or mental illness or any such failure
resulting from the Executive's termination for Good Reason), after a written
demand for substantial performance is delivered to the Executive by the
Company's Board of Directors which specifically identifies the manner in which
such Board of Directors believes that the
-6-
<PAGE>
Executive has not substantially performed his duties, or (ii) the Executive's
wilful engagement in conduct materially and demonstrably injurious to the
Company or Subsidiary. For purposes of this subsection, no act or failure to act
on the Executive's part shall be considered "wilful" unless done, or omitted to
be done, by the Executive not in good faith and without reasonable belief that
his action or omission was in the best interest of the Company or Subsidiary.
The Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than two-thirds of the entire
membership of the Company's Board of Directors, at a meeting of the Board of
Directors called and held for the purpose, finding that in the good faith
opinion of the Board of Directors the Executive was guilty of conduct set forth
in clause (i) or (ii) of the second sentence of this Section 3(d) and specifying
the particulars thereof in detail.
(e) Good Reason. The Executive may terminate the Executive's
-----------
employment for Good Reason within two years after a Change in Control of the
Company and during the term of this Agreement and become entitled to the
compensation provided in
-7-
<PAGE>
Section 4. For purposes of this Agreement "Good Reason" shall mean any of the
following events unless it occurs with the Executive's express prior written
consent:
(i) the assignment to the Executive by the Company or a Subsidiary
of any duties inconsistent with, or a diminution of, the Executive's
position, duties, titles, offices, responsibilities and status with the
Company or Subsidiary immediately prior to a Change in Control of the
Company, or any removal of the Executive from or any failure to reelect the
Executive to any of such positions, except in connection with the
termination of the Executive's employment for Disability, Retirement or
Cause or as a result of the Executive's death or by the Executive other
than for Good Reason;
(ii) a reduction by the Company or a Subsidiary in the Executive's
base salary as in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement or the Company's or
Subsidiary's failure to increase (within 15 months of the Executive's last
increase in base salary) the Executive's base salary after a Change in
Control of the Company in an amount which is substantially similar, on a
percentage basis, to the average percentage increase in base salary for all
officers of the Company or the Subsidiary effected during the preceding 12
months, other than a reduction of the Executive's base salary
-8-
<PAGE>
pursuant to the terms of the Company's short-term disability plan or long-
term disability plan during a period in which the Executive is disabled
(within the meaning of such plan or plans) and qualifies for benefits under
such plan or plans;
(iii) except with respect to changes required to maintain its tax-
qualified status or changes generally applicable to all employees of the
Company, any failure by the Company or a Subsidiary to continue in effect
any benefit plan or arrangement (including, without limitation, the
Company's Pension Plan, group life insurance plan, medical, dental,
accident and disability plans and educational assistance reimbursement
plan) in which the Executive is participating at the time of a Change in
Control of the Company (or to substitute and continue other plans providing
the Executive with substantially similar benefits) (hereinafter referred
to as "Benefit Plans"), the taking of any action by the Company or a
Subsidiary which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan or
deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company, or the failure
by the Company or Subsidiary to provide the Executive with the number of
paid
-9-
<PAGE>
vacation days to which the Executive is entitled in accordance with the
vacation policies in effect at the time of a Change in Control of the Company;
(iv) any failure by the Company or a Subsidiary to continue in effect any
incentive plan or arrangement (including, without limitation, the Company's
Management Incentive Plan, annual bonus and contingent bonus arrangements and
credits and the right to receive performance awards and similar incentive
compensation benefits) in which the Executive is participating at the time of a
Change in Control of the Company (or to substitute and continue other plans or
arrangements providing the Executive with substantially similar benefits)
(hereinafter referred to as "Incentive Plans") or the taking of any action by
the Company or Subsidiary which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's benefits
under any such Incentive Plan in an amount which is not substantially similar,
on a percentage basis, to the average percentage reduction of benefits under any
such Incentive Plan effected during the preceding 12 months for all officers of
the Company or Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in effect any
plan or arrangement to receive securities of the Company (including, without
limitation, the
-10-
<PAGE>
Company's 1985 Stock Option Plan and any other plan or arrangement to receive
and exercise stock options, stock appreciation rights, restricted stock or
grants thereof or to acquire stock or other securities of the Company) in which
the Executive is participating at the time of a Change in Control of the Company
(or to substitute and continue plans or arrangements providing the Executive
with substantially similar benefits) (hereinafter referred to as "Securities
Plans") or the taking of any action by the Company or a Subsidiary which would
adversely affect the Executive's participation in or materially reduce the
Executive's benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices or the
Executive's relocation to any place other than the location at which the
Executive performed the Executive's duties prior to a Change in Control of the
Company;
(vii) a substantial increase in business travel obligations over such
obligations as they existed at the time of a Change in Control of the Company;
(viii) any material breach by the Company or a Subsidiary of any
provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company; or
-11-
<PAGE>
(x) any purported termination of the Executive's employment which
is not effected pursuant to a Notice of Termination satisfying the requirements
of Section 3(f).
(f) Notice of Termination. Any termination by the Company or a
---------------------
Subsidiary pursuant to Section 3(b), 3(c) or 3(d) or by the Executive pursuant
to Section 3(e) shall be communicated to the other party by a Notice of
Termination. For purposes of this Agreement, a "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision
in this Agreement relied upon and which 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. For purposes of this
Agreement, no such purported termination by the Company or Subsidiary shall be
effective without such Notice of Termination.
(g) Date of Termination. "Date of Termination" shall mean (a) if this
-------------------
Agreement is terminated by the Company or a Subsidiary for Disability, 30 days
after Notice of Termination is given to the Executive (provided that the
Executive shall not have returned to the performance of the Executive's duties
on a full-time basis during such 30-day period) or (b) if the Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given.
-12-
<PAGE>
(h) Expenses. The Company shall pay to the Executive all legal fees and
--------
expenses incurred by the Executive as a result of the termination of the
Executive's employment other than pursuant to Section 3(b), 3(c) and 3(d) or by
reason of death or for Good Reason (including all such fees and expenses, if
any, incurred in contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement).
4. Severance Compensation upon Termination.
---------------------------------------
(a) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or Subsidiary pursuant to Section 3(b), 3(c) or
3(d) or by reason of death or (ii) by the Executive other than for Good Reason,
the Executive shall not be entitled to any severance compensation under this
Agreement, but the absence of the Executive's entitlement to any benefits under
this Agreement shall not prejudice the Executive's right to the full realization
of any and all other benefits to which the Executive shall be entitled pursuant
to the terms of any employee benefit plans or other agreements of the Company or
Subsidiary in which the Executive is a participant or to which the Executive is
a party.
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<PAGE>
(b) If the Executive's employment by the Company or a Subsidiary is
terminated (a) by the Company or Subsidiary other than pursuant to Section 3(b),
3(c) or 3(d) or by reason of death or (b) by the Executive for Good Reason, then
the Executive shall be entitled to the severance compensation provided below:
(i) The Company shall pay as severance compensation to the Executive at
the time specified in subsection (ii) below, unless the Executive elects the
option set forth in subsection (v) below, a lump-sum severance payment
equal to two times the Executive's Annual Cash Compensation reduced by any
actual damages paid to the Executive by the Company as a result of the
Company's breach of an employment contract with the Executive. For purposes
of this Agreement, "Annual Cash Compensation" shall mean the sum of (x) the
Executive's annual base salary in effect at the time Notice of Termination
is given, and (y) an amount equal to the highest annual compensation paid in
the last three (3) calendar years as compensation under the Company's
management incentive compensation plan (or any successor plan). If the date
that is twelve (12) months after the Date of Termination occurs after the
Executive reaches age 63, such lump-sum severance payment shall be equal to
the Executive's Annual Cash Compensation multiplied by a fraction of which
the numerator
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<PAGE>
shall be the number of months from such date until the Executive reaches
age 65 and the denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i) above
shall be made not later than the 10th day following the Date of Termination;
provided, however, that, if the amount of such compensation cannot be
finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the
Company but subject to the provisions of subsection (c), of the minimum
amount of such compensation and shall pay the remainder of such compensation
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Internal Revenue Code of 1986, as amended (the "Code")) as soon as the
amount thereof can be determined but in no event later than the thirtieth
day after the Date of Termination. In the event that the amount of the
estimated payment exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to the Executive
payable on the fifth day after demand by the Company (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code).
(iii) The Company shall arrange to provide the Executive for a period
of twenty-four (24) months following the date that is twelve (12) months
after the Date of
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<PAGE>
Termination (or, if such date occurs after the Executive reaches age 63, for
a period equal to the number of months after such date until the Executive
reaches age 65) or until the Executive's earlier death, with life, health,
disability and accident insurance benefits and a package of "executive
benefits" (including use of an automobile and certain club memberships)
(collectively, "Employment Benefits") substantially similar to those which
the Executive was receiving immediately prior to the Notice of Termination.
(iv) During the term of this Agreement and through the period of twenty-
four (24) months following the date that is twelve months after the Date of
Termination (or, if such date occurs after the Executive reaches age 63,
for a period equal to the number of months after such date until the
Executive reaches age 65), all benefits (collectively, "Pension Benefits")
under the Pension Plan and any other plan or agreement relating to
retirement benefits shall continue to accrue to the Executive, crediting of
service of the Executive with respect to Pension Benefits shall continue and
the Executive shall be entitled to receive all Pension Benefits provided to
the Executive under the Pension Plan or any other plan or agreement relating
to retirement benefits. To the extent that the amount of any Pension
Benefits cannot take into account such accrual or crediting by reason of the
Executive's no longer being an employee of the Company during
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<PAGE>
such period, the Company shall itself pay to the Executive an amount equal
to the additional benefits that would have been provided had such
accrual or crediting been taken into account in calculating such Pension
Benefits. The obligation of the Company to provide any Pension Benefit
payment under the preceding sentence constitutes merely the unsecured
promise of the Company to make such payments from its general assets, and
the Executive shall have no interest in, or lien or prior claim upon, any
property of the Company or any Subsidiary with respect thereto.
(v) If the Executive so elects by notice to the Company not later than
six (6) months prior to the Date of Termination, in lieu of the lump-sum
severance compensation payment set forth in subsection (b) (i), for a
period of twenty-four (24) months from the date that is twelve (12) months
after the Date of Termination, the Company shall pay the Executive monthly
an amount equal to one twenty-fourth (1/24) of a total amount which, payable
over such period in such installments, would have discounted present value
equal to the amount of the lump-sum severance compensation payment set forth
in subsection (b) (i) ; provided, however, that, if the date that is twelve
(12) months after the Date of Termination occurs after the Executive reaches
age 63, for a period equal to the number of months from such date until the
Executive reaches age 65, the Company shall pay the Executive
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<PAGE>
in equal monthly installments a total amount which, payable over such period
in such installments, would have a discounted present value equal to the
amount of the lump-sum severance compensation payment as determined in
accordance with the provisions of subsection (b)(i).
(c) If after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the
Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4, either alone or
together with other payments to the Executive from the Company or a Subsidiary
(including, but not limited to, payments under the 1982 Plan), would
constitute a "parachute payment" (as defined in Section 280G of the Code), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this paragraph (c) is to apply shall be made by the Executive in
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<PAGE>
good faith after consultation with the Company, and such determination shall be
conclusive and binding on the Company. The Company shall cooperate in qood Eaitb
with the Executive in making such determination and in providing the necessary
information for this purpose.
5. Consultinq Agreement upon Termination and
-----------------------------------------
Agreement not to Compete.
- ------------------------
(a) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than pursuant to Section
3(b), 3(c) or 3(d) or by reason of death or (ii) by the Executive for Good
Reason, then the Company shall retain the Executive as a consultant for a period
commencing on the Date of Termination and ending the earlier of one year after
the Date of Termination and the date on which the Executive reaches age 65.
During such period, the Executive shall provide ongoing consulting services to
the Company as requested by the Company, including services substantially
similar to those which would have been performed by the Executive had the
Executive's employment not been terminated, and in such capacity, the Executive
will be an independent contractor and not an employee or agent of the Company.
Such consulting services shall not be required to be performed at a location
other than that at which the Executive's duties were performed prior to the Date
of Termination
-19-
<PAGE>
(b) In consideration for the Executive's agreement to provide
consultlng services, the Company shall pay to the Executive not later than the
tenth day following the Date of Termination (unless the Executive elects the
option set forth in Section 5(e)) an amount equal to the Executive's Annual Cash
Compensation; provided, however, that if the Executive's Annual Cash
Compensation cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day the estimated minimum amount of such
Annual Cash Compensation, as determined in good faith by the Company and (A) the
Company shall pay to the Executive any deficiency in such estimated amount as
soon as the Executive's Annual Cash Compensation can be finally determined but
in no event later than the thirtieth day after the Date of Termination or (B)
the Executive shall repay to the Company, not later than the tenth day after
demand by the Company, any excess of such estimated amount over the Executive's
Annual Cash Compensation as finally determined (in each case, together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code).
(c) The Company shall arrange to provide the Executive for a period of
twelve (12) months following the Date of Termination (or, if the Date of
Termination occurs after the Executive reaches age 64, for a period equal to
the number of months after the Date of Termination until tbe Executive reaches
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<PAGE>
age 65) or until the Executive's earlier death, with Employment Benefits
substantially similar to those which the Executive was receiving immediately
prior to the Notice of Termination.
(d) During the period of twelve (12) months following the Date of
Termination (or, if the Date of Termination occurs after the Executive reaches
age 64, for a period equal to the number of months after the Date of Termination
until the Executive reaches age 65), all Pension Benefits shall continue to
accrue to the Executive, crediting of services of the Executive with respect to
the Pension Benefits shall continue and the Executive shall be entitled to
receive all Pension Benefits provided to the Executive under the Pension Plan or
any other plan or agreement relating to retirement benefits. To the extent that
the amount of any Pension Benefit cannot take into account such accrual or
crediting by reason of the Executive's no longer being an employee of the
Company during such period, the Company shall itself pay to the Executive an
amount equal to the additional benefits that would have been provided
had such accrual or crediting been taken into account in calculating such
Pension Benefits. The obligation of the Company to provide any Pension Benefit
payment under the preceding sentence constitutes merely the unsecured promise of
the Company to make such payments from its general assets, and the Executive
shall have no interest in, or lien or prior claim upon, any property of the
Company or any Subsidiary with respect thereto.
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<PAGE>
(e) If the Executive so elects by notice to the Company not later than
six (6) months prior to the Date of Termination, in lieu of the lump-sum payment
set forth in Section 5(b), for a period of twelve (12) months from the Date of
Termination, the Company shall pay the Executive monthly an amount equal to one
twelfth (1/12) of a total amount which, payable over such period in such
installments, would have a discounted present value equal to the amount of the
lump-sum payment set forth in Section 5(b); provided, however, that, if the Date
of Termination occurs after the Executive reaches age 64, for a period equal to
the number of months from the Date of Termination until the Executive reaches
ages 65, the Company shall pay the Executive in equal monthly installments a
total amount which, payable over such period in such installments, would have a
discounted present value equal to the amount of the lump-sum payment as
determined in accordance with the provisions of Section 5(b).
6. No Obligation To Mitigate Damages; No Effect on Other
-----------------------------------------------------
Contractual Rights.
- ------------------
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
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<PAGE>
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue so1ely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or arrangement of
the Company or any Subsidiary.
7. Successor to the Company.
------------------------
(a) The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor or assign to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this Section 7 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
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<PAGE>
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. Notice. For purposes of this Agreement, notices and all
-------
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Shearing, Inc.
Corporate Offices
1175 Logan Avenue
Youngstown, Ohio 44501
Attention of: General Counsel
If to the Executive: Paul J. Powers
137 Newport Drive
Youngstown, Ohio 44512
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
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<PAGE>
9. Miscellaneous. No provisions of this Agreement may be modified,
--------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. This Agreement shall be governed by and construed
in accordance with the laws of tbe State of Ohio.
10. Employment. The Executive agrees to be bound by the terms and
-----------
conditions of this Agreement and to remain in the employ of the Company or
Subsidiary during any period following any public announcement by any person of
any proposed transaction or transactions which, if effected, would result in a
Change in Control of the Company until a Change in Control of the Company has
taken place or, in the opinion of the Board of Directors, such person has
abandoned or terminated its efforts to effect a Change in Control of the
Company. Subject to the foregoing, nothing contained in this Agreement shall
impair or interfere in any way with the right of the Executive to terminate the
Executive's employment or the right of the Company or any Subsidiary to
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<PAGE>
terminate the employment of the Executive with or without cause prior to a
Change in Control of the Company. Nothing contained in this Agreement shall be
construed as a contract of employment between the Company or any Subsidiary and
the Executive or as a right of the Executive to continue in the employ of the
Company or any Subsidiary, or as a limitation of the right of the Company or any
Subsidiary to discharge the Executive with or without cause prior to a Change in
Control of the Company.
11. Validity. The invalidity or unenforceability of any provisions of this
---------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. Counterparts. This Agreement may be executed in one or more
-------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
13. Legal Fees and Expenses The Company or Subsidiary shall pay all legal
-----------------------
fees and expenses which the Executive may incur as a result of the Company's or
Subsidiary's contesting the validity, enforceability or the Executive's
interpretation of, or determinations under, this Agreement.
14. Laws Governing. This Agreement has been entered into in the State of
--------------
Ohio, and shall be construed, interpreted and governed in accordance with the
laws of the State of Ohio.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EXECUTIVE: COMMERCIAL SHEARING, INC.
Name: /s/ Paul J. Powers By: /s/ Don E. Tucker
- ------------------------------ ------------------------
Title: Chairman, President and Name: Don E. Tucker
Chief Executive Officer Title: SR. V.P.
-27-
<PAGE>
EXHIBIT 99.8
SEVERANCE COMPENSATION AGREEMENT
This Severance Compensation Agreement ("Agreement") made and
entered into as of the 25 day of June , 1992 , by and between Commercial
Intertech Corp. ("Company") and John Gilchrist ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the Executive's
continued services to the stability and continuity of management of the Company
and its subsidiaries, it is appropriate and in the best interests of the Company
and of its shareholders to reinforce and encourage the Executive's continued
disinterested attention and undistracted dedication to his duties in the
potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. DEFINITIONS.
-----------
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) Annual Cash Compensation. Annual Cash Compensation shall mean the
------------------------
sum of (i) the Executive's annual base salary in effect at the time the
Notice of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) Benefit Plan. Benefit Plan means any benefit plan or arrangement
------------
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
<PAGE>
(c) Cause. The Company or a Subsidiary may terminate the Executive's
-----
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) Change in Control. A Change in Control shall be deemed to have
-----------------
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company's
common stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of
the Company's common stock immediately prior to the merger have
substantially the same proportionate ownership of the common stock of
the surviving corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan
or proposal for the liquidation or dissolution of the
Company;
(iv) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner
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<PAGE>
(within the meaning of Rule 13d-3 under the Exchange Act) of securities
of the Company representing thirty percent (30%) or more of the
combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing in special circumstances)
having the right to vote in the election of directors, as a result of a
tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) Company. Company shall mean Commercial Intertech Corp.
-------
and any successor or assign to all or substantially all of the business and/or
assets which executes and delivers the agreement provided for in Section 7.1(a)
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(f) Date of Termination. Date of Termination shall mean (i)
-------------------
if this Agreement is terminated by the Company or a Subsidiary for Disability,
thirty (30) days after Notice of Termination is given to the Executive (provided
that the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) Disability. The Executive shall be deemed to have a
----------
Disability if, as a result of the Executive's incapacity due to physical or
mental illness, the Executive: (1) shall qualify for benefits under the
Company's short-term disability plan or long-term disability plan adopted or
maintained by the Company on the effective date of this Agreement or hereinafter
adopted or maintained during the term of this Agreement; and (2) shall have been
absent from his duties with the Company or a Subsidiary on a full-time basis for
a continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
(h) Employment Benefits. Employment Benefits shall mean
-------------------
life, health, disability and accident insurance plans and a package of
"executive benefits" adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
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<PAGE>
(i) Good Reason. The Executive may terminate the Executive's
-----------
employment for Good Reason, which shall mean in any of the following events
unless it occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a
Change in Control of the Company or any removal of the Executive from
or any failure to reelect the Executive to any of such positions,
unless the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than
for Good Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to the
average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan.
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive
-4-
<PAGE>
is participating at the time of a Change in Control of the Company (or
to substitute and continue other plans or arrangements providing the
Executive with substantially similar benefits) or the taking of any
action by the Company or a Subsidiary which would adversely affect the
Executive's participation in any such Incentive Plan or reduce the
Executive's benefits under any such Incentive Plan in an amount which
is not substantially similar, on a percentage basis, to the average
percentage reduction of benefits under any such Incentive Plan effected
during the preceding twelve (12) months for all officers of the Company
or a Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) Incentive Plan. Incentive Plan means any incentive plan or
--------------
arrangement including, without limitation, the Company's Management Incentive
Compensation Plan, annual bonus and contingent bonus arrangements and credits
and the right to receive performance awards and similar incentive compensation
benefits adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(k) Notice of Termination. Notice of Termination shall mean a written
---------------------
notice which shall indicate the specific termination
-5-
<PAGE>
provision in this Agreement relied upon and which 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.
(l) Pension Benefits. Pension Benefits shall mean all benefits
----------------
under the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) Retirement. Retirement shall mean termination by the Company or a
----------
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) Securities Plan. Securities Plan shall mean any plan or
---------------
arrangement to receive securities of the Company including, any Company plan or
arrangement to receive and exercise stock options, stock appreciation rights,
restricted stock or grants thereof or to acquire stock or other securities of
the Company adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
2. Term of Agreement.
-----------------
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
-6-
<PAGE>
3. Termination Following Change in Control.
---------------------------------------
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company
or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive for Good Reason shall be communicated
to the other party by a Notice of Termination. No such purported termination by
the Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. Compensation upon Termination.
-----------------------------
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
-7-
<PAGE>
(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
(iv) During the term of this Agreement and through the period
of twenty-four (24) months following the Date of
-8-
<PAGE>
Termination (or, if such date occurs after the Executive reaches age
sixty-three (63), for a period equal to the number of months after such
date until the Executive reaches age sixty-five (65)), under the
Company's pension plan in which the Executive is participating
immediately prior to the Notice of Termination, all Pension Benefits
shall continue to accrue to the Executive, crediting of service of the
Executive with respect to Pension Benefits shall continue and the
Executive shall be entitled to receive all Pension Benefits. To the
extent that the amount of any Pension Benefits cannot take into account
such accrual or crediting by reason of the Executive's no longer being
an employee of the Company during such period, the Company shall itself
pay to the Executive an amount equal to the additional benefits that
would have been provided had such accrual or crediting been taken into
account in calculating such pension benefits. The obligation of the
Company to provide any pension benefit payment under the preceding
sentence constitutes merely the unsecured promise of the Company to
make such payments from its general assets, and the Executive shall
have no interest in, or lien or prior claim upon, any property of the
Company or a Subsidiary with respect thereto.
(c) If after reduction for any applicable federal excise tax
imposed by Section 4999 of the Code and federal income tax imposed by the Code,
the Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
5. Employment.
----------
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employ of the Company or
-9-
<PAGE>
Subsidiary during any period following any public announcement by any person of
any proposed transaction or transactions which, if effected, would result in a
Change in Control of the Company until a Change in Control of the Company has
taken place or, in the opinion of the Board of Directors, such person has
abandoned or terminated its efforts to effect a Change in Control of the
Company. Subject to the foregoing, nothing contained in this Agreement shall
impair or interfere in any way with the right of the Executive to terminate the
Executive's employment or the right of the Company or any Subsidiary to
terminate the employment of the Executive with or without cause prior to a
Change in Control of the Company. Nothing contained in this Agreement shall be
construed as a contract of employment between the Company or a Subsidiary and
the Executive or as a right of the Executive to continue in the employ of
the Company or a Subsidiary, or as a limitation of the right of the Company or a
Subsidiary to discharge the Executive with or without cause prior to a Change in
Control of the Company.
6. No Obligation to Mitigate Damages; No Effect On Other Contractual Rights.
------------------------------------------------------------------------
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. Successor to the Company; Successor of the Executive.
----------------------------------------------------
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
-10-
<PAGE>
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. Miscellaneous.
-------------
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. Validity.
--------
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Legal Fees and Expenses.
-----------------------
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
-11-
<PAGE>
12. Laws Governing.
--------------
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
13. Notice.
------
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501
Attn: General Counsel
If to the Executive:
John Gilchrist
43681 Columbiana-Waterford Road
Columbiana, Ohio 44408
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE COMMERCIAL INTERTECH CORP.
By:
/s/ John Gilchrist /s/ Don E. Tucker
- -------------------------------- --------------------------------
Name: John Gilchrist Name: Don E. Tucker
-------------------------- -----------------------------
Title: Group Vice President Title: Senior Vice President
-------------------------- -----------------------------
-12-
<PAGE>
Exhibit 99.9
SEVERANCE COMPENSATION AGREEMENT
--------------------------------
This Severance Compensation Agreement ("Agreement") made and entered
into as of the 20 day of July, 1992, by and between Commercial Intertech Corp.
("Company") and Bruce C. Wheatley ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the
Executive's continued services to the stability and continuity of management of
the Company and its subsidiaries, it is appropriate and in the best interests of
the Company and of its shareholders to reinforce and encourage the Executive's
continued disinterested attention and undistracted dedication to his duties in
the potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. Definitions.
-----------
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) Annual Cash Compensation. Annual Cash Compensation shall mean the
------------------------
sum of (i) the Executive's annual base salary in effect at the time the
Notice of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) Benefit Plan. Benefit Plan means any benefit plan or arrangement
------------
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
<PAGE>
(c) Cause. The Company or a Subsidiary may terminate the Executive's
-----
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) Change in Control. A Change in Control shall be deemed to have
-----------------
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock
would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Company's common
stock immediately prior to the merger have substantially the same
proportionate ownership of the common stock of the surviving
corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan
or proposal for the liquidation or dissolution of the
Company;
(iv) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner
-2-
<PAGE>
(within the meaning of Rule 13d-3 under the Exchange Act) of securities
of the Company representing thirty percent (30%) or more of the
combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing in special circumstances)
having the right to vote in the election of directors, as a result of a
tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) Copmany. Company shall mean Commercial Intertech Corp. and any
-------
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.1(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) Date of Termination. Date of Termination shall mean (i) if this
-------------------
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) Disability. The Executive shall be deemed to have a Disability if,
----------
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
(h) Employment Benefits. Employment Benefits shall mean life, health,
-------------------
disability and accident insurance plans and a package of "executive benefits"
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
-3-
<PAGE>
(i) Good Reason. The Executive may terminate the Executive's
-----------
employment for Good Reason, which shall mean in any of the following events
unless it occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a Change
in Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless the
Executive's employment with the Company or a Subsidiary is terminated
(i) by the Company or a Subsidiary for Cause, Disability or Retirement
or by reason of death or (ii) by the Executive other than for Good
Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to the
average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan.
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive
-4-
<PAGE>
is participating at the time of a Change in Control of the Company (or
to substitute and continue other plans or arrangements providing the
Executive with substantially similar benefits) or the taking of any
action by the Company or a Subsidiary which would adversely affect the
Executive's participation in any such Incentive Plan or reduce the
Executive's benefits under any such Incentive Plan in an amount which
is not substantially similar, on a percentage basis, to the average
percentage reduction of benefits under any such Incentive Plan effected
during the preceding twelve (12) months for all officers of the Company
or a Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) Incentive Plan. Incentive Plan means any incentive plan or
--------------
arrangement including, without limitation, the Company's Management Incentive
Compensation Plan, annual bonus and contingent bonus arrangements and credits
and the right to receive performance awards and similar incentive compensation
benefits adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(k) Notice of Termination. Notice of Termination shall mean a written
---------------------
notice which shall indicate the specific termination
-5-
<PAGE>
provision in this Agreement relied upon and which 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.
(l) Pension Benefits. Pension Benefits shall mean all benefits
----------------
under the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) Retirement. Retirement shall mean termination by the Company or a
----------
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) Securities Plan. Securities Plan shall mean any plan or
---------------
arrangement to receive securities of the Company including, any Company plan or
arrangement to receive and exercise stock options, stock appreciation rights,
restricted stock or grants thereof or to acquire stock or other securities of
the Company adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
2. Term of Agreement.
-----------------
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
-6-
<PAGE>
3. Termination Following Change in Control.
---------------------------------------
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company
or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive for Good Reason shall be communicated
to the other party by a Notice of Termination. No such purported termination by
the Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. Compensation upon Termination.
-----------------------------
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
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<PAGE>
(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
(iv) During the term of this Agreement and through the period
of twenty-four (24) months following the Date of
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Termination (or, if such date occurs after the Executive reaches age
sixty-three (63), for a period equal to the number of months after such
date until the Executive reaches age sixty-five (65)), under the
Company's pension plan in which the Executive is participating
immediately prior to the Notice of Termination, all Pension Benefits
shall continue to accrue to the Executive, crediting of service of the
Executive with respect to Pension Benefits shall continue and the
Executive shall be entitled to receive all Pension Benefits. To the
extent that the amount of any Pension Benefits cannot take into account
such accrual or crediting by reason of the Executive's no longer being
an employee of the Company during such period, the Company shall itself
pay to the Executive an amount equal to the additional benefits that
would have been provided had such accrual or crediting been taken into
account in calculating such pension benefits. The obligation of the
Company to provide any pension benefit payment under the preceding
sentence constitutes merely the unsecured promise of the Company to
make such payments from its general assets, and the Executive shall
have no interest in, or lien or prior claim upon, any property of the
Company or a Subsidiary with respect thereto.
(c) If after reduction for any applicable federal excise tax
imposed by Section 4999 of the Code and federal income tax imposed by the Code,
the Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
5. Employment.
----------
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employ of the Company or Subsidiary during any
period following any public announcement by
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<PAGE>
any person of any proposed transaction or transactions which, if effected, would
result in a Change in Control of the Company until a Change in Control of the
Company has taken place or, in the opinion of the Board of Directors, such
person has abandoned or terminated its efforts to effect a Change in Control of
the Company. Subject to the foregoing, nothing contained in this Agreement shall
impair or interfere in any way with the right of the Executive to terminate the
Executive's employment or the right of the Company or any Subsidiary to
terminate the employment of the Executive with or without cause prior to a
Change in Control of the Company. Nothing contained in this Agreement shall be
construed as a contract of employment between the Company or a Subsidiary and
the Executive or as a right of the Executive to continue in the employ of
the Company or a Subsidiary, or as a limitation of the right of the Company or a
Subsidiary to discharge the Executive with or without cause prior to a Change in
Control of the Company.
6. No Obligation to Mitigate Damages; No Effect On Other Contractual Rights.
------------------------------------------------------------------------
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. Successor to the Company; Successor of the Executive.
----------------------------------------------------
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
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<PAGE>
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. Miscellaneous.
-------------
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. Validity.
--------
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Legal Fees and Expenses.
-----------------------
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. Laws Governing.
--------------
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
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<PAGE>
13. Notice.
------
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501
Attn: General Counsel
If to the Executive:
Bruce C. Wheatley
7959 Oakridge Drive
Mentor, Ohio 44060
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE COMMERCIAL INTERTECH CORP.
/s/ Bruce C. Wheatley By: /s/ Don E. Tucker
- -------------------------------- -------------------------------
Name: Bruce C. Wheatley Name: Don E. Tucker
------------------------------ -----------------------------
Title: Vice President Administration Title: Senior Vice President
------------------------------ ---------------------------
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<PAGE>
EXHIBIT 99.10
SEVERANCE COMPENSATION AGREEMENT
This Severance Compensation Agreement ("Agreement") made and entered
into as of the 25 day of March, l995, by and between Commercial Intertech
Corp. ("Company") and Mark G. Kachur ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the Executive's
continued services to the stability and continuity of management of the Company
and its subsidiaries, it is appropriate and in the best interests of the Company
and of its shareholders to reinforce and encourage the Executive's continued
disinterested attention and undistracted dedication to his duties in the
potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of
the Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
l. Definitions.
-----------
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) Annual Cash Compensation. Annual Cash Compensation shall mean the
sum of (i) the Executive's annual base salary in effect at the time the Notice
of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan),
including any other bonus payment.
(b) Benefit Plan. Benefit Plan means any benefit plan or arrangement
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
<PAGE>
(c) Cause. The Company or a Subsidiary may terminate the Executive's
employment for Cause only on the basis of:
(i) the Executive's wilful and continued failure substantially to
perform his duties with the Company or a Subsidiary (other than any such failure
resulting from his Disability or any such failure resulting from the
Executive's termination for Good Reason), after a written demand for substantial
performance is delivered to the Executive by the Company's Board of Directors
which specifically identifies the manner in which such Board of Directors
believes that the Executive has not substantially performed his duties; or
(ii) the Executive's wilful engagement in conduct materially and
demonstrably injurious to the Company or a Subsidiary.
For purposes of this Section 1(c), no act or failure to act on the
Executive's part shall be considered "wilful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company or a Subsidiary. The
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds of the entire
membership of the Company's Board of Directors, at a meeting of the Board of
Directors called and held for the purpose, finding that in the good faith
opinion of the Board of Directors the Executive was guilty of conduct set forth
in clause (i) or (ii) of the first sentence of this Section 1(c) and specifying
the particulars thereof in detail.
(d) Change in Control. A Change in Control shall be deemed to have
occurred if:
(i) there shall be consummated any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's common stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's common stock immediately prior to the merger have
substantially the same proportionate ownership of the common stock of the
surviving corporation immediately after the merger;
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<PAGE>
(ii) there shall be consummated any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan or proposal
for the liquidation or dissolution of the Company;
(iv) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than the Company or a Subsidiary or any employee
benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of securities of the Company representing
thirty percent (30%) or more of the combined voting power of the
Company's then outstanding securities ordinarily (and apart from
rights accruing in special circumstances) having the right to vote
in the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or
otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the
Board of Directors of the Company shall cease for any reason to
constitute at least a majority thereof, unless the election or the
nomination for election by the Company's shareholders of each new
director during such two (2) year period was approved by a vote of
at least two-thirds of the directors then still in office who were
directors at the beginning of such two (2) year period.
(e) Company. Company shall mean Commercial Intertech Corp. and any
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.l(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) Date of Termination. Date of Termination shall mean (i) if this
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
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<PAGE>
(g) Disability. The Executive shall be deemed to have a Disability if,
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
(h) Employment Benefits. Employment Benefits shall mean life, health,
disability and accident insurance and a package of "executive benefits" adopted
or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
(i) Good Reason. The Executive may terminate the Executive's
employment for Good Reason, which shall mean in any of the following events
unless it occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a Subsidiary of
any duties inconsistent with, or a diminution of, the Executive's
position, duties, titles, offices, responsibilities and status
with the Company or a Subsidiary immediately prior to a Change in
Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless
the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause,
Disability or Retirement or by reason of death or (ii) by the
Executive other than for Good Reason;
(ii) a reduction by the Company or a Subsidiary in the Executive's base
salary as in effect on the date hereof or as the same may be
increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within
fifteen (15) months of the Executive's last increase in base
salary) the Executive's base salary after a Change in Control of
the Company in an amount which is substantially similar, on a
percentage basis, to the average percentage increase in base
salary for all officers of the Company or a Subsidiary effected
during the preceding twelve (12) months, other than a reduction of
the Executive's base salary pursuant to the terms of the Company's
short-term or long-term disability plan during a period in which
the Executive has a Disability and qualifies for benefits under
such plan.
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<PAGE>
(iii) except with respect to changes required to maintain its tax-
qualified status or changes generally applicable to all
employees of the Company, any failure by the Company or a
Subsidiary to continue in effect any Benefit Plan in which the
Executive is participating at the time of a Change in Control of
the Company (or to substitute and continue other plans providing
the Executive with substantially similar benefits), the taking
of any action by the Company or a Subsidiary which would
adversely affect the Executive's participation in or materially
reduce the Executive's benefits under any such Benefit Plan or
deprive the Executive of any material fringe benefit enjoyed by
the Executive at the time of a Change in Control of the Company
or the failure by the Company or a Subsidiary to provide the
Executive with the number of paid vacation days to which the
Executive was entitled in accordance with the vacation policies
in effect at the time of a Change in Control of the Company;
(iv) any failure by the Company or a Subsidiary to continue in effect
any Incentive Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute
and continue other plans or arrangements providing the Executive
with substantially similar benefits) or the taking of any action
by the Company or a Subsidiary which would adversely affect the
Executive's participation in any such Incentive Plan or reduce
the Executive's benefits under any such Incentive Plan in an
amount which is not substantially similar, on a percentage
basis, to the average percentage reduction of benefits under any
such Incentive Plan effected during the preceding twelve (12)
months for all officers of the Company or a Subsidiary
participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in effect
any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute
and continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by
the Company or a Subsidiary which would adversely affect the
Executive's participation in or materially reduce the
Executive's benefits under any such Securities Plan;
(vi) a relocation of the Company's principal executive offices or the
Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a
Change in Control of the Company;
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<PAGE>
(vii) a substantial increase in business travel obligations over such
obligations as they existed at the time of a Change in Control
of the Company;
(viii) any material breach by the Company or a Subsidiary of any
provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company in
accordance with Section 7(a); or
(x) any purported termination of the Executive's employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Section 1(k).
(j) Incentive Plan. Incentive Plan means any incentive plan or
arrangement including, without limitation, the Company's Management Incentive
Compensation Plan, annual bonus and contingent bonus arrangements and credits
and the right to receive performance awards and similar incentive compensation
benefits adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(k) Notice of Termination. Notice of Termination shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and which 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.
(l) Pension Benefits. Pension Benefits shall mean all benefits under
the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) Retirement. Retirement shall mean termination by the Company or
a Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) Securities Plan. Securities Plan shall mean any plan or
arrangement to receive securities of the Company including, any Company plan or
arrangement to receive and exercise stock options, stock appreciation rights,
restricted stock or grants thereof or to acquire stock or other securities of
the Company.
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<PAGE>
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
2. Term of Agreement.
-----------------
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
3. Termination Following Change in Control.
----------------------------------------
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company
or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive for Good Reason shall be communicated
to the other party by a Notice of Termination. No such purported termination by
the Company or Subsidiary shall be effective without such Notice of Termination.
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<PAGE>
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement, or by reason of the Executive's death or (ii) by the Executive
for Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. Compensation upon Termination.
-----------------------------
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the Executive, at
the time specified in subsection (ii) below, a lump-sum severance
payment equal to two times the Executive's Annual Cash Compensation
reduced by any actual damages paid to the Executive by the Company
as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three
(63) or older on the Date of Termination, such lump-sum severance
payment shall be equal to the Executive's Annual Cash Compensation
multiplied by a fraction of which the numerator shall be the number
of months from such date until the Executive reaches age sixty-five
(65) and the denominator shall be twelve (12).
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(ii) The severance compensation provided for in subsection (i) above
shall be made not later than the tenth (l0th) day following the
Date of Termination; provided, however, that, if the amount of
such compensation cannot be finally determined on or before such
day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Company but subject
to the provisions of Section 4(c), of the minimum amount of such
compensation and shall pay the remainder of such compensation
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Internal Revenue Code of 1986, as amended
(the "Code")) as soon as the amount thereof can be determined but
in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payment
exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(iii) The Company shall arrange to provide the Executive for a period of
twenty-four (24) months following the Date of Termination (or, if
such date occurs after the Executive reaches age sixty-three (63),
for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the
Executive's death, if earlier, with Employment Benefits
substantially similar to those which the Executive was receiving
immediately prior to the Notice of Termination.
(iv) During the term of this Agreement and through the period of
twenty-four (24) months following the Date of Termination (or,
if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date
until the Executive reaches age sixty-five (65)), under the
Company's pension plan in which the Executive is participating
immediately prior to the Notice of Termination, all Pension
Benefits shall continue to accrue to the Executive, crediting of
service of the Executive with respect to Pension Benefits shall
continue and the Executive shall be entitled to receive all
Pension Benefits. To the extent that the amount of any Pension
Benefits cannot take into account such accrual or crediting by
reason of the Executive's no longer being an employee of the
Company during such period, the Company shall itself pay to the
Executive an amount equal to the additional benefits that would
have been provided had such accrual or crediting been
9
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taken into account in calculating such pension benefits. The
obligation of the Company to provide any pension benefit payment
under the preceding sentence constitutes merely the unsecured
promise of the Company to make such payments from its general
assets, and the Executive shall have no interest in, or lien or
prior claim upon, any property of the Company or a Subsidiary with
respect thereto.
(c) If after reduction for any applicable federal excise tax imposed
by Section 4999 of the Code and federal income tax imposed by the Code, the
Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
5. Employment.
----------
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employ of the Company or Subsidiary during any
period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control of the Company until a Change in Control of the Company has taken place
or, in the opinion of the Board of Directors, such person has abandoned or
terminated its efforts to effect a Change in Control of the Company. Subject to
the foregoing, nothing contained in this Agreement shall impair or interfere in
any way with the right of the Executive to terminate the Executive's employment
or the right of the Company or any Subsidiary to terminate the employment of the
Executive with or without cause prior to a Change in Control of the Company.
Nothing contained in this
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Agreement shall be construed as a contract of employment between the Company or
a Subsidiary and the Executive or as a right of the Executive to continue in the
employ of the Company or a Subsidiary, or as a limitation of the right of the
Company or a Subsidiary to discharge the Executive with or without cause prior
to a Change in Control of the Company.
6. No Obligation to Mitigate Damages; No Effect On Other Contractual
-----------------------------------------------------------------
Rights.
- ------
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary, including the terms of the Letter Agreement dated
December 3, 1993, attached.
7. Successor to the Company; Successor of the Executive.
----------------------------------------------------
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
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8. Miscellaneous.
-------------
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. Validity.
-------
The invalidity of unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
lO. Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Legal Fees and Expenses.
-----------------------
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. Laws Governing.
--------------
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
13. Notice.
------
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
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If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501-0239
Attn: General Counsel
If to the Executive:
Mark G. Kachur
29B School Lane
Lloyd Harbor, NY 11743
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE COMMERCIAL INTERTECH CORP.
/s/ MARK G. KACHUR By: /s/ BRUCE C. WHEATLEY
- ----------------------------- -------------------------------
Name: Mark G. Kachur Name: Bruce C. Wheatley
----------------------- ------------------------------
Senior Vice President -
Title: Fluid Purification Group Title: Vice President - Adminstration
------------------------- ------------------------------
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EXHIBIT 99.11
1
This Severance Compensation Agreement ("Agreement") made and
entered into as of the 28 day of Sept , 1989 , by and between Commercial
Intertech Corp. ("Company") and Gilbert M. Manchester ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the
Executive's continued services to the stability and continuity of management of
the Company and its subsidiaries, it is appropriate and in the best interests of
the Company and of its shareholders to reinforce and encourage the Executive's
continued disinterested attention and undistracted dedication to his duties in
the potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. DEFINITIONS.
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) ANNUAL CASH COMPENSATION. Annual Cash Compensation shall mean the
sum of (i) the Executive's annual base salary in effect at the time the Notice
of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) BENEFIT PLAN. Benefit Plan means any benefit plan or arrangement
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
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2
(c) CAUSE. The Company or a Subsidiary may terminate the Executive's
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock
would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Company's common
stock immediately prior to the merger have substantially the same
proportionate ownership of the common stock of the surviving
corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the
Company;
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3
(iv) any person (as such term is used in Sections 13(d) and
l4(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) COMPANY. Company shall mean Commercial Intertech Corp. and any
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.1(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) DATE OF TERMINATION. Date of Termination shall mean (i) if this
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) DISABILITY. The Executive shall be deemed to have a Disability if,
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
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4
(h) EMPLOYMENT BENEFITS. Employment Benefits shall mean life, health,
disability and accident insurance plans and a package of "executive benefits"
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
(i) GOOD REASON. The Executive may terminate the Executive's employment
for Good Reason, which shall mean in any of the following events unless it
occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a Change
in Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless the
Executive's employment with the Company or a Subsidiary is terminated
(i) by the Company or a Subsidiary for Cause, Disability or Retirement
or by reason of death or (ii) by the Executive other than for Good
Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to
the average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan;
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
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5
(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan in an amount which is not
substantially similar, on a percentage basis, to the average percentage
reduction of benefits under any such Incentive Plan effected during the
preceding twelve (12) months for all officers of the Company or a
Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) INCENTIVE PLAN. Incentive Plan means any incentive plan
or arrangement including, without limitation, the Company's Management
Incentive Compensation Plan, annual bonus and contingent bonus
arrangements and credits and the right to receive performance awards
and similar incentive compensation benefits adopted or maintained by
the Company on the effective date of this Agreement or hereinafter
adopted or maintained during the term of this Agreement.
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6
(k) NOTICE OF TERMINATION. Notice of Termination shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and which 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.
(l) PENSION BENEFITS. Pension Benefits shall mean all benefits under
the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) RETIREMENT. Retirement shall mean termination by the Company or a
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) SECURITIES PLAN. Securities Plan shall mean any plan or
arrangement to receive securities of the Company including, any Company plan or
arrangement to receive and exercise stock options, stock appreciation rights,
restricted stock or grants thereof or to acquire stock or other securities of
the Company adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
2. TERM OF AGREEMENT.
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
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7
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company
or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive for Good Reason shall be communicated
to the other party by a Notice of Termination. No such purported termination by
the Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. COMPENSATION UPON TERMINATION.
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
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8
(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
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9
(iv) During the term of this Agreement and through the period
of twenty-four (24) months following the Date of Termination (or, if
such date occurs after the Executive reaches age sixty-three (63), for
a period equal to the number of months after such date until the
Executive reaches age sixty-five (65)), under the Company's pension
plan in which the Executive is participating immediately prior to the
Notice of Termination, all Pension Benefits shall continue to accrue to
the Executive, crediting of service of the Executive with respect to
Pension Benefits shall continue and the Executive shall be entitled to
receive all Pension Benefits. To the extent that the amount of any
Pension Benefits cannot take into account such accrual or crediting by
reason of the Executive's no longer being an employee of the Company
during such period, the Company shall itself pay to the Executive an
amount equal to the additional benefits that would have been provided
had such accrual or crediting been taken into account in calculating
such pension benefits. The obligation of the Company to provide any
pension benefit payment under the preceding sentence constitutes merely
the unsecured promise of the Company to make such payments from its
general assets, and the Executive shall have no interest in, or lien or
prior claim upon, any property of the Company or a Subsidiary with
respect thereto.
(c) If after reduction for any applicable federal excise tax
imposed by Section 4999 of the Code and federal income tax imposed by the Code,
the Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
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10
5. EMPLOYMENT.
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employment of the Company or Subsidiary during
any period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control of the Company until a Change in Control of the Company has taken place
or, in the opinion of the Board of Directors, such person has abandoned or
terminated its efforts to effect a Change in Control of the Company. Subject to
the foregoing, nothing contained in this Agreement shall impair or interfere in
any way with the right of the Executive to terminate the Executive's employment
or the right of the Company or any Subsidiary to terminate the employment of the
Executive with or without cause prior to a Change in Control of the Company.
Nothing contained in this Agreement shall be construed as a contract of
employment between the Company or a Subsidiary and the Executive or as a right
of the Executive to continue in the employment of the Company or a Subsidiary,
or as a limitation of the right of the Company or a Subsidiary to discharge the
Executive with or without cause prior to a Change in Control of the Company.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. SUCCESSOR TO THE COMPANY; SUCCESSOR OF THE EXECUTIVE.
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
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11
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES.
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. LAWS GOVERNING.
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
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12
13. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501-0239
Attn: General Counsel
If to the Executive:
Gilbert M. Manchester
997 Colonial Drive
Youngstown, Ohio 44505
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE COMMERCIAL INTERTECH CORP.
By:
- -------------------------------- --------------------------------
Name: Gilbert M. Manchester Name: Don E. Tucker
------------------------ -----------------------------
Title: Secretary Title: Senior Vice President
------------------------ -----------------------------
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EXHIBIT 99.12
This Severance Compensation Agreement ("Agreement") made and entered
into as of the 28 day of Sept , 1989 , by and between Commercial Intertech
Corp. ("Company") and William W. Cushwa ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the Executive's
continued services to the stability and continuity of management of the Company
and its subsidiaries, it is appropriate and in the best interests of the Company
and of its shareholders to reinforce and encourage the Executive's continued
disinterested attention and undistracted dedication to his duties in the
potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. DEFINITIONS.
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) ANNUAL CASH COMPENSATION. Annual Cash Compensation shall mean the
sum of (i) the Executive's annual base salary in effect at the time the Notice
of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) BENEFIT PLAN. Benefit Plan means any benefit plan or arrangement
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
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(c) CAUSE. The Company or a Subsidiary may terminate the Executive's
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock
would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Company's common
stock immediately prior to the merger have substantially the same
proportionate ownership of the common stock of the surviving
corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
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(iv) any person (as such term is used in Sections 13(d) and
l4(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) COMPANY. Company shall mean Commercial Intertech Corp. and any
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.1(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) DATE OF TERMINATION. Date of Termination shall mean (i) if this
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) DISABILITY. The Executive shall be deemed to have a Disability if,
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
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(h) EMPLOYMENT BENEFITS. Employment Benefits shall mean life, health,
disability and accident insurance plans and a package of "executive benefits"
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
(i) GOOD REASON. The Executive may terminate the Executive's employment
for Good Reason, which shall mean in any of the following events unless it
occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a Change
in Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless the
Executive's employment with the Company or a Subsidiary is terminated
(i) by the Company or a Subsidiary for Cause, Disability or Retirement
or by reason of death or (ii) by the Executive other than for Good
Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to the
average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan.
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
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(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan in an amount which is not
substantially similar, on a percentage basis, to the average percentage
reduction of benefits under any such Incentive Plan effected during the
preceding twelve (12) months for all officers of the Company or a
Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) INCENTIVE PLAN. Incentive Plan means any incentive plan or
arrangement including, without limitation, the Company's Management Incentive
Compensation Plan, annual bonus and contingent bonus arrangements and credits
and the right to receive performance awards and similar incentive compensation
benefits adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
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(k) NOTICE OF TERMINATION. Notice of Termination shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and which 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.
(l) PENSION BENEFITS. Pension Benefits shall mean all benefits under
the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) RETIREMENT. Retirement shall mean termination by the Company or a
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) SECURITIES PLAN. Securities Plan shall mean any plan or arrangement
to receive securities of the Company including, any Company plan or arrangement
to receive and exercise stock options, stock appreciation rights, restricted
stock or grants thereof or to acquire stock or other securities of the Company
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
2. TERM OF AGREEMENT.
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
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3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company or
a Subsidiary for Cause, Disability or Retirement or by reason of the Executive's
death or (ii) by the Executive for Good Reason shall be communicated to the
other party by a Notice of Termination. No such purported termination by the
Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. COMPENSATION UPON TERMINATION.
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
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(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
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(iv) During the term of this Agreement and through the period
of twenty-four (24) months following the Date of Termination (or, if
such date occurs after the Executive reaches age sixty-three (63), for
a period equal to the number of months after such date until the
Executive reaches age sixty-five (65)), under the Company's pension
plan in which the Executive is participating immediately prior to the
Notice of Termination, all Pension Benefits shall continue to accrue to
the Executive, crediting of service of the Executive with respect to
Pension Benefits shall continue and the Executive shall be entitled to
receive all Pension Benefits. To the extent that the amount of any
Pension Benefits cannot take into account such accrual or crediting by
reason of the Executive's no longer being an employee of the Company
during such period, the Company shall itself pay to the Executive an
amount equal to the additional benefits that would have been provided
had such accrual or crediting been taken into account in calculating
such pension benefits. The obligation of the Company to provide any
pension benefit payment under the preceding sentence constitutes merely
the unsecured promise of the Company to make such payments from its
general assets, and the Executive shall have no interest in, or lien or
prior claim upon, any property of the Company or a Subsidiary with
respect thereto.
(c) If after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the
Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
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5. EMPLOYMENT.
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employment of the Company or Subsidiary during
any period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control of the Company until a Change in Control of the Company has taken place
or, in the opinion of the Board of Directors, such person has abandoned or
terminated its efforts to effect a Change in Control of the Company. Subject to
the foregoing, nothing contained in this Agreement shall impair or interfere in
any way with the right of the Executive to terminate the Executive's employment
or the right of the Company or any Subsidiary to terminate the employment of the
Executive with or without cause prior to a Change in Control of the Company.
Nothing contained in this Agreement shall be construed as a contract of
employment between the Company or a Subsidiary and the Executive or as a right
of the Executive to continue in the employment of the Company or a Subsidiary,
or as a limitation of the right of the Company or a Subsidiary to discharge the
Executive with or without cause prior to a Change in Control of the Company.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. SUCCESSOR TO THE COMPANY; SUCCESSOR OF THE EXECUTIVE.
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
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(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES.
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. LAWS GOVERNING.
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
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<PAGE>
13. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501-0239
Attn: General Counsel
If to the Executive:
William W. Cushwa
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
<TABLE>
<S> <C>
EXECUTIVE CORP. COMMERCIAL INTERTECH
________________________________ By: ________________________________
Name: William W. Cushwa Name: Don E. Tucker
Title: Title: Senior Vice President
</TABLE>
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<PAGE>
EXHIBIT 99.13
This Severance Compensation Agreement ("Agreement") made and entered
into as of the 28 day of Sept , 1989 , by and between Commercial Intertech Corp.
("Company") and Steven J. Hewitt ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the Executive's
continued services to the stability and continuity of management of the Company
and its subsidiaries, it is appropriate and in the best interests of the Company
and of its shareholders to reinforce and encourage the Executive's continued
disinterested attention and undistracted dedication to his duties in the
potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. DEFINITIONS.
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) ANNUAL CASH COMPENSATION. Annual Cash Compensation shall mean the
sum of (i) the Executive's annual base salary in effect at the time the Notice
of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) BENEFIT PLAN. Benefit Plan means any benefit plan or arrangement
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
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2
(c) CAUSE. The Company or a Subsidiary may terminate the Executive's
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock
would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Company's common
stock immediately prior to the merger have substantially the same
proportionate ownership of the common stock of the surviving
corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the
Company;
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<PAGE>
3
(iv) any person (as such term is used in Sections 13(d) and
l4(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) COMPANY. Company shall mean Commercial Intertech Corp. and any
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.1(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) DATE OF TERMINATION. Date of Termination shall mean (i) if this
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) DISABILITY. The Executive shall be deemed to have a Disability if,
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
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4
(h) EMPLOYMENT BENEFITS. Employment Benefits shall mean life, health,
disability and accident insurance plans and a package of "executive benefits"
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
(i) GOOD REASON. The Executive may terminate the Executive's employment
for Good Reason, which shall mean in any of the following events unless it
occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a Change
in Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless the
Executive's employment with the Company or a Subsidiary is terminated
(i) by the Company or a Subsidiary for Cause, Disability or Retirement
or by reason of death or (ii) by the Executive other than for Good
Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to the
average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan.
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
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<PAGE>
5
(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan in an amount which is not
substantially similar, on a percentage basis, to the average percentage
reduction of benefits under any such Incentive Plan effected during the
preceding twelve (12) months for all officers of the Company or a
Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) INCENTIVE PLAN. Incentive Plan means any incentive plan or
arrangement including, without limitation, the Company's Management
Incentive Compensation Plan, annual bonus and contingent bonus
arrangements and credits and the right to receive performance awards
and similar incentive compensation benefits adopted or maintained by
the Company on the effective date of this Agreement or hereinafter
adopted or maintained during the term of this Agreement.
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<PAGE>
6
(k) NOTICE OF TERMINATION. Notice of Termination shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and which 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.
(l) PENSION BENEFITS. Pension Benefits shall mean all benefits under
the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) RETIREMENT. Retirement shall mean termination by the Company or a
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) SECURITIES PLAN. Securities Plan shall mean any plan or arrangement
to receive securities of the Company including, any Company plan or arrangement
to receive and exercise stock options, stock appreciation rights, restricted
stock or grants thereof or to acquire stock or other securities of the Company
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
2. TERM OF AGREEMENT.
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
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7
3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company
or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive for Good Reason shall be communicated
to the other party by a Notice of Termination. No such purported termination by
the Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. COMPENSATION UPON TERMINATION.
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
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8
(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
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11
(iv) During the term of this Agreement and through the period of
twenty-four (24) months following the Date of Termination (or, if such
date occurs after the Executive reaches age sixty-three (63), for a
period equal to the number of months after such date until the
Executive reaches age sixty-five (65)), under the Company's pension
plan in which the Executive is participating immediately prior to the
Notice of Termination, all Pension Benefits shall continue to accrue to
the Executive, crediting of service of the Executive with respect to
Pension Benefits shall continue and the Executive shall be entitled to
receive all Pension Benefits. To the extent that the amount of any
Pension Benefits cannot take into account such accrual or crediting by
reason of the Executive's no longer being an employee of the Company
during such period, the Company shall itself pay to the Executive an
amount equal to the additional benefits that would have been provided
had such accrual or crediting been taken into account in calculating
such pension benefits. The obligation of the Company to provide any
pension benefit payment under the preceding sentence constitutes merely
the unsecured promise of the Company to make such payments from its
general assets, and the Executive shall have no interest in, or lien or
prior claim upon, any property of the Company or a Subsidiary with
respect thereto.
(c) If after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the
Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
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5. EMPLOYMENT.
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employment of the Company or Subsidiary during
any period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control of the Company until a Change in Control of the Company has taken place
or, in the opinion of the Board of Directors, such person has abandoned or
terminated its efforts to effect a Change in Control of the Company. Subject to
the foregoing, nothing contained in this Agreement shall impair or interfere in
any way with the right of the Executive to terminate the Executive's employment
or the right of the Company or any Subsidiary to terminate the employment of the
Executive with or without cause prior to a Change in Control of the Company.
Nothing contained in this Agreement shall be construed as a contract of
employment between the Company or a Subsidiary and the Executive or as a right
of the Executive to continue in the employment of the Company or a Subsidiary,
or as a limitation of the right of the Company or a Subsidiary to discharge the
Executive with or without cause prior to a Change in Control of the Company.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER
CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. SUCCESSOR TO THE COMPANY; SUCCESSOR OF THE EXECUTIVE.
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
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(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES.
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. LAWS GOVERNING.
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
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13. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501-0239
Attn: General Counsel
If to the Executive:
Steven J. Hewitt
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EXECUTIVE CORP. COMMERCIAL INTERTECH
By ______________________________ By ______________________________
Name: Steven J. Hewitt Name: Don E. Tucker
Title: Title: Senior Vice President
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EXHIBIT 99.14
This Severance Compensation Agreement ("Agreement") made and entered
into as of the 28 day of Sept , 1989 , by and between Commercial Intertech Corp.
("Company") and Robert A. Calcagni ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the Executive's
continued services to the stability and continuity of management of the Company
and its subsidiaries, it is appropriate and in the best interests of the Company
and of its shareholders to reinforce and encourage the Executive's continued
disinterested attention and undistracted dedication to his duties in the
potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. DEFINITIONS.
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) ANNUAL CASH COMPENSATION. Annual Cash Compensation shall mean the
sum of (i) the Executive's annual base salary in effect at the time the Notice
of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) BENEFIT PLAN. Benefit Plan means any benefit plan or arrangement
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
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(c) CAUSE. The Company or a Subsidiary may terminate the Executive's
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock
would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Company's common
stock immediately prior to the merger have substantially the same
proportionate ownership of the common stock of the surviving
corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the
Company;
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(iv) any person (as such term is used in Sections 13(d) and
l4(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) COMPANY. Company shall mean Commercial Intertech Corp. and any
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.1(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) DATE OF TERMINATION. Date of Termination shall mean (i) if this
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) DISABILITY. The Executive shall be deemed to have a Disability if,
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
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(h) EMPLOYMENT BENEFITS. Employment Benefits shall mean life, health,
disability and accident insurance plans and a package of "executive benefits"
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
(i) GOOD REASON. The Executive may terminate the Executive's employment
for Good Reason, which shall mean in any of the following events unless it
occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a Change
in Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless the
Executive's employment with the Company or a Subsidiary is terminated
(i) by the Company or a Subsidiary for Cause, Disability or Retirement
or by reason of death or (ii) by the Executive other than for Good
Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to the
average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan.
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
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(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan in an amount which is not
substantially similar, on a percentage basis, to the average percentage
reduction of benefits under any such Incentive Plan effected during the
preceding twelve (12) months for all officers of the Company or a
Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) INCENTIVE PLAN. Incentive Plan means any incentive plan or
arrangement including, without limitation, the Company's Management Incentive
Compensation Plan, annual bonus and contingent bonus arrangements and credits
and the right to receive performance awards and similar incentive compensation
benefits adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
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6
(k) NOTICE OF TERMINATION. Notice of Termination shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and which 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.
(l) PENSION BENEFITS. Pension Benefits shall mean all benefits under
the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) RETIREMENT. Retirement shall mean termination by the Company or a
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) SECURITIES PLAN. Securities Plan shall mean any plan or arrangement
to receive securities of the Company including, any Company plan or arrangement
to receive and exercise stock options, stock appreciation rights, restricted
stock or grants thereof or to acquire stock or other securities of the Company
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
2. TERM OF AGREEMENT.
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
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3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company
or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive for Good Reason shall be communicated
to the other party by a Notice of Termination. No such purported termination by
the Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. COMPENSATION UPON TERMINATION.
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
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(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
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(iv) During the term of this Agreement and through the period
of twenty-four (24) months following the Date of Termination (or, if
such date occurs after the Executive reaches age sixty-three (63), for
a period equal to the number of months after such date until the
Executive reaches age sixty-five (65)), under the Company's pension
plan in which the Executive is participating immediately prior to the
Notice of Termination, all Pension Benefits shall continue to accrue to
the Executive, crediting of service of the Executive with respect to
Pension Benefits shall continue and the Executive shall be entitled to
receive all Pension Benefits. To the extent that the amount of any
Pension Benefits cannot take into account such accrual or crediting by
reason of the Executive's no longer being an employee of the Company
during such period, the Company shall itself pay to the Executive an
amount equal to the additional benefits that would have been provided
had such accrual or crediting been taken into account in calculating
such pension benefits. The obligation of the Company to provide any
pension benefit payment under the preceding sentence constitutes merely
the unsecured promise of the Company to make such payments from its
general assets, and the Executive shall have no interest in, or lien or
prior claim upon, any property of the Company or a Subsidiary with
respect thereto.
(c) If after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the
Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
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5. EMPLOYMENT.
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employment of the Company or Subsidiary during
any period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control of the Company until a Change in Control of the Company has taken place
or, in the opinion of the Board of Directors, such person has abandoned or
terminated its efforts to effect a Change in Control of the Company. Subject to
the foregoing, nothing contained in this Agreement shall impair or interfere in
any way with the right of the Executive to terminate the Executive's employment
or the right of the Company or any Subsidiary to terminate the employment of the
Executive with or without cause prior to a Change in Control of the Company.
Nothing contained in this Agreement shall be construed as a contract of
employment between the Company or a Subsidiary and the Executive or as a right
of the Executive to continue in the employment of the Company or a Subsidiary,
or as a limitation of the right of the Company or a Subsidiary to discharge the
Executive with or without cause prior to a Change in Control of the Company.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. SUCCESSOR TO THE COMPANY; SUCCESSOR OF THE EXECUTIVE.
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
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(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES.
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. LAWS GOVERNING.
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
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13. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501-0239
Attn: General Counsel
If to the Executive:
Robert A. Calcagni
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
<TABLE>
<S> <C>
EXECUTIVE COMMERCIAL INTERTECH CORP.
By: By:
------------------------ ----------------------------
Name: Robert A. Calcagni Name: Don E. Tucker
------------------------ ----------------------------
Title: Title: Senior Vice President
------------------------ ----------------------------
</TABLE>
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EXHIBIT 99.15
This Severance Compensation Agreement ("Agreement") made and entered
into as of the 29th day of February, 1996, by and between Commercial Intertech
Corp. ("Company") and Hubert Jacobs van Merlen ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the Executive's
continued services to the stability and continuity of management of the Company
and its subsidiaries, it is appropriate and in the best interests of the Company
and of its shareholders to reinforce and encourage the Executive's continued
disinterested attention and undistracted dedication to his duties in the
potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. DEFINITIONS.
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) ANNUAL CASH COMPENSATION. Annual Cash Compensation shall mean the
sum of (i) the Executive's annual base salary in effect at the time the Notice
of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) BENEFIT PLAN. Benefit Plan means any benefit plan or arrangement
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
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(c) CAUSE. The Company or a Subsidiary may terminate the Executive's
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock
would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Company's common
stock immediately prior to the merger have substantially the same
proportionate ownership of the common stock of the surviving
corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the
Company;
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(iv) any person (as such term is used in Sections 13(d) and
l4(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) COMPANY. Company shall mean Commercial Intertech Corp. and any
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.1(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) DATE OF TERMINATION. Date of Termination shall mean (i) if this
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) DISABILITY. The Executive shall be deemed to have a Disability if,
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
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(h) EMPLOYMENT BENEFITS. Employment Benefits shall mean life, health,
disability and accident insurance plans and a package of "executive benefits"
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
(i) GOOD REASON. The Executive may terminate the Executive's employment
for Good Reason, which shall mean in any of the following events unless it
occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a Change
in Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless the
Executive's employment with the Company or a Subsidiary is terminated
(i) by the Company or a Subsidiary for Cause, Disability or Retirement
or by reason of death or (ii) by the Executive other than for Good
Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to the
average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan.
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
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(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan in an amount which is not
substantially similar, on a percentage basis, to the average percentage
reduction of benefits under any such Incentive Plan effected during the
preceding twelve (12) months for all officers of the Company or a
Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) INCENTIVE PLAN. Incentive Plan means any incentive plan or
arrangement including, without limitation, the Company's Management Incentive
Compensation Plan, annual bonus and contingent bonus arrangements and credits
and the right to receive performance awards and similar incentive compensation
benefits adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
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(k) NOTICE OF TERMINATION. Notice of Termination shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and which 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.
(l) PENSION BENEFITS. Pension Benefits shall mean all benefits under
the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) RETIREMENT. Retirement shall mean termination by the Company or a
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) SECURITIES PLAN. Securities Plan shall mean any plan or arrangement
to receive securities of the Company including, any Company plan or arrangement
to receive and exercise stock options, stock appreciation rights, restricted
stock or grants thereof or to acquire stock or other securities of the Company
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
2. TERM OF AGREEMENT.
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
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3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company
or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive for Good Reason shall be communicated
to the other party by a Notice of Termination. No such purported termination by
the Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. COMPENSATION UPON TERMINATION.
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
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(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
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(iv) During the term of this Agreement and through the period
of twenty-four (24) months following the Date of Termination (or, if
such date occurs after the Executive reaches age sixty-three (63), for
a period equal to the number of months after such date until the
Executive reaches age sixty-five (65)), under the Company's pension
plan in which the Executive is participating immediately prior to the
Notice of Termination, all Pension Benefits shall continue to accrue to
the Executive, crediting of service of the Executive with respect to
Pension Benefits shall continue and the Executive shall be entitled to
receive all Pension Benefits. To the extent that the amount of any
Pension Benefits cannot take into account such accrual or crediting by
reason of the Executive's no longer being an employee of the Company
during such period, the Company shall itself pay to the Executive an
amount equal to the additional benefits that would have been provided
had such accrual or crediting been taken into account in calculating
such pension benefits. The obligation of the Company to provide any
pension benefit payment under the preceding sentence constitutes merely
the unsecured promise of the Company to make such payments from its
general assets, and the Executive shall have no interest in, or lien or
prior claim upon, any property of the Company or a Subsidiary with
respect thereto.
(c) If after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the
Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
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5. EMPLOYMENT.
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employment of the Company or Subsidiary during
any period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control of the Company until a Change in Control of the Company has taken place
or, in the opinion of the Board of Directors, such person has abandoned or
terminated its efforts to effect a Change in Control of the Company. Subject to
the foregoing, nothing contained in this Agreement shall impair or interfere in
any way with the right of the Executive to terminate the Executive's employment
or the right of the Company or any Subsidiary to terminate the employment of the
Executive with or without cause prior to a Change in Control of the Company.
Nothing contained in this Agreement shall be construed as a contract of
employment between the Company or a Subsidiary and the Executive or as a right
of the Executive to continue in the employment of the Company or a Subsidiary,
or as a limitation of the right of the Company or a Subsidiary to discharge the
Executive with or without cause prior to a Change in Control of the Company.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. SUCCESSOR TO THE COMPANY; SUCCESSOR OF THE EXECUTIVE.
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
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(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES.
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. LAWS GOVERNING.
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
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13. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501-0239
Attn: General Counsel
If to the Executive:
Hubert Jacobs van Merlen
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
<TABLE>
<S> <C>
EXECUTIVE COMMERCIAL INTERTECH CORP.
By: By:
------------------------ ----------------------------
Name: Hubert Jacobs van Merlen Name: Don E. Tucker
------------------------ ----------------------------
Title: Title: Senior Vice President
------------------------ ----------------------------
</TABLE>
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EXHIBIT 99.16
This Severance Compensation Agreement ("Agreement") made and entered
into as of the 28 day of Sept , 1989 , by and between Commercial Intertech Corp.
("Company") and Edward J. Barnard ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the Executive's
continued services to the stability and continuity of management of the Company
and its subsidiaries, it is appropriate and in the best interests of the Company
and of its shareholders to reinforce and encourage the Executive's continued
disinterested attention and undistracted dedication to his duties in the
potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. DEFINITIONS.
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) ANNUAL CASH COMPENSATION. Annual Cash Compensation shall mean the
sum of (i) the Executive's annual base salary in effect at the time the Notice
of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) BENEFIT PLAN. Benefit Plan means any benefit plan or arrangement
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
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(c) CAUSE. The Company or a Subsidiary may terminate the Executive's
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock
would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Company's common
stock immediately prior to the merger have substantially the same
proportionate ownership of the common stock of the surviving
corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the
Company;
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(iv) any person (as such term is used in Sections 13(d) and
l4(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) COMPANY. Company shall mean Commercial Intertech Corp. and any
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.1(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) DATE OF TERMINATION. Date of Termination shall mean (i) if this
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) DISABILITY. The Executive shall be deemed to have a Disability if,
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
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(h) EMPLOYMENT BENEFITS. Employment Benefits shall mean life, health,
disability and accident insurance plans and a package of "executive benefits"
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
(i) GOOD REASON. The Executive may terminate the Executive's employment
for Good Reason, which shall mean in any of the following events unless it
occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a Change
in Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless the
Executive's employment with the Company or a Subsidiary is terminated
(i) by the Company or a Subsidiary for Cause, Disability or Retirement
or by reason of death or (ii) by the Executive other than for Good
Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to the
average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan.
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
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(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan in an amount which is not
substantially similar, on a percentage basis, to the average percentage
reduction of benefits under any such Incentive Plan effected during the
preceding twelve (12) months for all officers of the Company or a
Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) INCENTIVE PLAN. Incentive Plan means any incentive plan or
arrangement including, without limitation, the Company's Management Incentive
Compensation Plan, annual bonus and contingent bonus arrangements and credits
and the right to receive performance awards and similar incentive compensation
benefits adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
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(k) NOTICE OF TERMINATION. Notice of Termination shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and which 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.
(l) PENSION BENEFITS. Pension Benefits shall mean all benefits under
the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) RETIREMENT. Retirement shall mean termination by the Company or a
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) SECURITIES PLAN. Securities Plan shall mean any plan or arrangement
to receive securities of the Company including, any Company plan or arrangement
to receive and exercise stock options, stock appreciation rights, restricted
stock or grants thereof or to acquire stock or other securities of the Company
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
2. TERM OF AGREEMENT.
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
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3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company
or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive for Good Reason shall be communicated
to the other party by a Notice of Termination. No such purported termination by
the Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. COMPENSATION UPON TERMINATION.
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
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(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
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(iv) During the term of this Agreement and through the period
of twenty-four (24) months following the Date of Termination (or, if
such date occurs after the Executive reaches age sixty-three (63), for
a period equal to the number of months after such date until the
Executive reaches age sixty-five (65)), under the Company's pension
plan in which the Executive is participating immediately prior to the
Notice of Termination, all Pension Benefits shall continue to accrue to
the Executive, crediting of service of the Executive with respect to
Pension Benefits shall continue and the Executive shall be entitled to
receive all Pension Benefits. To the extent that the amount of any
Pension Benefits cannot take into account such accrual or crediting by
reason of the Executive's no longer being an employee of the Company
during such period, the Company shall itself pay to the Executive an
amount equal to the additional benefits that would have been provided
had such accrual or crediting been taken into account in calculating
such pension benefits. The obligation of the Company to provide any
pension benefit payment under the preceding sentence constitutes merely
the unsecured promise of the Company to make such payments from its
general assets, and the Executive shall have no interest in, or lien or
prior claim upon, any property of the Company or a Subsidiary with
respect thereto.
(c) If after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the
Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
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5. EMPLOYMENT.
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employment of the Company or Subsidiary during
any period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control of the Company until a Change in Control of the Company has taken place
or, in the opinion of the Board of Directors, such person has abandoned or
terminated its efforts to effect a Change in Control of the Company. Subject to
the foregoing, nothing contained in this Agreement shall impair or interfere in
any way with the right of the Executive to terminate the Executive's employment
or the right of the Company or any Subsidiary to terminate the employment of the
Executive with or without cause prior to a Change in Control of the Company.
Nothing contained in this Agreement shall be construed as a contract of
employment between the Company or a Subsidiary and the Executive or as a right
of the Executive to continue in the employment of the Company or a Subsidiary,
or as a limitation of the right of the Company or a Subsidiary to discharge the
Executive with or without cause prior to a Change in Control of the Company.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. SUCCESSOR TO THE COMPANY; SUCCESSOR OF THE EXECUTIVE.
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
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11
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES.
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. LAWS GOVERNING.
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
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13. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501-0239
Attn: General Counsel
If to the Executive:
Edward J. Barnard
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
<TABLE>
<S> <C>
EXECUTIVE COMMERCIAL INTERTECH CORP.
By: By:
------------------------ ----------------------------
Name: Edward J. Barnard Name: Don E. Tucker
------------------------ ----------------------------
Title: Title: Senior Vice President
------------------------ ----------------------------
</TABLE>
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EXHIBIT 99.17
This Severance Compensation Agreement ("Agreement") made and entered
into as of the 28 day of Sept , 1989 , by and between Commercial Intertech Corp.
("Company") and Patrick C. Reardon ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the Executive's
continued services to the stability and continuity of management of the Company
and its subsidiaries, it is appropriate and in the best interests of the Company
and of its shareholders to reinforce and encourage the Executive's continued
disinterested attention and undistracted dedication to his duties in the
potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. DEFINITIONS.
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) ANNUAL CASH COMPENSATION. Annual Cash Compensation shall mean the
sum of (i) the Executive's annual base salary in effect at the time the Notice
of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) BENEFIT PLAN. Benefit Plan means any benefit plan or arrangement
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
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(c) CAUSE. The Company or a Subsidiary may terminate the Executive's
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock
would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Company's common
stock immediately prior to the merger have substantially the same
proportionate ownership of the common stock of the surviving
corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the
Company;
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(iv) any person (as such term is used in Sections 13(d) and
l4(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) COMPANY. Company shall mean Commercial Intertech Corp. and any
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.1(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) DATE OF TERMINATION. Date of Termination shall mean (i) if this
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) DISABILITY. The Executive shall be deemed to have a Disability if,
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
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(h) EMPLOYMENT BENEFITS. Employment Benefits shall mean life, health,
disability and accident insurance plans and a package of "executive benefits"
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
(i) GOOD REASON. The Executive may terminate the Executive's employment
for Good Reason, which shall mean in any of the following events unless it
occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a Change
in Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless the
Executive's employment with the Company or a Subsidiary is terminated
(i) by the Company or a Subsidiary for Cause, Disability or Retirement
or by reason of death or (ii) by the Executive other than for Good
Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to the
average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan.
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
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(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan in an amount which is not
substantially similar, on a percentage basis, to the average percentage
reduction of benefits under any such Incentive Plan effected during the
preceding twelve (12) months for all officers of the Company or a
Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) INCENTIVE PLAN. Incentive Plan means any incentive plan or
arrangement including, without limitation, the Company's Management Incentive
Compensation Plan, annual bonus and contingent bonus arrangements and credits
and the right to receive performance awards and similar incentive compensation
benefits adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
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(k) NOTICE OF TERMINATION. Notice of Termination shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and which 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.
(l) PENSION BENEFITS. Pension Benefits shall mean all benefits under
the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) RETIREMENT. Retirement shall mean termination by the Company or a
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) SECURITIES PLAN. Securities Plan shall mean any plan or arrangement
to receive securities of the Company including, any Company plan or arrangement
to receive and exercise stock options, stock appreciation rights, restricted
stock or grants thereof or to acquire stock or other securities of the Company
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
2. TERM OF AGREEMENT.
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
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3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company
or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive for Good Reason shall be communicated
to the other party by a Notice of Termination. No such purported termination by
the Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. COMPENSATION UPON TERMINATION.
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
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(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
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(iv) During the term of this Agreement and through the period
of twenty-four (24) months following the Date of Termination (or, if
such date occurs after the Executive reaches age sixty-three (63), for
a period equal to the number of months after such date until the
Executive reaches age sixty-five (65)), under the Company's pension
plan in which the Executive is participating immediately prior to the
Notice of Termination, all Pension Benefits shall continue to accrue to
the Executive, crediting of service of the Executive with respect to
Pension Benefits shall continue and the Executive shall be entitled to
receive all Pension Benefits. To the extent that the amount of any
Pension Benefits cannot take into account such accrual or crediting by
reason of the Executive's no longer being an employee of the Company
during such period, the Company shall itself pay to the Executive an
amount equal to the additional benefits that would have been provided
had such accrual or crediting been taken into account in calculating
such pension benefits. The obligation of the Company to provide any
pension benefit payment under the preceding sentence constitutes merely
the unsecured promise of the Company to make such payments from its
general assets, and the Executive shall have no interest in, or lien or
prior claim upon, any property of the Company or a Subsidiary with
respect thereto.
(c) If after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the
Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
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5. EMPLOYMENT.
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employment of the Company or Subsidiary during
any period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control of the Company until a Change in Control of the Company has taken place
or, in the opinion of the Board of Directors, such person has abandoned or
terminated its efforts to effect a Change in Control of the Company. Subject to
the foregoing, nothing contained in this Agreement shall impair or interfere in
any way with the right of the Executive to terminate the Executive's employment
or the right of the Company or any Subsidiary to terminate the employment of the
Executive with or without cause prior to a Change in Control of the Company.
Nothing contained in this Agreement shall be construed as a contract of
employment between the Company or a Subsidiary and the Executive or as a right
of the Executive to continue in the employment of the Company or a Subsidiary,
or as a limitation of the right of the Company or a Subsidiary to discharge the
Executive with or without cause prior to a Change in Control of the Company.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. SUCCESSOR TO THE COMPANY; SUCCESSOR OF THE EXECUTIVE.
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
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11
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES.
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. LAWS GOVERNING.
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
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13. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501-0239
Attn: General Counsel
If to the Executive:
Patrick C. Reardon
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
<TABLE>
<S> <C>
EXECUTIVE COMMERCIAL INTERTECH CORP.
By: By:
------------------------ ----------------------------
Name: Patrick C. Reardon Name: Don E. Tucker
------------------------ ----------------------------
Title: Title: Senior Vice President
------------------------ ----------------------------
</TABLE>
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EXHIBIT 99.18
This Severance Compensation Agreement ("Agreement") made and entered
into as of the 28 day of Sept , 1989 , by and between Commercial Intertech Corp.
("Company") and Kenneth W. Marcum ("Executive").
WHEREAS the Company's Compensation Committee of the Board of Directors
("Committee") has determined that, in light of the importance of the Executive's
continued services to the stability and continuity of management of the Company
and its subsidiaries, it is appropriate and in the best interests of the Company
and of its shareholders to reinforce and encourage the Executive's continued
disinterested attention and undistracted dedication to his duties in the
potentially disturbing circumstances of a possible change in control of the
Company by providing some degree of personal financial security; and
WHEREAS in order to induce the Executive to remain in the employ of the
Company or a subsidiary of the Company ("Subsidiary"), the Committee has
determined that it is desirable to pay the Executive the severance compensation
set forth below if the Executive's employment with the Company or a Subsidiary
terminates in one of the circumstances described below following a Change in
Control of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the Company and the Executive agree as
follows:
1. DEFINITIONS.
The following terms shall have the meaning set forth below unless the
context clearly indicates otherwise:
(a) ANNUAL CASH COMPENSATION. Annual Cash Compensation shall mean the
sum of (i) the Executive's annual base salary in effect at the time the Notice
of Termination is given; and (ii) an amount equal to the highest annual
compensation paid in the last three (3) calendar years as compensation under the
Company's Management Incentive Compensation Plan (or any successor plan).
(b) BENEFIT PLAN. Benefit Plan means any benefit plan or arrangement
including, without limitation, the Company's pension or profit sharing plan,
life insurance plan, medical, dental, accident and disability plans and
educational assistance reimbursement plan adopted or maintained by the Company
on the effective date of this Agreement or hereinafter adopted or maintained
during the term of this Agreement.
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(c) CAUSE. The Company or a Subsidiary may terminate the Executive's
employment for Cause only on the basis of: (i) the Executive's wilful and
continued failure substantially to perform his duties with the Company or a
Subsidiary (other than any such failure resulting from his Disability or any
such failure resulting from the Executive's termination for Good Reason), after
a written demand for substantial performance is delivered to the Executive by
the Company's Board of Directors which specifically identifies the manner in
which such Board of Directors believes that the Executive has not substantially
performed his duties; or (ii) the Executive's wilful engagement in conduct
materially and demonstrably injurious to the Company or a Subsidiary. For
purposes of this Section 1(c), no act or failure to act on the Executive's part
shall be considered "wilful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company or a Subsidiary. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the Company's Board of Directors, at a meeting of the Board of Directors called
and held for the purpose, finding that in the good faith opinion of the Board of
Directors the Executive was guilty of conduct set forth in clause (i) or (ii) of
the first sentence of this Section 1(c) and specifying the particulars thereof
in detail.
(d) CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock
would be converted into cash, securities or other property, other than
a merger of the Company in which the holders of the Company's common
stock immediately prior to the merger have substantially the same
proportionate ownership of the common stock of the surviving
corporation immediately after the merger;
(ii) there shall be consummated any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of the Company;
(iii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the
Company;
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(iv) any person (as such term is used in Sections 13(d) and
l4(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise; or
(v) at any time during a period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two (2) year period was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning
of such two (2) year period.
(e) COMPANY. Company shall mean Commercial Intertech Corp. and any
successor or assign to all or substantially all of the business and/or assets
which executes and delivers the agreement provided for in Section 7.1(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(f) DATE OF TERMINATION. Date of Termination shall mean (i) if this
Agreement is terminated by the Company or a Subsidiary for Disability, thirty
(30) days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period); or (ii) if the
Executive's employment is terminated for any reason other than Disability, the
date on which a Notice of Termination is given.
(g) DISABILITY. The Executive shall be deemed to have a Disability if,
as a result of the Executive's incapacity due to physical or mental illness, the
Executive: (1) shall qualify for benefits under the Company's short-term
disability plan or long-term disability plan adopted or maintained by the
Company on the effective date of this Agreement or hereinafter adopted or
maintained during the term of this Agreement; and (2) shall have been absent
from his duties with the Company or a Subsidiary on a full-time basis for a
continuous period of six (6) months commencing with the date of Change in
Control of the Company or the first day of such absence (whichever is later).
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(h) EMPLOYMENT BENEFITS. Employment Benefits shall mean life, health,
disability and accident insurance plans and a package of "executive benefits"
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
(i) GOOD REASON. The Executive may terminate the Executive's employment
for Good Reason, which shall mean in any of the following events unless it
occurs with the Executive's express prior written consent:
(i) the assignment to the Executive by the Company or a
Subsidiary of any duties inconsistent with, or a diminution of, the
Executive's position, duties, titles, offices, responsibilities and
status with the Company or a Subsidiary immediately prior to a Change
in Control of the Company or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, unless the
Executive's employment with the Company or a Subsidiary is terminated
(i) by the Company or a Subsidiary for Cause, Disability or Retirement
or by reason of death or (ii) by the Executive other than for Good
Reason;
(ii) a reduction by the Company or a Subsidiary in the
Executive's base salary as in effect on the date hereof or as the same
may be increased from time to time during the term of this Agreement or
the Company's or a Subsidiary's failure to increase (within fifteen
(15) months of the Executive's last increase in base salary) the
Executive's base salary after a Change in Control of the Company in an
amount which is substantially similar, on a percentage basis, to the
average percentage increase in base salary for all officers of the
Company or a Subsidiary effected during the preceding twelve (12)
months, other than a reduction of the Executive's base salary pursuant
to the terms of the Company's short-term or long-term disability plan
during a period in which the Executive has a Disability and qualifies
for benefits under such plan.
(iii) except with respect to changes required to maintain its
tax-qualified status or changes generally applicable to all employees
of the Company, any failure by the Company or a Subsidiary to continue
in effect any Benefit Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans providing the Executive with substantially similar
benefits), the taking of any action by the Company or a Subsidiary
which would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such Benefit Plan
or deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of a Change in Control of the Company or the
failure by the Company or a Subsidiary to provide the Executive with
the number of paid vacation days to which the Executive was entitled in
accordance with the vacation policies in effect at the time of a Change
in Control of the Company;
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(iv) any failure by the Company or a Subsidiary to continue in
effect any Incentive Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue other plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in any such Incentive Plan or reduce the Executive's
benefits under any such Incentive Plan in an amount which is not
substantially similar, on a percentage basis, to the average percentage
reduction of benefits under any such Incentive Plan effected during the
preceding twelve (12) months for all officers of the Company or a
Subsidiary participating in any such Incentive Plan;
(v) any failure by the Company or a Subsidiary to continue in
effect any Securities Plan in which the Executive is participating at
the time of a Change in Control of the Company (or to substitute and
continue plans or arrangements providing the Executive with
substantially similar benefits) or the taking of any action by the
Company or a Subsidiary which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under
any such Securities Plan;
(vi) a relocation of the Company's principal executive offices
or the Executive's relocation to any place other than the location at
which the Executive performed the Executive's duties prior to a Change
in Control of the Company;
(vii) a substantial increase in business travel obligations
over such obligations as they existed at the time of a Change in
Control of the Company;
(viii) any material breach by the Company or a Subsidiary of
any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company in accordance
with Section 7(a); or
(x) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 1(k).
(j) INCENTIVE PLAN. Incentive Plan means any incentive plan or
arrangement including, without limitation, the Company's Management Incentive
Compensation Plan, annual bonus and contingent bonus arrangements and credits
and the right to receive performance awards and similar incentive compensation
benefits adopted or maintained by the Company on the effective date of this
Agreement or hereinafter adopted or maintained during the term of this
Agreement.
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(k) NOTICE OF TERMINATION. Notice of Termination shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and which 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.
(l) PENSION BENEFITS. Pension Benefits shall mean all benefits under
the Company's pension plan and any other plan or agreement relating to
retirement benefits adopted or maintained by the Company on the effective date
of this Agreement or hereinafter adopted or maintained during the term of this
Agreement.
(m) RETIREMENT. Retirement shall mean termination by the Company or a
Subsidiary or by the Executive of the Executive's employment based on the
Executive's having reached age sixty-five (65). Termination based on Retirement
shall not include, for purposes of this Agreement, the Executive's taking of
early retirement by reason of a termination by the Executive of his employment
for Good Reason.
(n) SECURITIES PLAN. Securities Plan shall mean any plan or arrangement
to receive securities of the Company including, any Company plan or arrangement
to receive and exercise stock options, stock appreciation rights, restricted
stock or grants thereof or to acquire stock or other securities of the Company
adopted or maintained by the Company on the effective date of this Agreement or
hereinafter adopted or maintained during the term of this Agreement.
2. TERM OF AGREEMENT.
This Agreement shall commence on the date hereof and shall terminate,
except to the extent that any obligation of the Company under this Agreement
remains unpaid as of such time, on the earlier of (i) the date on which the
Executive reaches age sixty-five (65) and (ii) the date five (5) years from the
date of this Agreement; provided that this Agreement shall continue in effect
until the earlier of (i) the date on which the Executive reaches age sixty-five
(65) and (ii) the date two (2) years beyond the date of termination of this
Agreement as provided above if a Change in Control of the Company shall have
occurred prior to such date of termination of this Agreement (and shall continue
for such additional period as any obligation of the Company under this Agreement
shall remain unpaid).
It is further provided, however, that commencing on the date five (5)
years after the date of this Agreement and each anniversary date of the
Agreement thereafter (unless the Executive has attained age sixty-five (65)),
the term of this Agreement shall automatically be extended for one (1)
additional year unless not later than one (1) year prior to the date five (5)
years after the date of this Agreement or subsequent anniversary date the
Company or the Executive shall have given written notice to the other of its or
his intention not to extend this Agreement.
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3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) No compensation shall be payable to the Executive pursuant to
Section 4 of this Agreement unless and until (i) there shall have been a Change
in Control of the Company while the Executive is still employed as an Executive
of the Company or a Subsidiary; and (ii) the Executive's employment with the
Company or a Subsidiary is terminated within two (2) years of the date of the
Change in Control unless the Executive's employment is terminated (i) by the
Company or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive other than for Good Reason.
(b) Any termination of the Executive's employment (i) by the Company
or a Subsidiary for Cause, Disability or Retirement or by reason of the
Executive's death or (ii) by the Executive for Good Reason shall be communicated
to the other party by a Notice of Termination. No such purported termination by
the Company or Subsidiary shall be effective without such Notice of Termination.
(c) The Company shall pay to the Executive all legal fees and expenses
incurred by the Executive as a result of the termination of the Executive's
employment (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of the Executive's death or (ii) by the Executive for
Good Reason, including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
4. COMPENSATION UPON TERMINATION.
(a) If the Executive's employment with the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary for Cause, Disability or
Retirement or by reason of death or (ii) by the Executive other than for Good
Reason, the Executive shall not be entitled to any severance compensation under
this Agreement. In the event the Company or a Subsidiary provides a Notice of
Termination to an Executive with a Disability and the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days of
such Notice, the Company or Subsidiary may terminate the Executive's employment
for Disability without the Executive's being entitled to any severance
compensation under this Agreement. The absence of the Executive's entitlement to
any benefits under this Agreement shall not prejudice the Executive's right to
the full realization of any and all other benefits to which the Executive shall
be entitled pursuant to the terms of any employee benefit plans or other
agreements of the Company or a Subsidiary in which the Executive is a
participant or to which the Executive is a party.
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<PAGE>
8
(b) If the Executive's employment by the Company or a Subsidiary is
terminated (i) by the Company or a Subsidiary other than for Cause, Disability
or Retirement or by reason of death or (ii) by the Executive for Good Reason,
then the Executive shall be entitled to the severance compensation provided
below:
(i) The Company shall pay as severance compensation to the
Executive, at the time specified in subsection (ii) below, a lump-sum
severance payment equal to two times the Executive's Annual Cash
Compensation reduced by any actual damages paid to the Executive by the
Company as a result of the Company's termination of the Executive's
employment with the Company. If the Executive is age sixty-three (63)
or older on the Date of Termination, such lump-sum severance payment
shall be equal to the Executive's Annual Cash Compensation multiplied
by a fraction of which the numerator shall be the number of months from
such date until the Executive reaches age sixty-five (65) and the
denominator shall be twelve (12).
(ii) The severance compensation provided for in subsection (i)
above shall be made not later than the tenth (10th) day following the
Date of Termination; provided, however, that, if the amount of such
compensation cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as
determined in good faith by the Company but subject to the provisions
of Section 4(c), of the minimum amount of such compensation and shall
pay the remainder of such compensation (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the Date of Termination. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive
payable on the fifth (5th) day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
(iii) The Company shall arrange to provide the Executive for a
period of twenty-four (24) months following the Date of Termination
(or, if such date occurs after the Executive reaches age sixty-three
(63), for a period equal to the number of months after such date until
the Executive reaches age sixty-five (65)) or until the Executive's
death, if earlier, with Employment Benefits substantially similar to
those which the Executive was receiving immediately prior to the Notice
of Termination.
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<PAGE>
9
(iv) During the term of this Agreement and through the period
of twenty-four (24) months following the Date of Termination (or, if
such date occurs after the Executive reaches age sixty-three (63), for
a period equal to the number of months after such date until the
Executive reaches age sixty-five (65)), under the Company's pension
plan in which the Executive is participating immediately prior to the
Notice of Termination, all Pension Benefits shall continue to accrue to
the Executive, crediting of service of the Executive with respect to
Pension Benefits shall continue and the Executive shall be entitled to
receive all Pension Benefits. To the extent that the amount of any
Pension Benefits cannot take into account such accrual or crediting by
reason of the Executive's no longer being an employee of the Company
during such period, the Company shall itself pay to the Executive an
amount equal to the additional benefits that would have been provided
had such accrual or crediting been taken into account in calculating
such pension benefits. The obligation of the Company to provide any
pension benefit payment under the preceding sentence constitutes merely
the unsecured promise of the Company to make such payments from its
general assets, and the Executive shall have no interest in, or lien or
prior claim upon, any property of the Company or a Subsidiary with
respect thereto.
(c) If after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the
Executive's net proceeds of the severance compensation payable under this
Section 4 would be less than the amount of the Executive's net proceeds
resulting from payment of severance compensation described below, after
reduction for federal income taxes, then the amount under this Section 4
(without application of the paragraph (c)) shall be reduced as hereinafter
provided. If the severance compensation under this Section 4 (without
application of this Section 4(c)), either alone or together with other payments
to the Executive from the Company or a Subsidiary, would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations), such
severance compensation shall be reduced to the largest amount that will result
in no portion of the severance compensation payments under this Section 4 being
subject to the excise tax imposed by Section 4999 of the Code or being
disallowed as deductions to the Company under Section 280G of the Code. The
determination of whether any reduction in the severance compensation payments
under this Section 4(c) is to apply shall be made by the Executive in good faith
after consultation with the Company, and such determination shall be conclusive
and binding on the Company. The Company shall cooperate in good faith with the
Executive in making such determination and in providing the necessary
information for this purpose.
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<PAGE>
10
5. EMPLOYMENT.
The Executive agrees to be bound by the terms and conditions of this
Agreement and to remain in the employment of the Company or Subsidiary during
any period following any public announcement by any person of any proposed
transaction or transactions which, if effected, would result in a Change in
Control of the Company until a Change in Control of the Company has taken place
or, in the opinion of the Board of Directors, such person has abandoned or
terminated its efforts to effect a Change in Control of the Company. Subject to
the foregoing, nothing contained in this Agreement shall impair or interfere in
any way with the right of the Executive to terminate the Executive's employment
or the right of the Company or any Subsidiary to terminate the employment of the
Executive with or without cause prior to a Change in Control of the Company.
Nothing contained in this Agreement shall be construed as a contract of
employment between the Company or a Subsidiary and the Executive or as a right
of the Executive to continue in the employment of the Company or a Subsidiary,
or as a limitation of the right of the Company or a Subsidiary to discharge the
Executive with or without cause prior to a Change in Control of the Company.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of the
Executive's employment, or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, or other plan, arrangement, agreement or contract of the
Company or a Subsidiary.
7. SUCCESSOR TO THE COMPANY; SUCCESSOR OF THE EXECUTIVE.
(a) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all the business and/or assets of the company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason.
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<PAGE>
11
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
8. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
9. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. LEGAL FEES AND EXPENSES.
The Company or Subsidiary shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's or a Subsidiary's
contesting the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
12. LAWS GOVERNING.
This Agreement has been entered into in the State of Ohio, and shall be
construed, interpreted and governed in accordance with the laws of the State of
Ohio.
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12
13. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company or a Subsidiary:
Commercial Intertech Corp.
1775 Logan Avenue
P.O. Box 239
Youngstown, Ohio 44501-0239
Attn: General Counsel
If to the Executive:
Kenneth W. Marcum
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
<TABLE>
<S> <C>
EXECUTIVE COMMERCIAL INTERTECH CORP.
By: By:
------------------------ ----------------------------
Name: Kenneth W. Marcum Name: Don E. Tucker
------------------------ ----------------------------
Title: Title: Senior Vice President
------------------------ ----------------------------
</TABLE>
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<PAGE>
EXHIBIT 99.19
EXHIBIT B
COMMERCIAL INTERTECH CORP.
Stock Option and Award Plan of 1989
Section 1. Purpose.
The purpose of the Stock Option and Award Plan of 1989 ("the Plan") is to assist
Commercial Intertech Corp. (the "Company") in attracting and retaining capable
employees. The Plan will provide a long-term incentive to key employees by
encouraging and enabling them to participate in the Company's future prosperity
and growth. The Plan will provide equity ownership opportunities to better match
the interests of key employees with those of shareholders.
These objectives will be promoted through the granting to key employees of
equity instruments including (i) options (Incentive Stock Options ["ISOs"])
which are intended to qualify under Section 422A of the Internal Revenue Code of
1986 (the "Code"); (ii) options which are not intended to so qualify
(Nonqualified Stock Options ["NQSOs]), (ISOs and NQSOs are referred to together
hereinafter as Stock Options); (iii) Stock Appreciation Rights ("SARs"); (iv)
Limited Stock Appreciation Rights ("LSARs"); (v) Restricted Stock; and (vi)
Performance Shares.
The Plan supersedes any previous plans, including the Stock Option and Award
Plan of 1985, used by the Company to grant the above named instruments.
Section 2. Administration.
The Plan shall be administered by the Compensation Committee (the "Committee")
of the Board which shall have the power and authority to grant to eligible
employees Stock Options, SARs, LSARs, Restricted Stock and Performance Shares.
In particular, the Committee shall have the authority to: (i) select key
employees of the Company as recipients of awards; (ii) determine the number and
type of awards to be granted; (iii) determine the terms and conditions, not
inconsistent with the terms hereof, of any award granted; (iv) adopt, alter and
repeal such administrative rules, guidelines and practices governing the Plan
as it shall, from time to time, deem advisable; (v) interpret the terms and
provisions of the Plan and any award granted and any agreements relating
thereto; and (vi) to otherwise supervise the administration of the Plan. All
decisions made by the Committee pursuant to the provisions hereof shall be made
in the Committee's sole discretion and shall be final and binding on all
persons.
Section 3. Eligibility.
Key employees of the Company, who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company, are
eligible to be granted
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<PAGE>
awards. The participants under the Plan shall be selected from time to time
by the Committee, in its sole discretion from among those eligible.
Section 4. Stock Subject to Plan.
The total number of shares of the Company's common stock, $1.00 par value,
("Stock") reserved and available for distribution pursuant to awards hereunder
shall be 550,000 shares. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
Subject to Section 6(b)(iv), if any shares of Stock that have been optioned
cease to be subject to a Stock Option, or if any such shares of Stock that are
subject to any Restricted Stock or Performance Share award granted hereunder are
forfeited or any such Stock Option or other award otherwise terminates without a
payment being made to the participant in the form of Stock, such shares shall
again be available for distribution in connection with future awards under the
Plan.
Section 5. Stock Options.
Stock Options may be granted alone or in addition to other awards granted under
the Plan. Any Stock Options granted under the Plan shall be in such form as
the Committee may from time to time approve and the provisions of Stock Option
awards need not be the same with respect to each optionee.
Stock Options granted under the Plan may be either ISOs or NQSOs. The Committee
may grant to any optionee ISOs, NQSOs or both types of Stock Options (in each
case with or without SARs).
Anything in the Plan to the contrary notwithstanding, without the consent of the
optionee(s) affected, no term of this Plan relating to ISOs shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422A
of the Code or to disqualify any ISO under such Section 422A.
Stock Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions not
inconsistent with the terms of the Plan, as the Committee deems appropriate.
(a) Exercise Price. In the case of an ISO grant, the exercise price per share of
Stock purchasable under such ISO shall be no less than the Fair Market Value on
the day the Option is granted. Fair Market Value shall mean the closing sale
price of the Stock on the National Association of Securities Dealers Automated
Quotation system ("NASDAQ") or, if not quoted by NASDAQ on such date, the
average of the closing bid and asked price of the Stock on such date. For NQSOs,
the Committee has the discretion to set any exercise price it deems appropriate.
(b) Option Term. The term of each Stock Option shall be fixed by the Committee,
but no ISO shall be exercisable more than ten years after the date such ISO is
granted. The length of the term for NQSOs may be whatever the Committee deems
appropriate given the circumstances.
(c) Exercise of Stock Options. Stock Options shall become exercisable at such
time or times and subject to such terms and conditions (including, without
limitation, installment exercise provisions) as shall be determined by the
Committee, provided, however, that, except as provided in Section 5(f) or (g)
(in the case of death or Disability, respectively) and Section 10, unless
otherwise determined by the Committee at or after grant, no Stock Option shall
be exercisable prior to six months after the date of the granting of the Stock
Option. If the Committee provides that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time in whole or in part based on performance and/or such other factors as
the Committee may determine.
(d) Method of Exercise. Options may be exercised in whole or in part by giving
written notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price, either by certified check or bank check, or such other instrument as may
be permitted in accordance with rules or procedures adopted by the Committee.
As determined by the Committee, at or after grant, payment in full or in part
may also be made in the form of unrestricted Stock already owned by the
optionee.
No shares of Stock shall be transferred until full payment therefor has been
made. An optionee shall generally have the right of a shareholder with respect
to shares subject to Stock Options only when the optionee has given written
notice of exercise, has paid in full for such shares and, if requested, given
the representation described in Section 13(a).
(e) Non-Transferability of Options. No Stock Options shall be transferable by
the optionee other than by will or by the laws of descent and distribution, and
all Stock Options shall be exercisable, during the optionee's lifetime, only by
the
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<PAGE>
optionee.
At the request of an optionee, Stock purchased upon exercise of a Stock Option
may be issued or transferred into the name of the optionee and another person
jointly with rights of survivorship.
(f) Termination by Death. Subject to Section 5(i), if an optionee's employment
by the Company terminates by reason of death, any Stock Option held by such
optionee may thereafter be exercised, to the extent it was exercisable at the
time of death or on such accelerated basis as the Committee may determine at or
after grant, by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of one year (or such
other period up to three years as the Committee may specify) from the date of
death or until the expiration of the stated term of such Stock Option, whichever
period is shorter.
(g) Termination by Reason of Disability or Retirement. Subject to Section 5(i),
if an optionee's employment by the Company terminates by reason of Disability,
as defined under the Company's long-term disability plan, or Retirement, any
Stock Option held by such optionee will become exercisable upon approval by the
Committee and may thereafter be exercised by the optionee for a period of three
years (or such shorter period as the Committee may specify at grant) from the
date of such termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is the shorter, provided, however,
that, if the optionee dies within such three-year period (or such shorter
period), any unexercised Stock Option held by such optionee shall thereafter be
exercisable, to the extent to which it was exercisable at the time of death, for
a period of one year from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter. In the event
of termination of employment by reason of Disability or Retirement, if an ISO is
exercised after the expiration of the exercise periods that apply for purposes
of Section 422A of the Code, such ISO shall thereafter be treated as an NQSO.
(h) Other Termination of Employment. Unless otherwise determined by the
Committee at or after grant, if an optionee's employment by the Company
terminates for any reason other than death, Disability or Retirement, the
optionee will have one month from the date of termination to exercise any and
all Stock Options that are then exercisable, except that, if the termination was
for Cause, any and all Options shall be immediately cancelled. For the purpose
of the Plan, Cause means a felony conviction of a participant or the failure of
a participant to contest prosecution for a felony, or a participant's willful
misconduct or dishonesty, any of which is directly and materially harmful to the
business or reputation of the Company.
(i) ISO Limitations. To the extent required for "incentive stock option" status
under Section 422A of the Code, the aggregate Fair Market Value (determined as
of the time of grant) of the Stock with respect to which ISOs are exercisable
for the first time by the optionee during any calendar year under the Plan and
any other stock option plan of the Company and its affiliates, shall not exceed
$100,000.
The Committee may provide at grant, to the extent permitted under Section 422A
of the Code, that, if (i) a participant's employment with the Company is
terminated by reason of death, Disability or Retirement and (ii) the portion of
any ISO that is otherwise exercisable during the post-termination period
specified under Section 5(f), (g) or (h), applied without regard to this Section
5(i), is greater than the portion of such Stock Option that is exercisable as an
"incentive stock option" during such post-termination period under Section 422A,
such post-termination period shall automatically be extended, but not beyond the
original Stock Option term, to the extent necessary to permit the optionee to
exercise such ISO either as an ISO or, if exercised after the expiration of the
applicable exercise periods under Section 422A(a), as an NQSO. The Committee is
also authorized to provide at grant for a similar extension of the post-
termination exercise period in the event of a Change in Control or a Potential
Change in Control.
Section 6. Stock Appreciation Rights.
(a) Grant and Exercise. SARs may be granted in conjunction with all or part of
any Stock Option granted under the Plan.
An SAR or applicable portion thereof granted with respect to a given Stock
Option shall terminate and no longer be exercisable upon the termination or
exercise of the related Stock Option, except that, unless otherwise determined
by the Committee at the time of grant, an SAR granted with respect to less than
the full number of shares covered by a related Stock Option shall not be reduced
until the number of shares covered by an exercise or termination of the related
Stock Option exceeds the number of shares not covered by the SAR.
An SAR may be exercised by an optionee, in accordance with Section 6(b), by
surrendering the applicable portion of the related Stock Option in accordance
with procedures estab-
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<PAGE>
lished by the Committee for such purposes. Upon such exercise and surrender,
the optionee shall be entitled to receive an amount determined in the manner
prescribed in Section 6(b). Stock Options which have been so surrendered shall
no longer be exercisable to the extent the related SARs have been exercised.
(b) Terms and Conditions. SARs shall be subject to such terms and conditions,
not inconsistent with the provisions of the Plan, as shall be determined from
time to time by the Committee, including the following:
(i) SARs shall be exercisable only at such time or times and to the
extent that the Stock Options to which they relate are exercisable, in
accordance with the provisions of Sections 5 and 6 of the Plan, provided
that an SAR shall not be exercisable during the first six months of its
term by any optionee except as provided in Section 10(a)(i) or in the
event of death or Disability of the optionee prior to the expiration of
the six-month period.
(ii) Upon the exercise of an SAR, the optionee shall be entitled to
receive an amount in cash, if any, and/or shares of Stock in the
aggregate equal in value to the excess of the Fair Market Value of one
share of Stock over the option price per share specified in the related
Stock Option multiplied by the number of shares in respect of which the
SAR shall have been exercised, with the Committee having the right to
determine the form of payment.
(iii) SARs shall be transferable only when and to the extent that the
underlying Stock Option would be transferable under Section 5(e) of the
Plan.
(iv) Upon the exercise of an SAR for Stock, the Stock Option or part
thereof to which the SAR is related shall be deemed to have been
exercised for the purpose of the limitation set forth in Section 4 of
the Plan on the number of shares of Stock to be issued under the Plan.
7. Limited Stock Appreciation Rights.
(a) The Committee may at any time and from time to time grant LSARs in respect
to all or any part of any outstanding Stock Option and may define the terms of
such LSARs with respect to the value of Stock covered by the related outstanding
Stock Option.
(b) LSARs may be exercised only (i) when the Fair Market Value of one share of
stock is greater than the option price per share specified in the related stock
option; (ii) after the expiration of six months from the date of grant of the
LSAR except as provided in Section 10(a)(i); (iii) during the 30-day period
beginning on the first day after the date of a Change in Control or Potential
Change in Control of the Company, as defined in Section 10(b) and 10(c); (iv) at
a time when the holder of the related outstanding Stock Option is, directly or
indirectly, subject to Section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act"); (v) at a time and to the same extent as the related outstanding
Stock Option is exercisable, and (vi) by surrender to the Company, unexercised,
of the related outstanding Stock Option or any applicable portion thereof.
(c) LSARs shall entitle the optionee to receive from the Company, upon surrender
of the related outstanding Stock Option, or any portion thereof, an amount equal
to 100% of the higher of (i) the spread at the time of the exercise of the
LSARs, or (ii) the excess of the highest mean between the high and low sales
prices per share on the NASDAQ on any one day during the period beginning on the
sixtieth day prior to the date on which such LSARs are exercised and ending on
the date on which such LSARs are exercised over the option price per share of
Stock subject to the related Stock Option, multiplied by the number of shares in
respect of which the LSARs have been exercised. Such amount shall be paid by the
Company in cash.
(d) Each grant of an LSAR shall be evidenced by an agreement executed on behalf
of the Company by an officer designated by the Committee and accepted by the
optionee. Such agreement shall describe the LSARS, specify the related
outstanding Stock Option(s) and state that such LSARs are subject to all the
terms and provisions of the Plan and contain such other terms and provisions,
consistent with the Plan, as the Committee may approve.
(e) LSARs shall not be granted in respect of outstanding Stock Options to
purchase in excess of the number of shares of Stock reserved for the Plan in
Section 4. In the event of any change in the shares subject to outstanding Stock
Options in respect of which LSARs have been granted under the Plan, by reason of
any stock dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Company, or any merger,
consolidation, separation, reorganization or partial or complete liquidation, or
any other corporate transaction or event having an effect similar to any of the
foregoing, the aggregate number of shares subject to outstanding Stock Options
in respect of which
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<PAGE>
LSARs may thereafter be granted under the Plan and the number and
class of shares subject to each outstanding Stock Option in respect of which
LSARs have theretofore been granted under the Plan shall be appropriately
adjusted.
Section 8. Restricted Stock.
The provisions of Restricted Stock awards need not be the same with respect to
each recipient. Restricted Stock awards shall consist of awards of Company Stock
and shall be subject to the following restrictions and conditions.
(a) Price. The purchase price for shares of Restricted Stock shall be set by
the Committee and may be zero.
(b) Restricted Stock Award Agreement. Awards of Restricted Stock must be
accepted within a period of 60 days (or such shorter periods as the
Committee may specify at grant) after the award date, by executing a
Restricted Stock Award Agreement and paying whatever price, if any, is
required under Section 8(a).
The prospective recipient of a Restricted Stock award shall not have any rights
with respect to such award, unless and until such recipient has executed an
agreement evidencing the award and has delivered a fully executed copy thereof
to the Company, and has otherwise complied with the applicable terms and
conditions of such award.
(c) Stock Certificate and Legends. Each participant receiving a Restricted
Stock award shall be issued a stock certificate in respect of such shares
of Restricted Stock. Such certificate shall be registered in the name of
such participant, and shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to such award, substantially
in the following form:
The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) of
Commercial Intertech Corp.'s Stock Option and Award Plan of 1989 and an
Agreement entered into between the registered owner and Commercial Intertech
Corp. Copies of such Plan and Agreement are on file in the offices of Commercial
Intertech Corp.
The Committee may require that the stock certificates evidencing such shares be
held in custody by the Company until the restrictions hereon shall have lapsed,
and that, as a condition of any Restricted Stock award, the participant shall
have delivered a stock power, endorsed in blank, relating to the Stock covered
by such award.
(d) Stock Restrictions. Subject to the provisions of this Plan and
the applicable Restricted Stock Award Agreement, during a period set by the
Committee commencing with the date of such award (the "Restriction
Period"), the participant shall not be permitted to sell, transfer, pledge,
assign or otherwise encumber shares of Restricted Stock awarded under the
Plan.
Based on procedures set forth by the Committee, the Committee may, however, at
or after grant provide for the lapse of such restrictions in installments and/
or may accelerate or waive such restrictions in whole or in part, or as provided
in Section 11.
(e) Shareholder Rights. Except as provided in this Section 8, the recipient
shall have, with respect to the shares of Restricted Stock covered by any
award, all of the rights of a shareholder of the Company, including the
right to vote the shares, and the right to receive any dividends, provided,
however, that unless otherwise determined by the Committee, any
dividends on such shares shall be automatically deferred and reinvested in
additional Restricted Stock subject to the same restrictions as the
underlying award to the extent shares are available under Section 4.
(f) Termination of Employment. Except as otherwise provided in this Section 8
and in the applicable Restricted Stock Award Agreement, upon termination of
a participant's employment with the Company because of death, Disability
or Retirement, the Committee, at its discretion, may provide for waiver
of all or a portion of the restrictions applicable to unvested Restricted
Stock awards. If termination occurs for any other reason during the
Restriction Period for a given award, all shares still subject to
restriction shall be forfeited by the participant, provided, however, that
the Committee at its discretion may provide for waiver of all or a portion
of the remaining restrictions.
(g) Waiver of Restrictions. In the event of hardship or other special
circumstances of a participant whose employment with the Company is
involuntarily terminated (other than for Cause), the Committee may waive in
whole or in part any or all remaining restrictions with respect to any or
all of the participant's Restricted Stock, based on such factors and
criteria as the Committee may deem appropriate.
(h) Expiration of Restriction Period. If and when the Restriction Period
expires without a prior forfeiture of the Restricted
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Stock subject to such Restriction Period, unrestricted certificates for such
shares shall be delivered to the participant.
Section 9. Performance Shares.
The provisions of Performance Share awards need not be the same with respect to
each recipient. Performance Share awards shall consist of awards of Company
Stock and shall be subject to the following terms and conditions.
(a) Price. The purchase price for Performance Shares shall be zero.
(b) Performance Share Agreement. Awards of Performance Shares will be
specified in a Performance Share Award Agreement executed between the
recipient and the Committee.
(c) Restrictions. Each Performance Share award shall be subject to
restrictions related to (i) time and (ii) Company financial performance.
Such time periods (the "Performance Period") and financial performance
goals shall be set by the Committee in its sole discretion.
(d) Performance Share Restrictions. A recipient shall become vested in and
shall receive Performance Shares upon the elapse of the Performance Period
and the attainment of the associated financial performance goals set forth
in the agreement between the recipient and the Company. A recipient may
vest in more or less than the number of Performance Shares originally
awarded. The number of Performance Shares actually received shall be based
on the level of attainment of the financial performance objectives and
shall be specified in the Performance Share Award Agreement, subject to the
discretion of the Committee.
(e) Shareholder Rights. Subject to the provisions of this Plan and the
applicable award agreement, Performance Share awards may not be sold,
transferred, pledged, assigned or otherwise encumbered during
the Performance Period specified by the Committee. At the expiration
of the Performance Period, share certificates shall be delivered to the
participant, or his legal representative, in a number equal to the number
of shares earned under the Performance Share award.
The Committee may, however, at or after grant, accelerate the vesting of all or
part of any Performance Share award and/or waive the limitations for all or any
part of such award.
(f) Termination of Employment. Except to the extent otherwise provided in this
Section 9 and in the applicable Performance Share Award Agreement, upon
termination of a participant's employment with the Company for any reason
during the Performance Period for a given award, the Performance Shares
covered by such award shall be forfeited by the participant, provided,
however, the Committee may provide for accelerated vesting in the event of
termination of employment due to death, Disability or Retirement.
(g) Waiver of Restrictions. In the event of hardship or other special
circumstances of a participant whose employment with the Company is
involuntarily terminated (other than for Cause), the Committee may waive in
whole or in part any or all of the remaining limitations imposed hereunder
with respect to any or all of the participant's Performance Shares, based
on such factors and criteria as the Committee deems appropriate.
(h) Expiration of Performance Period. If and when the Performance Period
expires without a prior forfeiture of the Performance Shares subject to
such Performance Period, unrestricted certificates for the number of shares
of Stock earned under the award shall be delivered to the participant.
Section 10. Change in Control Provisions.
(a) Impact of Event. In the event of:
(x) a "Change in Control" as defined in Section 10(b)
or
(y) a "Potential Change in Control" as defined in Section 10(c)
the Committee may provide that one or more of the following acceleration and
valuation provisions shall apply:
(i) Any or all SARs or LSARs outstanding on the date that such Change in
Control or Potential Change in Control is determined to have occurred
and any or all Stock Options awarded under this Plan not previously
exercisable and vested shall become fully exercisable and vested.
(ii) The restrictions applicable to any or all Restricted Stock and
Performane Share awards shall lapse and such shares and awards shall be
fully vested.
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(b) Definition of "Change in Control" for purposes of Section 10(a), a "Change
in Control" shall be deemed to have occurred if:
(i) there shall be consummated (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Common Stock
would be converted into cash, securities or other property, other than a
merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of the Company, or
(ii) the shareholders of the Company shall approve any plan or proposal
for the liquidation or dissolution of the Company, or
(iii) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
other than the Company or a Subsidiary or any employee benefit plan
sponsored by the Company or a Subsidiary, shall become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing 30% or more of the combined
voting power of the Company's then outstanding securities ordinarily
(and apart from rights accruing in special circumstances) having the
right to vote in the election of director, as a result of a tender or
exchange offer, open market purchases, privately negotiated purchases or
otherwise, or
(iv) at any time during a period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
of the Company shall cease for any reason to constitute at least a
majority thereof, unless the election or the nomination for election by
the Company's shareholders of each new director during such two-year
period was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such two-
year period.
For purposes hereof, ownership of voting securities shall take into account and
shall include ownership as determined by applying the provisions of Rule
13d-3(d)(1)(1) (as in effect on the Approval Date) pursuant to the Exchange Act.
(c) Definition of "Potential Change in Control" for purpose of Section 10(a),
a "Potential Change in Control" means the happening of any one of the
following:
(i) The entering into an agreement by the Company, the consummation of
which would result in a Change in Control of the Company as defined in
Section 10(b); or
(ii) The acquisition of beneficial ownership, directly, or indirectly,
by any entity, person or group (other than the Company employee benefit
plan, including any trustee of such plan acting as such trustee) of
securities of the Company representing 5% or more of the combined voting
power of the Company's outstanding securities, and the adoption by the
Board of a resolution to the effect that a "Potential Change in Control"
of the Company has occurred for the purposes of this Plan.
(d) Change in Control Price. For the purposes of this Section 10, "Change in
Control Price" means the highest price per share paid in any transaction
reported on the NASDAQ, or paid or offered in any bona fide transaction
related to an actual or Potential Change in Control of the Company, at any
time during the preceding sixty-day period as determined by the Committee.
Section 11. Amendments and Termination.
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under any award theretofore granted, without the
optionee's or participant's consent, or which, without the approval of the
Company's stockholders, would:
(a) except as expressly provided in the Plan, increase the total number of
shares reserved for purposes of the Plan;
(b) change the class of employees eligible to participate in the Plan;
(c) extend the maximum option period under Section 5(b) of the Plan; or
(d) increase materially the benefits under the Plan.
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The Committee may amend the terms of any Stock Option or other award theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any holder without the holder's consent.
Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in applicable tax and securities laws and
accounting rules, as well as other developments.
Section 12. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a participant or
optionee by the Company, nothing contained herein shall give any such
participant or optionee any rights that are greater than those of a general
creditor of the Company. The Committee may authorize the creation of trusts or
other arrangements to meet the obligations created under the Plan to deliver
Stock or payments hereunder consistent with the foregoing.
Section 13. General Provisions.
(a) Share Transfer and Distribution. The Committee may require each person
purchasing shares pursuant to a Stock Option or Restricted Stock award under the
Plan to represent to and agree with the Company in writing that the optionee or
participant is acquiring the shares without a view to distribution thereof. The
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered under the
Plan shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed and any applicable federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(b) Additional Arrangements. Nothing contained in this Plan shall prevent the
Company from adopting other or additional compensation arrangements for its
employees.
(c) No Right to Employment. The adoption of the Plan shall not confer upon any
employee of the Company any right to continued employment with the Company nor
shall it interfere in any way with the right of the Company to terminate the
employment of any of its employees at any time.
(d) Tax Withholding. It shall be a condition to the performance of the
Company's obligation to issue or transfer Shares upon exercise of an option or
options, that the optionee pay or make provision satisfactory to the Company for
the payment of any taxes (other than stock transfer taxes) which the Company is
obligated to collect with respect to the issuance of such Shares upon such
exercise. Optionees may elect to have the Company withhold Shares otherwise
issuable upon the exercise of a stock option, or to irrevocably commit to
surrender to the Shares acquired upon the exercise of such options at a date six
months following such exercise, to cover federal and state withholding
obligations incident to such exercise up to an amount equal to the optionee's
maximum marginal rate, even though in excess of the statutory minimum.
The optionee's elections are subject to the following restrictions:
(1) elections must be made on or prior to the date as of which the amount of
tax to be withheld is determined;
(2) elections are irrevocable; and
(3) elections are subject to the disapproval of the Committee.
Participants subject to Section 16(b) of the Securities Act of 1934 are subject
to additional restrictions, as required pursuant to the securities laws, and the
rules and regulations promulgated thereunder.
The Committee may adopt procedures which would allow the participants, as part
of the Share Withholding Election, to pay withholding taxes in excess of the
statutory minimum, as long as the amount paid does not exceed the participant's
estimated total federal, state and local tax obligations associated with the
transaction, including FICA taxes to the extent applicable.
(e) Beneficiaries. The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid.
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(f) Laws Governing. The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State
of Ohio.
Section 14. Effective Date of Plan.
The Plan shall be effective on the date it is approved by the stockholders of
the Company. Grants made prior to such stockholder approval shall be contingent
on such approval.
Section 15. Term of Plan.
No award shall be granted pursuant to the Plan on or after the tenth anniversary
of the effective date of the Plan, but awards granted prior to such tenth
anniversary may extend beyond that date.
Section 16. Miscellaneous
(a) Retirement. For purposes of this Plan, the term Retirement shall mean (1)
termination of employment with a pension under the provisions of any
retirement plan for employees of Commercial Intertech Corp. or a domestic
or foreign subsidiary corporation or (2) termination of employment
following attainment of age 65 regardless of eligibility for pension.
(b) Adjustments. In the event of any stock dividend, stock split, combination
of shares, recapitalization or other change in the capital structure of the
Company, or any merger, consolidation, separation, reorganization or
partial or complete liquidation, or any other corporate transaction or
event having an effect similar to any of the foregoing, the aggregate
number of shares reserved for issuance under the Plan, the number and
option price of shares subject to outstanding Stock Options, including any
SAR or LSAR granted in connection with such Stock Option, and the number of
shares subject to a Performance Share Award Agreement or granted by a
Restricted Stock Award Agreement, shall be appropriately substituted for
new shares or adjusted as determined by the Committee in its discretion.
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EXHIBIT 99.20
EXHIBIT A
COMMERCIAL INTERTECH CORP.
Stock Option and Award Plan of 1993
SECTION 1. PURPOSE.
The purpose of the Stock Option and Award Plan of 1993 (the "Plan") is
to assist Commercial Intertech Corp. (the "Company") in attracting and retaining
capable employees and outside directors. The Plan will provide a long-term
incentive to key employees by encouraging and enabling them to participate in
the Company's future prosperity and growth. The Plan will provide equity
ownership opportunities to better match the interests of key employees and
outside directors with those of shareholders.
These objectives will be promoted through the granting to key employees
of equity instruments including (i) options [Incentive Stock Options ("ISOs")]
which are intended to qualify under Section 422 of the Internal Revenue Code of
1986 (the "Code"); (ii) options which are not intended to so qualify
[Nonqualified Stock Options ("NQSOs")]; (ISOs and NQSOs are referred to
together hereinafter as "Stock Options"); (iii) Stock Appreciation Rights
("SARs"); (iv) Limited Stock Appreciation Rights ("LSARs"); (v) Restricted
Stock; and (vi) Performance Shares. All members of the Company's Board of
Directors (the "Board") who are not currently employees of the Company ("Outside
Directors") may receive NQSOs from the Plan only as provided herein.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board which shall have the power and authority to grant to
eligible employees Stock Options, SARs, LSARs, Restricted Stock and Performance
Shares. In particular, the Committee shall have the authority to: (i) select
employees of the Company as recipients of awards; (ii) determine the number and
type of awards to be granted; (iii) determine the terms and conditions, not
inconsistent with the terms hereof, of any award granted; (iv) adopt, alter and
repeal such administrative rules, guidelines and practices governing the Plan as
it shall, from time to time, deem advisable; (v) interpret the terms and
provisions of the Plan and any award granted and any agreements relating
thereto; and (vi) otherwise supervise the administration of the Plan. All
decisions made by the Committee pursuant to the provisions hereof shall be made
in the Committee's sole discretion and shall be final and binding on all
persons.
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SECTION 3. ELIGIBILITY.
Key employees of the Company, who are responsible for or contribute to
the management, growth and/or profitability of the business of the Company, are
eligible to be granted awards. The participants under the Plan shall be selected
from time to time by the Committee, in its sole discretion, from among those
eligible.
In addition, all Outside Directors are eligible to receive NQSOs as set
forth in Section 10.
SECTION 4. STOCK SUBJECT TO PLAN.
The total number of shares of the Company's common stock, $1.00 par
value ("Stock") reserved and available for distribution pursuant to awards
hereunder shall be 495,000 shares. No more than 250,000 such shares shall be
granted in the form of Restricted Stock or Performance Shares. Such shares may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
Subject to Section 6(b)(iv), if any shares of Stock that have been
optioned cease to be subject to a Stock Option, or if any such shares of Stock
that are subject to any Restricted Stock or Performance Share award granted
hereunder are forfeited prior to the receipt of an economic benefit (e.g.,
dividends) by the holder, or any such Stock Option or other award otherwise
terminates without a payment being made to the participant in the form of Stock,
such shares shall again be available for distribution in connection with future
awards under the Plan.
In the event of any stock dividend, stock split, combination or exchange
of shares, recapitalization or other change in the capital structure of the
Company, corporate separation or division (including, but not limited to, split-
up, spin-off, split-off or distribution to Company shareholders other than a
normal cash dividend), sale by the Company of all or a substantial portion of
its assets, rights offering, merger, consolidation, reorganization or partial or
complete liquidation, or any other corporate transaction or event having an
effect similar to any of the foregoing, the aggregate number of shares reserved
for issuance under the Plan, the number and option price of shares subject to
outstanding Stock Options, including any SAR or LSAR granted in connection with
such Stock Option, the financial performance goals, if any, of the Stock
contained in a Performance Share award, the number of shares subject to a
Performance Share Award Agreement or granted by a Restricted Stock Award
Agreement, and any other characteristics or terms of the awards as the Committee
shall deem necessary or appropriate to reflect equitably the effects of such
changes to the holders of awards, shall be appropriately substituted for new
shares or adjusted, as determined by the Committee in its discretion.
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SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other awards
granted under the Plan. Any Stock Options granted under the Plan shall be in
such form as the Committee may from time to time approve and the provisions of
Stock Option awards need not be the same with respect to each optionee. Stock
Options granted under the Plan may be eith er ISOs or NQSOs. The Committee may
grant to any optionee ISOs, NQSOs or both types of Stock Options (in each case
with or without SARs).
Anything in the Plan to the contrary notwithstanding, without the
consent of the optionee(s) affected, no term of this Plan relating to ISOs shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code or to disqualify any ISO under such Section 422.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions not
inconsistent with the terms of the Plan, as the Committee deems appropriate.
Each Stock Option grant shall be evidenced by an agreement executed on behalf of
the Company by an officer designated by the Committee and accepted by the
optionee. Such agreement shall describe the Stock Options and state that such
Stock Options are subject to all the terms and provisions of the Plan and shall
contain such other terms and provisions, consistent wi th the Plan, as the
Committee may approve.
(a) Exercise Price. The exercise price per share of Stock purchasable
under a Stock Option shall be no less than the Fair Market Value on the day the
Stock Option is granted. Fair Market Value shall mean the closing price of the
Stock on the New York Stock Exchange ("NYSE") or, if no such sale of Stock
occurs on the NYSE on such date, the Fair Market Value of the Stock as
determined by the Committee in good faith.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no ISO shall be exercisable more than ten years after the date
such ISO is granted. The length of the term for NQSOs may be whatever the
Committee deems appropriate given the circumstances.
(c) Exercise of Stock Options. Stock Options shall become exercisable
at such time or times and subject to such terms and conditions (including,
without limitation, installment exercise provisions) as shall be determined by
the Committee, provided, however, that, except as provided in Section 5(f) or
(g) (in the case of death or disability, respectively) and Section 11, unless
otherwise determined by the Committee
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at or after grant, no Stock Option shall be exercisable prior to six months
after the date of the granting of the Stock Option. If the Committee provides
that any Stock Option is exercisable only in installments, the Committee may
waive such installment exercise provisions at any time in whole or in part
based on performance and/or such other factors as the Committee may determine.
(d) Method of Exercise. Options may be exercised in whole or in part
by giving written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in full of
the purchase price, either by certified or bank check, or such other instrument
as may be permitted in accordan ce with rules or procedures adopted by the
Committee.
As determined by the Committee, at or after grant, payment in full or in
part may also be made in the form of unrestricted Stock already owned by the
optionee or the tendering of shares of Stock which would otherwise be issuable
to the optionee upon the exercise of the Stock Option.
No shares of Stock shall be transferred until full payment therefor has
been made. An optionee shall generally have the rights of a shareholder with
respect to shares subject to Stock Options only when the optionee has given
written notice of exercise, has paid in full for such shares and, if requested,
given the representation described in Section 14(a).
(e) Non-Transferability of Stock Options. No Stock Options shall be
transferable by the optionee other than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee. At the request of an optionee, Stock purchased
upon exercise of a Stock Option may be issued or transferred into the name of
the optionee and another person jointly with rights of survivorship.
(f) Termination by Death. Subject to Section 5(i), if an optionee's
employment by the Company terminates by reason of death, any Stock Option held
by such optionee may thereafter be exercised, to the extent it was exercisable
at the time of death or on such accelerated basis as the Committee may determine
at or after grant, by the legal representative of the estate or by the legatee
of the optionee under the will of the optionee, for a period of one year (or
such other period up to three years as the Committee may specify) from the date
of death or until the expiration of the stated term of such Stock Option,
whichever period is shorter.
(g) Termination by Reason of Disability or Retirement. Subject to
Section 5(i), if an optionee's employment by the Company terminates by reason of
disability, as defined under
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the Company's long-term disability plan, or retirement, any Stock Option held by
such optionee will become exercisable upon approval of the Committee and may
thereafter be exercised by the optionee for a period of three years (or such
shorter period as the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the stated term of such
Stock Option, whichever period is shorter, provided, however, that, if the
optionee dies within such three-year period (or such shorter period), any
unexercised Stock Option held by such optionee shall thereafter be exercisable,
to the extent to which it was exercisable at the time of death, for a period of
one year from the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is shorter. In the event of termination
of employment by reason of disability or retirement, if an ISO is exercised
after the expiration of the exercise periods that apply for pur poses of Section
422 of the Code, such ISO shall thereafter be treated as an NQSO.
(h) Other Termination of Employment. Unless otherwise determined by
the Committee at or after grant, if an optionee's employment by the Company
terminates for any reason other than death, disability or retirement, the
optionee will have one month from the date of termination to exercise any and
all Stock Options that are then exercisable, except that, if the termination
was for Cause, any and all Stock Options shall be immediately cancelled. For the
purpose of the Plan, Cause means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony, or a participant's
willful misconduct or dishonesty, any of which is directly and materially
harmful to the business or reputation of the Company, as determined by the
Committee.
(i) ISO Limitations. To the extent required for "incentive stock
option" status under Section 422 of the Code, the aggregate Fair Market Value
(determined as of the time of grant) of the Stock with respect to which ISOs are
exercisable for the first time by the optionee during any calendar year under
the Plan and any other stock option plan of the Company and its affiliates,
shall not exceed $100,000.
The Committee may provide at grant, to the extent permitted under
Section 422 of the Code, that, if (i) a participant's employment with the
Company is terminated by reason of death, disability or retirement and (ii) the
portion of any ISO that is otherwise exercisable during the post-termination
period specified under Section 5(f), (g) or (h), applied without regard to this
Section 5(i), is greater than the portion of such Stock Option that is exercis
able as an "incentive stock option" during such post-termination period under
Section 422, such post-termination period shall automatically be extended,
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but not beyond the original Stock Option term, to the extent necessary to permit
the optionee to exercise such ISO either as an ISO or, if exercised after the
expiration of the applicable exercise periods under Section 422, as an NQSO. The
Committee is also authorized to provide at grant for a similar extension of the
post-termination exercise period in the event of a Change in Control or a
Potential Change in Control (as defined below).
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. SARs may be granted in conjunction with all
or part of any Stock Option granted under the Plan.
An SAR or applicable portion thereof granted with respect to a given
Stock Option shall terminate and no longer be exercisable upon the termination
or exercise of the related Stock Option, except that, unless otherwise
determined by the Committee at the time of grant, an SAR granted with respect to
less than the full number of shares covered by a related Stock Option shall not
be reduced until the number of shares covered by an exercise or termination of
the related Stock Option exceeds the number of shares not covered by the SAR.
An SAR may be exercised by an optionee, in accordance with Section 6(b),
by surrendering the applicable portion of the related Stock Option in accordance
with procedures established by the Committee for such purposes. Upon such
exercise and surrender, the optionee shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b). Stock Options which have
been so surrendered shall no longer be exercisable to the extent the related
SARs have been exercised.
(b) Terms and Conditions. Each SAR grant shall be evidenced by an
agreement executed on behalf of the Company by an officer designated by the
Committee and accepted by the optionee. Such agreement shall describe the SAR,
specify the related outstanding Stock Option(s) and state that such SARs are
subject to all the terms and provisions of the Plan and contain such other terms
and provisions, consistent with the Plan, as the Committee may approve,
including the following:
(i) SARs shall be exercisable only at such time or times and to
the extent that the Stock Options to which they relate are exercisable,
in accordance with the provisions of Sections 5 and 6 of the Plan,
provided that an SAR shall not be exercisable during the first six
months of its term by any optionee except in the event of death or
disability of the optionee prior to the expiration of the six-month
period.
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(ii) Upon the exercise of an SAR, the optionee shall be entitled
to receive an amount in cash, if any, and/or shares of Stock in the
aggregate equal in value to the excess of the Fair Market Value of one
share of Stock over the option price per share specified in the related
Stock Option multiplied by the number of shares in respect of which the
SAR shall have been exercised, with the Committee having the right to
determine the form of payment.
(iii) SARs shall be transferable only when and to the extent that
the underlying Stock Option would be transferable under Section 5(e) of
the Plan.
(iv) Upon the exercise of an SAR, the Stock Option or part
thereof to which the SAR is related shall be deemed to have been
exercised for the purpose of the limitation set forth in Section 4 of
the Plan on the number of shares of Stock to be issued under the Plan.
SECTION 7. LIMITED STOCK APPRECIATION RIGHTS.
(a) The Committee may at any time and from time to time grant LSARs
in respect to all or any part of any outstanding Stock Option and may define the
terms of such LSARs with respect to the value of Stock covered by the related
outstanding Stock Option.
(b) LSARs may be exercised only (i) when the Fair Market Value of one
share of stock is greater than the option price per share specified in the
related Stock Option; (ii) after the expiration of six months from the date of
grant of the LSAR, except as provided in Section 11(a)(i); (iii) during the 30-
day period beginning on the first day after the date of a Change in Control or
Potential Change in Control of the Company, as defined in Section 11(b) and
11(c); (iv) at a time when the holder of the related outstanding Stock Option
is, directly or indirectly, subject to Section 16(b) of the Securities Exchange
Act of 1934 (the "Exchange Act"); (v) at a time and to the same extent as the
related outstanding Stock Option is exercisable; and (vi) by surrender to the
Company, unexercised, of the related outstanding Stock Option or any applicable
portion thereof.
(c) LSARs shall entitle the optionee to receive from the Company,
upon surrender of the related outstanding Stock Option, or any portion thereof,
an amount equal to 100% of the excess of the highest closing sale price per
share on the NYSE (or the principal exchange on which the Stock is listed or
quoted) on any one day during the period beginning on the sixtieth day prior to
the date on which such LSARs are exercised and ending on the date on which such
LSARs are exercised over
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the option price per share of Stock subject to the related Stock Option,
multiplied by the number of shares in respect of which the LSARs have been
exercised. Such amount shall be paid by the Company in cash.
(d) Each grant of an LSAR shall be evidenced by an agreement executed
on behalf of the Company by an officer designated by the Committee and accepted
by the optionee. Such agreement shall describe the LSARs, specify the related
outstanding Stock Option(s) and state that such LSARs are subject to all the
terms and provisions of the Plan and contain such other terms and provisions,
consistent with the Plan, as the Committee may approve.
(e) LSARs shall not be granted in respect of outstanding
Stock Options to purchase in excess of the number of shares of Stock reserved
for the Plan in Section 4.
SECTION 8. RESTRICTED STOCK.
The provisions of Restricted Stock awards need not be the same with
respect to each recipient. Restricted Stock awards shall consist of awards of
Company Stock and shall be subject to the following restrictions and conditions.
(a) Price. The purchase price for shares of Restricted Stock shall be
set by the Committee and may be zero.
(b) Restricted Stock Award Agreement. Awards of Restricted Stock must
be accepted by an employee within a period of 60 days (or such shorter periods
as the Committee may specify at grant) after the award date, by executing a
Restricted Stock Award Agreement and paying whatever price, if any, is required
under Section 8(a).
The prospective recipient of a Restricted Stock award shall not have
any rights with respect to such award, unless and until such recipient has
executed an agreement evidencing the award and has delivered a fully executed
copy thereof to the Company, and has otherwise complied with the applicable
terms and conditions of such award.
(c) Stock Certificate and Legends. Each participant receiving
a Restricted Stock award shall be issued a stock certificate in respect of such
shares of Restricted Stock. Such certificate shall be registered in the name of
such participant, and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such award, substantially in the
following form:
The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of Commercial Intertech Corp.'s Stock Option and Award Plan
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of 1993 and an Agreement entered into between the registered owner and
Commercial Intertech Corp. Copies of such Plan and Agreement are on file in the
offices of Commercial Intertech Corp.
The Committee may require that the stock certificates evidencing such
shares be held in custody by the Company until the restrictions thereon shall
have lapsed, and that, as a condition of any Restricted Stock award, the
participant shall have delivered a stock power, endorsed in blank, relating to
the Stock covered by such award.
(d) Stock Restrictions. Subject to the provisions of this Plan and
the applicable Restricted Stock Award Agreement, during a period set by the
Committee commencing with the date of such award (the "Restriction Period"), the
participant shall not be permitted to sell, transfer, pledge, assign or
otherwise encumber shares of Restricted Stock awarded under the Plan.
Based on procedures set forth by the Committee, the Committee may,
however, at or after grant provide for the lapse of such restrictions in
installments and/or may accelerate or waive such restrictions in whole or in
part, or as provided in Section 12.
(e) Shareholder Rights. Except as provided in this Section 8, the
recipient shall have, with respect to the shares of Restricted Stock covered by
any award, all of the rights of a shareholder of the Company, including the
right to vote the shares, and the right to receive any dividends, provided,
however, that unless otherwise determined by the Committee, any dividends on
such shares shall be automatically deferred and reinvested in additional
Restricted Stock subject to the same restrictions as the underlying award to the
extent shares are available under Section 4.
(f) Termination of Employment. Except as otherwise provided in this
Section 8 and in the applicable Restricted Stock Award Agreement, upon
termination of a participant's employment with the Company because of death,
disability or retirement, the Committee, at its discretion, may provide for
waiver of all or a portion of the restrictions applicable to unvested Restricted
Stock awards. If termination occurs for any other reason during the Restriction
Period for a given award, all shares still subject to restriction shall be
forfeited by the participant, provided, however, that the Committee at its
discretion may provide for waiver of all or a portion of the remaining
restrictions.
(g) Waiver of Restrictions. In the event of hardship or other
special circumstances of a participant whose employment with the Company is
involuntarily terminated (other than for Cause), the Committee may waive in
whole or in part any or all remaining
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restrictions with respect to any or all of the participant's Restricted Stock,
based on such factors and criteria as the Committee may deem appropriate.
(h) Expiration of Restriction Period. If and when the Restriction
Period expires without a prior forfeiture of the Restricted Stock subject to
such Restriction Period, unrestricted certificates for such shares shall be
delivered to the participant.
SECTION 9. PERFORMANCE SHARES.
The provisions of Performance Share awards need not be the same with
respect to each recipient. Performance Share awards shall consist of awards of
Company Stock and shall be subject to the following terms and conditions. (a)
Price. The purchase price for Performance Shares shall be specified by the
Committee and may be zero.
(b) Performance Share Agreement. Awards of Performance Shares will
be specified in a Performance Share Award Agreement executed between the
recipient and the Committee.
(c) Restrictions. Each Performance Share award shall be subject to
restrictions related to (i) time; and (ii) Company financial performance. Such
time periods (the "Performance Period") and financial performance goals shall be
set by the Committee in its sole discretion.
(d) Performance Share Restrictions. The Committee has the authority
to decide when to grant Performance Shares during the Performance Period. A
recipient shall become vested in Performance Shares upon the lapse of the
Performance Period and the attainment of the associated financial performance
goals set forth in the agreement between the recipient and the Company. A
recipient may vest in more or less than the number of Performance Shares
originally awarded. The number of Performance Shares that vest shall be based on
the level of attainment of the financial performance objectives and shall be
specified in the Performance Share Award Agreement, subject to the discretion of
the Committee.
(e) Shareholder Rights. Subject to the provisions of this Plan and the
applicable award agreement, Performance Share awards may not be sold,
transferred, pledged, assigned or otherwise encumbered during the Performance
Period specified by the Committee. At the expiration of the Performance Period,
share certificates shall be delivered to the participant, or his legal
representative, in a number equal to the number of shares earned under the
Performance Share award.
The Committee may, however, at or after grant, accelerate the vesting
of all or part of any Performance Share award and/or waive the limitations for
all or any part of such award.
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(f) Termination of Employment. Except to the extent otherwise provided
in this Section 9 and in the applicable Performance Share Award Agreement, upon
termination of a participant's employment with the Company for any reason during
the Performance Period for a given award, the Performance Shares covered by such
award shall be forfeited by the participant, provided, however, the Committee
may provide for accelerated vesting in the event of termination of employment
due to death, disability or retirement.
(g) Waiver of Restrictions. In the event of hardship or other
special circumstances of a participant whose employment with the Company is
involuntarily terminated (other than for Cause), the Committee may waive in
whole or in part any or all of the remaining limitations imposed hereunder with
respect to any or all of the participant's Performance Shares, based on such
factors and criteria as the Committee deems appropriate.
(h) Expiration of Performance Period. If and when the Performance
Period expires without a prior forfeiture of the Performance Shares subject to
such Performance Period, unrestricted certificates for the number of shares of
Stock earned under the award shall be delivered to the participant.
SECTION 10. AWARDS TO BOARD OF DIRECTORS.
(a) Administration. All Outside Directors shall be eligible to
participate in the Plan only as expressly set forth in this Section 10. The
full Board of Directors shall have all of the duties and responsibilities
normally vested in the Committee as defined in Section 2 hereof with respect to
awards to Outside Directors provided, however, that the Board shall have no
power to determine which Outside Directors may receive Stock Options, the amount
of such Stock Options, or the terms of such Stock Options to the extent provided
below.
(b) Eligibility and Grant of Options. Upon each Outside
Director's election by shareholders to a new three-year term during the term of
the Plan, each Outside Director shall receive a Stock Option to purchase 1,500
shares of the Company's Stock.
(c) Terms of Options. All Stock Options granted to Outside Directors
shall be NQSOs and shall be issued at Fair Market Value as defined in Section
5(a). All other terms applicable to Stock Options, as defined in Section 5
[with the exception of the provisions of Section 5(c) which apply to the
exercisability of the Stock Options and Section 5(i)] and in other sections of
this Plan are applicable to Outside Director Stock Options.
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(d) Exercisability of Stock Options. The Stock Options granted to
Outside Directors shall become exercisable in three equal installments,
commencing on the first anniversary of the date of grant and annually
thereafter. Each Stock Option granted under the Plan shall expire ten years from
the date of the grant, and shall be subject to earlier termination as
hereinafter provided.
(e) Prorated Stock Option Grants. All continuing Outside Directors
who are not up for election in 1993 shall receive a prorated grant of Stock
Options upon approval of this Plan by shareholders as follows: (i) Outside
Directors who have two years remaining in their current term shall receive 1,000
Stock Options which will become exercisable in two equal installments commencing
on the first anniversary of the date of grant and annually thereafter; (ii)
Outside Directors with one year remaining in their current term shall receive
500 Stock Options which will become exercisable in one installment on the first
anniversary of the date of grant. Each prorated Stock Option granted shall
expire ten years from the date of the grant, and shall be subject to earlier
termination as herein after provided.
Section 11. Change in
Control Provisions.
(a) Impact of Event. In the event of:
(x) a "Change in Control" as defined in Section 11(b),
or
(y) a "Potential Change in Control" as defined in Section 11(c),
the Committee may provide that one or more of the following acceleration
and valuation provisions shall apply:
(i) Any or all SARs or LSARs outstanding on the date that such Change
in Control or Potential Change in Control is determined to have occurred and any
or all Stock Options awarded under this Plan not previously exercisable and
vested shall become fully exercisable and vested.
(ii) The restrictions applicable to any or all Restricted Stock and
Performance Share awards shall lapse and such shares and awards shall be fully
vested.
(b) Definition of "Change in Control" for purposes of Section 11(a),
a "Change in Control" shall be deemed to have occurred if:
(i) there shall be consummated (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation
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or pursuant to which shares of the Company's Common Stock would be converted to
cash, securities or other property, other than a merger of the Company in which
the holders of the Company's Common Stock immediately prior to the merger have
substantially the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (B) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
the assets of the Company, or
(ii) the shareholders of the Company shall approve any plan or proposal
for the liquidation or dissolution of the Company, or
(iii) any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other
than the Company or a subsidiary or any employee benefit plan sponsored by the
Company or a subsidiary, shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act) of securities of the Company representing
30% or more of the combined voting power of the Company's then outstanding
securities ordinarily (and apart from rights accruing in special circumstances)
having the right to vote in the election of directors, as a result of a tender
or exchange offer, open market purchases, privately negotiated purchases or
otherwise, or
(iv) at any time during a period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company shall cease for any reason to constitute at least a majority thereof,
unless the election or the nomination for election by the Company's shareholders
of each new director during such two-year period was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of such two-year period.
For purposes hereof, ownership of voting securities shall take into
account and shall include ownership as determined by applying the provisions of
Rule 13d-3(d)(1)(l) (as in effect on the Approval Date) pursuant to the Exchange
Act.
(c) Definition of "Potential Change in Control" for purposes of
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Section 11(a), a "Potential Change in Control" means the happening of any one of
the following:
(i) The entering into of an agreement by the Company, the consummation
of which would result in a Change of Control of the Company as defined in
Section 11(b); or
(ii) The acquisition of beneficial ownership, directly or indirectly,
by any entity, person or group (other than the Company or any Company employee
benefit plan, including any trustee of such plan acting as such trustee) of
securities of the Company representing 5% or more of the combined voting power
of the Company's outstanding securities, and the adoption by the Board of a
resolution to the effect that a "Potential Change in Control" of the Company has
occurred for the purposes of this Plan.
(d) Change in Control Price. For the purposes of this Section 11,
"Change in Control Price" means the highest price per share paid in any
transaction reported on the NYSE (or the principal exchange on which the Stock
is listed or quoted), or paid or offered in any bona fide transacti on related
to an actual or Potential Change in Control of the Company, at any time during
the preceding sixty-day period as determined by the Committee.
Section 12. Amendments
and Termination.
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of an
optionee or participant under any award theretofore granted, without the
optionee's or participant's consent, or which, without the approval of the
Company's stockholders, would:
(a) except as expressly provided in the Plan, increase the total number of
shares reserved for purposes of the Plan;
(b) change the class of employees eligible to participate in the Plan;
(c) extend the maximum option period under Section 5(b) of the Plan; or
(d) increase materially the benefits under the Plan.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent.
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The provisions regarding Stock Options granted to Outside Directors
pursuant to Section 10 above shall not in any case be amended more often than
once in any six-month period other than to comply with changes in the Code or
the Employee Retirement Income Security Act, or the rules thereunder.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in applicable tax and securities laws and
accounting rules, as well as other developments.
SECTION 13. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments or deliveries of Stock not
yet made to a participant or optionee by the Company, nothing contained herein
shall give any such participant or optionee any rights that are greater than
those of a general creditor of the Company. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments hereunder consistent with the foregoing.
SECTION 14. GENERAL PROVISIONS.
(a) Share Transfer and Distribution. The Committee may require each
person purchasing shares pursuant to a Stock Option or Restricted Stock award
under the Plan to represent to and agree with the Company in writing that the
optionee or participant is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed and any applicable federal or state
securities law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
(b) Additional Arrangements. Nothing contained in this Plan shall
prevent the Company from adopting other or additional compensation arrangements
for its employees.
(c) No Right to Employment. The adoption of the Plan shall not
confer upon any employee of the Company any right to continued employment with
the Company nor shall it interfere in any way with the right of the Company to
terminate the employment of any of its employees at any time.
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(d) Tax Withholding. It shall be a condition to the performance of
the Company's obligations to issue or transfer Shares upon exercise of a Stock
Option, that the optionee pay or make provision satisfactory to the Company for
the payment of any taxes (other than stock transfer taxes) which the Company is
obligated to collect with respect to the issuance of such Shares upon such
exercise. Optionees may elect to have the Company withhold Shares otherwise
issuable upon the exercise of a Stock Option to cover federal and state
withholding obligations incident to such exercise and to request that shares be
withheld to pay withholding taxes in excess of the statutory minimum, as long as
the amount does not exceed the participant's estimated total federal, state and
local tax obligations associated with the transaction, including FICA taxes to
the extent applicable.
The optionee's elections are subject to the following restrictions:
(1) elections must be made on or prior to the date as of which the
amount of tax to be withheld is determined;
(2) elections are irrevocable; and
(3) elections are subject to the disapproval of the Committee.
Participants subject to Section 16(b) of the Securities Act of 1934
are subject to additional restrictions, as required pursuant to the securities
laws, and the rules and regulations promulgated thereunder.
(e) Beneficiaries. The Committee shall establish such procedures as it
deems appropriate for a participant to designate a beneficiary to whom any
amounts payable in the event of the participant's death are to be paid.
(f) Laws Governing. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Ohio.
SECTION 15. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is approved by the stockholders
of the Company. Grants made prior to such stockholder approval shall be
contingent on such approval.
SECTION 16. TERM OF PLAN.
No award shall be granted pursuant to the Plan on or after the tenth
anniversary of the effective date of the Plan, but awards granted prior to such
tenth anniversary may extend beyond that date.
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SECTION 17. MISCELLANEOUS.
For purposes of this Plan, the term retirement shall mean (1) termination
of employment with a pension under the provisions of any retirement plan for
employees of Commercial Intertech Corp. or a domestic or foreign subsidiary
corporation or (2) termination of employment following attainment of age 65
regardless of eligibility for pension.
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EXHIBIT 99.21
COMMERCIAL INTERTECH CORP.
STOCK OPTION AND AWARD PLAN OF 1995
SECTION 1. PURPOSE.
The purpose of the Commercial Intertech Corp. Stock Option and Award
Plan of 1995 (the "Plan") is to assist Commercial Intertech Corp. (the
"Company") in attracting and retaining capable employees and outside directors.
The Plan will provide long and short term incentives to key employees by
encouraging and enabling them to participate in the Company's future prosperity
and growth. The Plan will provide equity ownership opportunities and appropriate
incentives to better match the interests of key employees and outside directors
with those of shareholders.
These objectives will be promoted through the granting to key employees
of equity instruments including (i) options [Incentive Stock Options ("ISOs")]
which are intended to qualify under Section 422 of the Internal Revenue Code of
1986 (the "Code"); (ii) options which are not intended to so qualify
[Nonqualified Stock Options ("NQSOs")]; (ISOs and NQSOs are referred to together
hereinafter as "Stock Options"); (iii) Restricted Stock; (iv) Performance
Shares; and (v) Annual Incentive Awards. All members of the Company's Board of
Directors (the "Board") who are not currently employees of the Company ("Outside
Directors") may receive NQSOs from the Plan only as provided herein.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board which shall have the power and authority to grant to
eligible employees Stock Options, Restricted Stock, Performance Shares, and
Annual Incentive Awards. In particular, the Committee shall have the authority
to: (i) select employees of the Company as recipients of awards; (ii) determine
the number and type of awards to be granted; (iii) determine the terms and
conditions, not inconsistent with the terms hereof, of any award granted; (iv)
adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall, from time to time, deem advisable; (v)
interpret the terms and provisions of the Plan and any award granted and any
agreements relating thereto; and (vi) otherwise supervise the administration of
the Plan. All decisions made by the Committee pursuant to the provisions
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hereof shall be made in the Committee's sole discretion and shall be final and
binding on all persons. Members of the Compensation Committee shall meet the
criteria so as to be "outside directors" within the meaning of Code Section
162(m) and "disinterested administrators" within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934
SECTION 3. ELIGIBILITY.
Key employees of the Company, and any subsidiary of the Company
("Subsidiary"), who are responsible for or contribute to the management, growth
and/or profitability of the business of the Company, are eligible to be granted
awards. The participants under the Plan shall be selected from time to time by
the Committee, in its sole discretion, from among those eligible. In addition,
all Outside Directors are eligible to receive NQSOs as set forth in Section 9.
SECTION 4. STOCK SUBJECT TO PLAN.
The total number of shares of the Company's common stock, $1.00 par
value, ("Stock") reserved and available for distribution pursuant to awards
hereunder shall be 750,000 shares. No more than 375,000 shares shall be granted
in the form of Restricted Stock or Performance Shares. Such shares may consist,
in whole or in part, of authorized and unissued shares or treasury shares.
If any shares of Stock that have been optioned cease to be subject to a
Stock Option, or if any such shares of Stock that are subject to any Restricted
Stock (including any Annual Incentive Awards paid in Restricted Stock) or
Performance Share award granted hereunder are forfeited by the holder, or if any
such Stock Option or other award otherwise terminates without a payment being
made to the participant in the form of Stock, or if any shares of Stock (whether
or not restricted) previously distributed under the Plan are returned to the
Company in connection with the exercise of an award, such shares shall again be
available for distribution in connection with future awards under the Plan.
In the event of any stock dividend, stock split, combination or
exchange of shares, recapitalization or other change in the capital structure of
the Company, corporate separation or division (including, but not limited to,
split-up, spin-off, split-off or distribution to Company shareholders other than
a normal cash dividend), sale by the Company of all or a substantial portion of
its assets, rights offering, merger, consolidation, reorganization or partial or
complete liquidation, or any other corporate transaction or event having an
effect similar to any of the foregoing, the aggregate number of shares reserved
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for issuance under the Plan, the number and option price of shares subject to
outstanding Stock Options, the financial performance goals, if any, of the Stock
contained in a Performance Share award, the number of shares subject to a
Performance Share award agreement or granted by a Restricted Stock award
agreement or Annual Incentive Award agreement, and any other characteristics or
terms of the awards as the Committee shall deem necessary or appropriate to
reflect equitably the effects of such changes to the holders of awards, shall be
appropriately substituted for new shares or adjusted, as determined by the
Committee in its discretion.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other awards
granted under the Plan. Any Stock Options granted under the Plan shall be in
such form as the Committee may from time to time approve and the provisions of
Stock Option awards need not be the same with respect to each optionee. Stock
Options granted under the Plan may be either ISOs or NQSOs. The Committee may
grant to any optionee ISOs, NQSOs or both types of Stock Options. During any
five fiscal year period, Stock Options covering no more than 250,000 shares of
Stock shall be granted to any optionee.
Anything in the Plan to the contrary notwithstanding, without the
consent of the optionee(s) affected, no term of this Plan relating to ISOs shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code or to disqualify any ISO under such Section 422.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions not
inconsistent with the terms of the Plan, as the Committee deems appropriate.
Each Stock Option grant shall be evidenced by an agreement executed on behalf of
the Company by an officer designated by the Committee and accepted by the
optionee. Such agreement shall describe the Stock Options and state that such
Stock Options are subject to all the terms and provisions of the Plan and shall
contain such other terms and provisions, consistent with the Plan, as the
Committee may approve.
(a) Exercise Price. The exercise price per share of Stock
purchasable under a Stock Option shall be no less than the Fair Market Value on
the day the Stock Option is granted. Fair Market Value shall mean the closing
price of the Stock on the New York Stock Exchange ("NYSE") or, if no such sale
of Stock occurs on the NYSE on such date, the Fair Market
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Value of the Stock as determined by the Committee in good faith.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years after
the date such Stock Option is granted.
(c) Exercise of Stock Options. Stock Options shall become exercisable
at such time or times and subject to such terms and conditions (including,
without limitation, installment exercise provisions) as shall be determined by
the Committee, provided, however, that, except as provided in Section 5(f) or
(g) (in the case of death or disability, respectively) and Section 10, unless
otherwise determined by the Committee at or after grant, no Stock Option shall
be exercisable prior to six months after the date of the granting of the Stock
Option. If the Committee provides that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time in whole or in part based on Company performance and/or such other
factors as the Committee may determine.
(d) Method of Exercise. Options may be exercised in whole or in part by
giving written notice of exercise to the Company specifying the number of shares
to be purchased. Such notice shall be accompanied by payment in full of the
purchase price, or such other instrument as may be permitted in accordance with
rules or procedures adopted by the Committee.
If approved by the Committee, payment in full or in part may also be
made (i) by delivering Common Stock already owned by the optionee having a total
fair market value on the date of such delivery (as determined by the previous
trading day's closing price of the Stock on the NYSE) equal to the option price;
(ii) by authorizing the Company to retain shares of Stock which would otherwise
be issuable upon exercise of the option having a total fair market value on the
date of delivery equal to the option price; (iii) by the delivery of cash on the
extension of credit by a broker-dealer to whom the optionee has submitted a
notice of exercise (in accordance with Part 220, Chapter II, Title 12 of the
Code of Federal Regulations, so-called "cashless" exercise); or (iv) by any
combination of the foregoing.
No shares of Stock shall be transferred until full payment therefor has
been made. An optionee shall generally have the rights of a shareholder with
respect to shares subject to Stock Options only when the optionee has given
written notice of exercise, has paid in full for such shares and, if requested,
given the representation described in Section 13(a).
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(e) Non-Transferability of Stock Options. Except as provided
hereunder, no Stock Option shall be transferable by the optionee other than by
will or by the laws of descent and distribution, and all Stock Options shall be
exercisable, during the optionee's lifetime, only by the optionee. At the
request of an optionee, Stock purchased upon exercise of a Stock Option may be
issued or transferred into the name of the optionee and another person jointly
with rights of survivorship.
(f) Termination by Death. If an optionee's employment by the Company
terminates by reason of death, any Stock Option held by such optionee may
thereafter be exercised, to the extent it was exercisable at the time of death
or on such accelerated basis as the Committee may determine at or after grant,
by the legal representative of the estate or by the legatee of the optionee
under the will of the optionee, for a period of one year (or such other period
up to three years as the Committee may specify) from the date of death or until
the expiration of the stated term of such Stock Option, whichever period is
shorter.
(g) Termination by Reason of Disability or Retirement. If an optionee's
employment by the Company terminates by reason of disability, as defined under
the Company's long-term disability plan, or retirement, any Stock Option held by
such optionee will become exercisable upon approval of the Committee and may
thereafter be exercised by the optionee for a period of three years (or such
shorter period as the Committee may specify) from the date of such termination
of employment or until the expiration of the stated term of such Stock Option,
whichever period is shorter; provided, however, that, if the optionee dies
within such three-year period (or such shorter period), any unexercised Stock
Option held by such optionee shall thereafter be exercisable, to the extent to
which it was exercisable at the time of death, for a period of one year from the
date of such death or until the expiration of the stated term of such Stock
Option, whichever period is shorter. In the event of termination of employment
by reason of disability or retirement, if an ISO is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, such ISO shall thereafter be treated as an NQSO.
(h) Other Termination of Employment. Unless otherwise determined by the
Committee at or after grant, if an optionee's employment by the Company
terminates for any reason other than death, disability or retirement, the
optionee will have one month from the date of termination to exercise any and
all Stock Options that are then exercisable, except that, if the termination was
for Cause, any and all Stock Options shall be immediately cancelled. For the
purpose of the Plan, "Cause"
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means a felony conviction of a participant or the failure of a participant to
contest prosecution for a felony, or a participant's willful misconduct or
dishonesty, any of which is directly and materially harmful to the business or
reputation of the Company, as determined by the Committee.
(i) ISO Limitations. To the extent required for "incentive stock
option" status under Section 422 of the Code, the aggregate Fair Market Value
(determined as of the time of grant) of the Stock with respect to which ISOs are
exercisable for the first time by the optionee during any calendar year under
the Plan and any other stock option plan of the Company and its affiliates,
shall not exceed $100,000.
SECTION 6. RESTRICTED STOCK.
The provisions of Restricted Stock awards need not be the same with
respect to each recipient. Restricted Stock awards shall consist of awards of
Company Stock and shall be subject to the following restrictions and conditions.
(a) Price. The purchase price for shares of Restricted Stock shall be
set by the Committee and may be zero.
(b) Restricted Stock Award Agreement. Awards of Restricted Stock must
be accepted by an employee within a period of 60 days (or such shorter periods
as the Committee may specify at grant) after the award date, by executing a
Restricted Stock Award Agreement and paying whatever price, if any, is required
under Section 6(a).
The prospective recipient of a Restricted Stock award shall not have
any rights with respect to such award, unless and until such recipient has
executed an agreement evidencing the award and has delivered a fully executed
copy thereof to the Company, and has otherwise complied with the applicable
terms and conditions of such award.
(c) Stock Certificate and Legends. Each participant receiving a
Restricted Stock award shall be issued a stock certificate in respect of such
shares of Restricted Stock. Such certificate shall be registered in the name of
such participant, and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such award, substantially in the
following form:
The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of Commercial Intertech
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Corp.'s Stock Option and Award Plan of 1995 and an Agreement entered
into between the registered owner and Commercial Intertech Corp. Copies
of such Plan and Agreement are on file in the offices of Commercial
Intertech Corp.
The Committee may require that the stock certificates evidencing such
shares be held in custody by the Company until the restrictions thereon shall
have lapsed, and that, as a condition of any Restricted Stock award, the
participant shall have delivered a stock power, endorsed in blank, relating to
the Stock covered by such award.
(d) Stock Restrictions. Subject to the provisions of this Plan and the
applicable Restricted Stock Award Agreement, during a period set by the
Committee commencing with the date of such award and ending not earlier than the
third anniversary of the date of the grant of the award (the "Restriction
Period"), the participant shall not be permitted to sell, transfer, pledge,
assign or otherwise encumber shares of Restricted Stock awarded under the Plan.
(e) Shareholder Rights. Except as provided in this Section 6, the
recipient shall have, with respect to the shares of Restricted Stock covered by
any award, all of the rights of a shareholder of the Company, including the
right to vote the shares, and the right to receive any dividends; provided,
however, that unless otherwise determined by the Committee, any dividends on
such shares shall be automatically deferred and reinvested in additional
Restricted Stock subject to the same restrictions as the underlying award to the
extent shares are available under Section 4.
(f) Termination of Employment. Except as otherwise provided in this
Section 6 and in the applicable Restricted Stock Award Agreement, upon
termination of a participant's employment with the Company if, but only if, the
participant incurs a termination of employment during the Restriction Period due
to the participant's death, disability, retirement, or involuntarily and without
cause, the Committee, at its discretion, may provide for waiver of all or a
portion of the restrictions applicable to unvested Restricted Stock awards. If
termination occurs for any other reason during the Restriction Period for a
given award, all shares still subject to restriction shall be forfeited
by the participant.
(g) Expiration of Restriction Period. If and when the Restriction
Period expires without a prior forfeiture
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of the Restricted Stock subject to such Restriction Period, unrestricted
certificates for such shares shall be delivered to the participant.
(h) Relation to Section 8. Restricted Stock granted in respect of
an Annual Incentive Award under Section 8 shall be regarded as Restricted Stock
granted under this Section 6.
SECTION 7. PERFORMANCE SHARES.
(a) Subject to the terms and conditions described below, Performance
Shares may be granted to participants at any time and from time to time as
determined by the Committee. The Committee shall have complete discretion in
determining the number of Performance Shares granted to each participant;
provided, however, that no participant may earn more than 65,000 Performance
Shares with respect to any Performance Period (as defined below).
(b) Price. The purchase price for Performance Shares shall be zero
unless otherwise specified by the Committee.
(c) Performance Share Agreement. Prior to the beginning of the
applicable Performance Period (as defined below), subject to the provisions of
this Plan, all the terms and conditions of an award of Performance Shares shall
be determined by the Committee in its discretion and shall be confirmed by a
Performance Share Award Agreement which shall be executed by the Company and the
recipient.
(d) Performance Periods. Any time period (the "Performance Period")
relating to a Performance Share award shall be at least two years in length.
(e) Performance Goals. Performance Shares shall be earned based upon
the financial performance of the Company or an operating group of the Company
during a Performance Period. Prior to the beginning of the applicable
Performance Period, the Committee will establish in writing targets for return
on equity of the Company (and/or an operating group of the Company, if
applicable) over the Performance Period ("Performance Goals"), which Performance
Goals, depending on the extent to which they are met, will determine the number
of Performance Shares, if any, that will be earned by the participants. Return
on equity will be calculated from the consolidated financial statements of the
Company and subsidiaries but shall exclude (i) the effects of changes in federal
income tax rates, (ii) the effects of unusual and extraordinary items as defined
by Generally Accepted Accounting Principles ("GAAP"), (iii) the cumulative
effect of changes in accounting principles in accordance with GAAP, and (iv) the
effects of acquisitions, mergers, and significant dispositions
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and sales of assets. The Performance Goals may vary for different Performance
Periods and need not be the same for each participant receiving an award for a
Performance Period. The Committee may, in its discretion, subject to the
limitations of Section 11, vary the terms and conditions of any Performance
Share Award, including, without limitation, the Performance Period and
Performance Goals, without shareholder approval, as applied to any recipient who
is not a "covered employee" with respect to the Company as defined in Section
162(m) of the Internal Revenue Code of 1986, as amended ("Code"). In the event
applicable tax or securities laws change to permit the Committee discretion to
alter the governing performance measures without obtaining shareholder approval
of such changes, the Committee shall have sole discretion to make such changes
without obtaining shareholder approval.
(f) Earning of Performance Shares. After the applicable Performance
Period shall have ended, the Committee shall certify the extent to which the
established Performance Goals have been achieved. Subsequently, each recipient
of Performance Shares shall be entitled to receive payout on the number of
Performance Shares, if any, earned by the recipient over the Performance Period,
to be determined as a direct function of the extent to which the Company's
Performance Goals have been achieved. A recipient may earn more or less than the
number of Performance Shares originally awarded, or no Performance Shares at
all. Performance Shares shall be paid in the form of Company Stock. Unrestricted
certificates representing such number of shares of Stock as equals the number of
Performance Shares earned under the award shall be delivered to the participant
as soon as practicable after the end of the applicable Performance Period.
Participants shall also be entitled to any dividends or other distributions that
would have been paid or earned in respect of such shares of Stock had such
shares been outstanding during the period from the initial award date to the
final payout on the Performance Shares. Unless otherwise provided, in its
discretion, by the Committee, any such dividends or other distributions shall
not bear interest.
(g) Termination of Employment Due to Death, Disability or Retirement or
at the Request of the Company Without Cause. In the event the employment of a
participant is terminated by reason of death, disability or retirement or by the
Company without Cause during a Performance Period, the participant shall receive
a prorated payout with respect to the Performance Shares relating to such
Performance Period. The prorated payout shall be determined by the Committee,
in its sole discretion, and shall be based upon the length of time that the
participant held the Performance Shares during the
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Performance Period and based upon the achievement of the established Performance
Goals. Distribution of earned Performance Shares shall be made at the same time
payments are made to participants who did not terminate employment during the
applicable Performance Period.
(h) Termination of Employment for Other Reasons. In the event that a
participant's employment terminates for any reason other than those reasons set
forth in paragraph (g) of this Section 7, all Performance Shares shall be
forfeited by the participant to the Company.
(i) Nontransferability. Performance Shares may not be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, a
participant's rights under the Plan shall be exercisable during the
participant's lifetime only by the participant, the participant's legal
representative or the recipient of the participant's Performance Shares.
SECTION 8. ANNUAL INCENTIVE AWARDS.
(a) Eligibility. Participants designated by the Committee shall be
eligible for an annual incentive award ("Annual Incentive Award"), the amount of
which will be based on the satisfaction of specified bonus targets ("Award
Targets"). Prior to the beginning of each of the Company's fiscal years, the
Committee shall establish in writing (i) the Award Targets and (ii) the Annual
Incentive Awards which may be earned by participants, based upon the extent to
which the Award Targets are achieved ("Award Opportunities"). The Award Targets
and Award Opportunities shall be confirmed in agreements between the Company and
the participants. The Award Targets shall be functions of one or more of the
following Company performance measures, as shall be determined by the Committee:
(i) total consolidated net income of the Company and subsidiaries, (ii) group
operating income, (iii) operating group return on sales, (iv) operating group
return on gross assets and (v) corporate and operating group return on equity.
Total net income, group operating income, operating group return on sales,
operating group return on gross assets, and corporate and operating group return
on equity shall be calculated from the consolidated financial statements of the
Company and subsidiaries, but shall exclude (i) the effects of changes in
federal income tax rates, (ii) the effects of unusual and extraordinary items as
defined in GAAP, (iii) the cumulative effect of changes in accounting principles
in accordance with GAAP, and (iv) the effects of acquisitions, mergers, and
significant dispositions and sales of assets.
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(b) Earning of Annual Incentive Awards. After the applicable fiscal
year shall have ended, the Committee shall certify the extent to which the
established Award Targets have been achieved. Subsequently, the Committee shall
calculate the Annual Incentive Award (if any) for each participant, based upon
the Award Opportunities established by the Committee prior to the beginning of
the applicable year. Each Annual Incentive Award shall be solely a function of
the degree to which the established Award Targets have been achieved.
(c) Payments and Election. Participants may elect to receive Annual
Incentive payouts in cash or Restricted Stock or a combination of the two,
provided that any election for payment in Restricted Stock is subject to the
approval of the Committee. Payouts with respect to a fiscal year will be made
within 75 days of the end of such year. To elect the payout of a portion of an
Annual Incentive Award in Restricted Stock, a participant must inform the
Committee in writing prior to the start of the fiscal year with respect to which
payout would be made. Unless modified by the Committee before the beginning of a
fiscal year of the Company, terms and conditions of Restricted Stock payouts
shall include the following:
(i) Any portion of an Annual Incentive Award can be elected for
payout in Restricted Stock, either in a dollar amount or as a
percentage of the total Annual Incentive Award.
(ii) Restricted Stock will be issued on the same date that cash
payouts would be made, based on the closing price of the Stock as of
the date of the award ("Closing Price") on the NYSE (or the principal
exchange on which the Stock shall then be listed or quoted).
(iii) The Restricted Stock will be issued pursuant to, and shall be
subject to the terms and conditions contained in Section 6 of this
Plan. The restriction period will be for a period determined by the
Committee of at least three years in duration, after which time the
Stock will be released to the participant.
(iv) The number of shares of Restricted Stock granted to a
participant will equal the product of (A) such number of shares of
Stock as have an aggregate Closing Price equal to the dollar amount of
the Annual Incentive Award elected to be received in the form of
Restricted Stock, multiplied by (B) a factor greater than
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1.00 but less than or equal to 1.30, as determined by the Committee
prior to the beginning of the Company's applicable fiscal year.
(v) If the participant's employment is terminated by reason of
death, disability or retirement or by the Company without Cause, the
Committee, at its discretion, may provide for waiver of all or a
portion of the restrictions applicable to unvested restricted awards.
If the participant's employment is terminated for any other
reason, the shares of Stock will be forfeited.
(d) Amendment of Awards. The Committee has discretion, subject to
Section 11, to vary the terms and conditions of any Annual Incentive Award,
including, without limitation, the Award Targets, without shareholder approval,
as applied to any participant who is not a "covered employee" with respect to
the Company as defined in Section 162(m) of the Code.
(e) Performance Threshold. The Committee shall establish minimum
levels of Company performance which must be achieved during a fiscal year before
any Annual Incentive Awards shall be paid to participants.
(f) Maximum Awards. The Committee may establish guidelines governing
the maximum Annual Incentive Awards that may be earned by participants (either
in the aggregate, by employee class or among individual participants), provided
that no participant may receive an Annual Incentive Award in an amount
(including the value of any Restricted Stock constituting any portion of such
Annual Incentive Award) of greater than $850,000 with respect to any fiscal year
of the Company.
(g) Termination of Employment. In the event a participant's employment
is terminated for any reason, such participant shall not be entitled to receive
any Annual Incentive Award with respect to the fiscal year in which the
termination occurs.
SECTION 9. AWARDS TO BOARD OF DIRECTORS.
(a) Administration. All Outside Directors shall be eligible to
participate in the Plan only as expressly set forth in this Section 9. The
Committee shall have no power to determine which Outside Directors may receive
Stock Options, the amount of such Stock Options, or the terms of such Stock
Options to the extent provided below.
(b) Eligibility and Grant of Options. On the date of each Out-
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side Director's election by shareholders to a new three-year term during the
term of the Plan, each Outside Director shall receive a Stock Option to purchase
2,250 shares of the Company's Stock; provided, however, that no Stock Option
shall be granted under this Section to an Outside Director to the extent that it
would duplicate an award of Stock Options to the Outside Director under the
Commercial Intertech Corp. Stock Option and Award Plan of 1993 ("1993 Plan").
All awards of Stock Options to Outside Directors shall be made under the 1993
Plan rather than under this Plan until the earlier of the expiration of the 1993
Plan or the exhaustion of shares of Stock authorized thereunder.
(c) Terms of Options. All Stock Options granted to Outside Directors
shall be NQSOs and shall be issued at Fair Market Value as defined in Section
5(a). All other terms applicable to Stock Options, as defined in Section 5
[with the exception of the provisions of Section 5(c) which apply to the
exercisability of the Stock Options and Section 5(i)] and in other sections of
this Plan are applicable to Outside Director Stock Options.
(d) Exercisability of Stock Options. The Stock Options granted to
Outside Directors shall become exercisable in three equal installments,
commencing on the first anniversary of the date of grant and annually
thereafter. Each Stock Option granted under the Plan shall expire ten years from
the date of the grant, and shall be subject to earlier termination as
hereinafter provided.
SECTION 10. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. In the event of:
(x) a "Change in Control" as defined in Section 10(b),
or
(y) a "Potential Change in Control" as defined in Section 10(c),
the Committee may provide that one or more of the following acceleration and
valuation provisions shall apply:
(i) On the date that such Change in Control or Potential Change in
Control is determined to have occurred, any or all Stock Options
awarded under this Plan not previously exercisable and vested shall
become fully exercisable and vested.
(ii) The restrictions applicable to any or all Restricted Stock
(including Restricted Stock issued in payment of Annual Incentive
Awards) and
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Performance Share awards shall lapse and such shares and awards shall
be fully vested.
(b) Definition of "Change in Control." For purposes of Section 10(a),
a "Change in Control" shall be deemed to have occurred if:
(i) there shall be consummated (A) any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Common Stock
would be converted to cash, securities or other property, other than a
merger of the Company in which the holders of the Company's Common
Stock immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of
all or substantially all the assets of the Company, or
(ii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company, or
(iii) any person [as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")], other than the Company or a subsidiary or any employee benefit
plan sponsored by the Company or a subsidiary, shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing in special circumstances)
having the right to vote in the election of director, as a result of a
tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, or
(iv) at any time during a period of two consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company shall cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for
election by the Company's shareholders of each new director during such
two-year period was approved by a vote
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of at least two-thirds of the directors then still in office who were
directors at the beginning of such two-year period.
For purposes hereof, ownership of voting securities shall take into
account and shall include ownership as determined by applying the provisions of
Rule 13d-3(d)(1)(1)(as in effect on the Approval Date) pursuant to the Exchange
Act.
(c) Definition of "Potential Change in Control." For purposes of
Section 10(a), a "Potential Change in Control" means the happening of any one of
the following:
(i) The entering into an agreement by the Company, the
consummation of which would result in a Change in Control of the
Company as defined in Section 10(b); or
(ii) The acquisition of beneficial ownership, directly or indirectly,
by any entity, person or group (other than the Company or any Company
employee benefit plan, including any trustee of such plan acting as
such trustee) of securities of the Company representing 5% or more of
the combined voting power of the Company's outstanding securities, and
the adoption by the Board of a resolution to the effect that a
"Potential Change in Control" of the Company has occurred for the
purposes of this Plan.
(d) Change in Control Price. For the purposes of this Section 10,
"Change in Control Price" means the highest price per share paid in any
transaction reported on the NYSE (or the principal exchange on which the Stock
is listed or quoted), or paid or offered in any bona fide transaction related to
an actual or Potential Change in Control of the Company, at any time during the
preceding sixty-day period as determined by the Committee.
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of an
optionee or participant under any award theretofore granted, without the
optionee's or participant's consent, or which, without the approval of the
Company's stockholders, would:
(a) except as expressly provided in the Plan, increase the total
number of shares reserved for purposes of the Plan;
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(b) change the class of employees eligible to participate in
the Plan;
(c) extend the maximum option period under Section 5(b) of the
Plan; or
(d) increase materially the benefits under the Plan.
The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent, nor shall any
amendment provide for a reduction in the exercise price of a Stock Option except
as permitted under Section 4 (respecting an adjustment due to a stock dividend,
split, combination, etc.), nor shall any amendment to a Restricted Stock award
accelerate vesting other than as permitted in Section 6.
The provisions regarding Stock Options granted to Outside Directors
pursuant to Section 9 above shall not in any case be amended more often than
once in any six-month period other than to comply with changes in the Code or
the Employee Retirement Income Security Act, or the rules thereunder.
Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in applicable tax and securities
laws and accounting rules, as well as other developments.
SECTION 12. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments or deliveries of Stock not
yet made to a participant or optionee by the Company, nothing contained herein
shall give any such participant or optionee any rights that are greater than
those of a general creditor of the Company. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments hereunder consistent with the foregoing.
SECTION 13. GENERAL PROVISIONS.
(a) Share Transfer and Distribution. The Committee may require each
person purchasing shares pursuant to a Stock Option or Restricted Stock award
under the Plan to represent to and agree with the Company in writing that the
optionee or participant is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-
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transfer orders and other restrictions as the Committee may deem advisable under
the rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed and any
applicable federal or state securities law, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
(b) Additional Arrangements. Nothing contained in this Plan shall
prevent the Company from adopting other or additional compensation arrangements
for its employees.
(c) No Right to Employment. The adoption of the Plan shall not confer
upon any employee of the Company any right to continued employment with the
Company nor shall it interfere in any way with the right of the Company to
terminate the employment of any of its employees at any time.
(d) Tax Withholding. It shall be a condition to the performance of the
Company's obligations to issue or transfer Shares upon exercise of a Stock
Option, that the optionee pay or make provision satisfactory to the Company for
the payment of any taxes (other than stock transfer taxes) which the Company is
obligated to collect with respect to the issuance of such Shares upon such
exercise. Subject to limitation by the Committee, optionees may elect to have
the Company withhold Shares otherwise issuable upon the exercise of a Stock
Option to cover federal and state withholding obligations incident to such
exercise and to request that shares be withheld to pay withholding taxes in
excess of the statutory minimum, as long as the amount does not exceed the
participant's estimated total federal, state and local tax obligations
associated with the transaction, including FICA taxes to the extent applicable.
The optionees' elections are subject to the following restrictions:
(1) elections must be made on or prior to the date as of which the
amount of tax to be withheld is determined;
(2) elections are irrevocable; and
(3) elections are subject to the disapproval of the Committee.
Participants subject to Section 16(b) of the Securities Act of 1934 are
subject to additional restrictions, as required pursuant to the securities laws,
and the rules and regulations promulgated thereunder.
(e) Beneficiaries. The Committee shall establish such procedures as
it deems appropriate for a
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participant to designate a beneficiary to whom any amounts payable in the event
of the participant's death are to be paid.
(f) Laws Governing. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Ohio.
SECTION 14. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is approved by the
stockholders of the Company. Grants made prior to such stockholder approval
shall be contingent on such approval.
SECTION 15. TERM OF PLAN.
No award shall be granted pursuant to the Plan on or after the tenth
anniversary of the effective date of the Plan, but awards granted prior to such
tenth anniversary may extend beyond that date.
SECTION 16. MISCELLANEOUS.
For purposes of this Plan, the term retirement shall mean (1)
termination of employment with a pension under the provisions of any retirement
plan for employees of Commercial Intertech Corp. or a domestic or foreign
subsidiary corporation or (2) termination of employment following attainment of
age 65 regardless of eligibility for pension.
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EXHIBIT 99.22
1995 PLAN COMMERCIAL INTERTECH CORP.
1775 Logan Avenue Youngstown, Ohio 44501
NON-QUALIFIED STOCK OPTION
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Commercial Intertech Corp., an Ohio corporation (the
"Company"), is largely dependent upon the judgment, initiative and efforts of
selected key employees for the successful conduct of its business; and
WHEREAS, the Company desires to advance its interests by providing a
means whereby key employees may acquire or enlarge their proprietary interest in
the Company, thereby assuring closer identification of their interest with those
of the Company and strengthening their desire to remain with the Company or its
subsidiaries; and
WHEREAS, to accomplish these ends, the Stock Option and Award Plan of
1995 was adopted by the Board of Directors of the Company (the "Board"), and was
approved and authorized by the shareholders at the annual meeting of the Company
held on March 22, 1995; and
WHEREAS, the Stock Option and Award Plan of 1995 (the "Plan") provides
for the granting to key employees of the Company and its subsidiaries of options
to purchase common shares of the Company, and the Compensation Committee (the
"Committee"), to which the Board has delegated the responsibility of
administering the Plan, has acted to grant options to key employees selected by
the Committee; and
WHEREAS, this option is granted pursuant to the purpose, authorization
and action set forth above;
NOW, THEREFORE, in consideration of the mutual promises and
representations herein contained, and other good and valuable considerations,
the Company does hereby grant unto __________________________ (the "Grantee"),
an option to purchase from the Company an aggregate of _____________ of the
authorized but unissued common shares of $1.00 par value of this Company, at the
price of $___ per share, such aggregate number of shares to become purchasable
as follows:
_________________ shares on or after _______________________________
_________________ shares on or after _______________________________
<PAGE>
THIS OPTION is subject to the following terms and conditions:
1. Type of Shares
This option shall apply to the Company's authorized but unissued common
shares of $1.00 par value.
2. Administration of the Plan
The Plan shall be administered by the Committee. The Committee shall
have full power to construe and interpret the Plan, to establish such rules as
it deems necessary for the proper administration of the Plan and to make such
determinations and to take such other action in connection with the Plan as it
deems necessary or advisable. Any such construction, interpretation, rule,
determination or other action taken by the Committee pursuant to the Plan shall
be binding upon the Grantee and all other participants in the Plan and their
legal representatives.
3. Exercise of Option
a. To exercise this option, the Grantee shall give written notice
addressed to the Company, to the attention of its Secretary at
1775 Logan Avenue, Youngstown, Ohio, 44501. Such written
notice shall set forth the number of shares to be purchased,
shall contain a representation that such shares are being
purchased by the Grantee for his own account as an investment,
and not with the view to reselling such shares to the public,
and shall be accompanied by payment of the full purchase price
for the shares to be purchased (which is the option price per
share multiplied by the number of shares purchased). Shares
purchased may, at the request of the Grantee, be issued in the
name of the Grantee or in the name of the Grantee and another
jointly, with the right of survivorship. After any installment
becomes purchasable, the option may be exercised as to the
whole or any part of such installment at any time or from time
to time prior to the expiration of this option or its earlier
termination.
b. An exercise of this option shall become effective on the date
written notice of such exercise is received by the Company at
its principal office, accompanied by full payment for the
shares, but in no case earlier than the date on which the
installment becomes purchasable and only upon the terms set
forth herein.
4. Non-transferability of Option
During the Grantee's lifetime, this option may be exercised only by
him. This option shall not be transferred other than by will or by the laws of
descent and distribution, and shall not be subject to attachment, execution or
other similar process.
<PAGE>
5. Term of Option
This option shall expire ten years after the date hereof, unless
terminated earlier as provided in Paragraph 6 below.
6. Termination of Employment
Upon termination of the Grantee's employment, this option will become
void as to all shares which are not then purchasable. If employment terminates
for reasons other than death, disability, retirement or cause, this option will
continue as to shares purchasable on the employment termination date for a
period of three months after the employment termination date. Upon the
retirement of the Grantee, under the Company's Retirement Plan, his right to
acquire shares purchasable by him on the date of such retirement shall continue
for a period of twenty-four months after such retirement. Upon the death of the
Grantee, his right to acquire shares purchasable by him on the date of his death
may be exercised by his legal representatives for a period of twelve months
after the date of his death. Upon the termination of the Grantee's employment
because of the Grantee's disability, his right to acquire shares purchasable by
him on the date of such termination may be exercised for a period of twelve
months after such termination. Upon termination of Grantee's employment for
cause, this option will immediately be void for all purposes.
Notwithstanding the foregoing, under no circumstances will this option
extend beyond ten years from the date hereof.
7. Effect of Change in Stock Subject to the Plan
In the event any dividend payable in shares of the Company is declared
by the Company, or in case of any subdivision or combination of the outstanding
shares, the number of shares allotted under this option shall be increased or
decreased proportionately and the option price per share as stated above shall
be decreased or increased proportionately so that there will be no change in the
aggregate purchase price payable upon the exercising of this option. In the
event of any other recapitalization or any reorganization, merger, consolidation
or any other change in the corporate structure or shares of the Company, the
Board may make such adjustment, if any, as it may deem appropriate in the number
and kind of shares deliverable upon subsequent exercising of this option and in
the option price under this option.
8. Listing and Registration of Shares
If at any time the Board shall deem listing, registration or
qualification of the shares covered by this option upon any securities exchange
or under any state or federal law or the consent or approval of any governmental
regulatory body to be necessary or desirable as a condition of or in connection
with the purchase of shares under this option, this option may not be exercised
in whole or in part unless and until such listing, registration, qualification,
consent, or approval shall have been effected or obtained on such terms and
conditions as are acceptable to the Board.
9. Agreement to Remain in Employ
This option is granted in consideration of, among other things, the
Grantee's agreement to continue in the employ of the Company or one of its
subsidiary companies for a period of one year from the date of this instrument
if the employing company shall
<PAGE>
so request. By accepting this option, the Grantee indicates his agreement to
continue in such employ; but nothing herein contained shall obligate such
employing company to continue the Grantee in such employment.
10. Amendment or Termination
The Board may amend or terminate the Plan at any time provided that the
Board shall not (except as provided in Paragraph 8 hereof) make any change in
this option which will impair the rights of the Grantee herein, without the
consent of the Grantee.
11. Law Governing Option
This option shall be construed under and governed by the laws of the
State of Ohio.
12. Change in Control and Potential Change in Control
In the event of a "Change in Control" or a "Potential Change in Control" of the
Company, as said terms are hereinafter defined, all options granted herein not
yet exercisable shall immediately become exercisable and vested.
A "Change in Control" shall be deemed to have occurred if:
(i) there shall be consummated (A) any consolidation or merger of
the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the
Company's Common Stock would be converted into cash, securities
or other property, other than a merger of the Company in which
the holders of the Company's Common Stock immediately prior to
the merger have substantially the same proportionate
ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange
or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the
Company, or
(ii) the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company, or
(iii) any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a Subsidiary or any
employee benefit plan sponsored by the Company or a Subsidiary,
shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities of the Company
representing 30% or more of the combined voting power of the
Company's then outstanding securities ordinarily (and apart
from rights accruing in special circumstances) having the right
to vote in the election of
<PAGE>
director, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise,
or
(iv) at any time during a period of two consecutive years,
individuals who at the beginning of such period constituted the
Board of Directors of the Company shall cease for any reason to
constitute at least a majority thereof, unless the election or
the nomination for election by the Company's shareholders of
each new director during such two-year period was approved by a
vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such two-year
period.
For purposes hereof, ownership of voting securities shall take into
account and shall include ownership as determined by applying the provisions of
Rule 13d-3(d)(1)(1) (as in effect on the Approval Date) pursuant to the Exchange
Act.
A Potential Change in Control means the happening of any one of the
following:
(i) The entering into an agreement by the Company, the
consummation of which would result in a Change in Control of
the Company as defined above; or
(ii) The acquisition of beneficial ownership, directly, or
indirectly, by any entity, person or group (other than the
Company or any Company employee benefit plan, including any
trustee of such plan acting as such trustee) of securities of
the Company representing 5% or more of the combined voting
power of the Company's outstanding securities, and the adoption
by the Board of a resolution to the effect that a "Potential
Change in Control" of the Company has occurred for the purposes
of the Stock Option and Award Plan.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed in duplicate by its proper officers duly authorized and its corporate
seal to be hereto affixed, at Youngstown, Ohio, this _________ day of
______________________, 19__.
COMMERCIAL INTERTECH CORP.
By __________________________________
Attest ______________________________
Secretary
S E A L
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ACCEPTANCE
I hereby accept the within option in accordance with the terms and
conditions thereof.
_____________________________
Witness:
___________________________________________
