Exhibit 10.8
TERMINATION AND CHANGE OF CONTROL AGREEMENT
TERMINATION
AND CHANGE OF CONTROL AGREEMENT (“Agreement”), made as
of October 24, 2007, between AMETEK, Inc. (the
“Company”), and Frank S. Hermance (the
“Executive”).
W I T N E S S
E T H :
WHEREAS,
on the date hereof, the Executive is the Chief Executive Officer of
the Company and Chairman of the Company’s Board of Directors;
and
WHEREAS,
the Company wishes to provide certain benefits to the Executive in
the event of a termination of the Executive’s employment
under certain circumstances or in the event of a change of control
of the Company;
NOW,
THEREFORE, in consideration of the mutual covenants and promises of
the parties hereto, the Company and the Executive agree as
follows:
1.
Definitions . For purposes of this Agreement, the
following terms shall have the meanings set forth below, unless the
context clearly indicates otherwise:
(a) “Awards”
shall mean such Restricted Shares and such Stock Options, if any,
as may be granted to the Executive by the Company from time to
time.
(b) “Board”
shall mean the Board of Directors of the Company.
(c) “Cash
Compensation” shall mean the sum of the Executive’s
base salary (equal to the rate of annual base salary for the
Company’s fiscal year immediately prior to the Termination
Date) plus (i) the Executive’s targeted bonus, if known,
for the year in which the
Termination Date occurs, or (ii) if the targeted bonus
described in clause (i) is not known, the average of the
Executive’s bonuses for the two fiscal years of the Company
immediately preceding the year in which the Termination Date
occurs, including all such salary and bonuses earned in all
capacities with the Company and its Subsidiaries, as reported for
Federal income tax purposes on Form W-2, together with any amounts
which would have been included in the Executive’s salary or
bonus but for a deferral election by the Executive under any plan
of the Company or its Subsidiaries, including, but not limited to,
a plan qualified under Section 401(k) or 125 of the Code.
(d) “Cause”
shall mean (i) misappropriation of funds, (ii) habitual
insobriety or substance abuse, (iii) conviction of a crime
involving moral turpitude, or (iv) gross negligence in the
performance of duties, which gross negligence has had a material
adverse effect on the business, operations, assets, properties or
financial condition of the Company.
(e) “Change
of Control” shall mean (i) the acquisition by any person
or group, other than the Company or any of its Subsidiaries, of 20%
or more of the voting stock of the Company; (ii) the
acquisition by the Company or any of its Subsidiaries, or any
Executive benefit plan of the Company or any Subsidiary, or any
person or entity organized, appointed or established by the Company
or Subsidiary for or pursuant to the terms of any such Executive
benefit plan, acting separately or in combination with each other
or with other persons, of 50% or more of the voting stock of the
Company, if after such acquisition the Shares are no longer
publicly traded; (iii) the death, resignation or removal
within any two-year period from the Board of a sufficient number of
directors such that the individuals who constituted the Board at
the
-2-
beginning of the period shall cease to constitute a majority of the
Board, unless the election of each subsequent member was approved
in advance by two-thirds of the members of the Board in office at
the beginning of such two-year period; or (iv) the approval by
the shareholders of the Company of (A) a merger or
consolidation, the result of which is that the shareholders of the
Company immediately prior to the merger or consolidation do not own
or control immediately after the merger or consolidation at least
50% of the value of the outstanding equity or combined voting power
of the then outstanding voting securities of the Company entitled
to vote generally in the election of Directors or (B) a sale
or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the Company’s
assets.
(f) “Code”
shall mean the Internal Revenue Code of 1986, as amended.
(g) “Good
Reason” shall mean, without the written consent of the
Executive, one or more of the following occurrences:
(i)
any failure of the Company to comply with and satisfy any of the
terms of this Agreement;
(ii)
any reduction of the authority, duties or responsibilities held by
the Executive, or removal from, or failure to be reelected to, the
Board;
-3-
(iii)
any reduction of the Executive’s base compensation or bonus
opportunity or any material reduction of the Executive’s
benefit entitlements; or
(iv)
any transfer of the Executive to a location which is outside the
Paoli, Pennsylvania area (or the general area in which his
principal place of business immediately preceding the transfer may
be located at such time if other than Paoli, Pennsylvania) by more
than fifty miles other than on a temporary basis (less than 6
months), except for required travel on the Company’s business
to an extent substantially consistent with the Executive’s
business travel obligations on behalf of the Company in effect
immediately prior to the transfer;
provided, however, that in the event Executive delivers a Notice of
Termination based on one or more of the foregoing occurrences of
Good Reason, the Company may correct or cure such occurrence or
occurrences within twenty (20) days of receipt of the Notice
of Termination, in which event the Notice of Termination shall be
deemed withdrawn and of no further force or effect.
(h) “Notice
of Termination” shall mean a written notice which conforms to
the requirements of Section 2.
(i) “Restricted
Shares” shall mean any restricted stock awards of Shares
which may be granted to the Executive under any Stock Incentive
Plan of the Company, as adjusted pursuant to the terms of the
agreement between the Company and the Executive evidencing such
awards, which Shares continue to be forfeitable as of the
applicable date or
-4-
event
referred to herein; upon becoming Vested, such Shares shall no
longer be Restricted Shares for purposes of this Agreement.
(j) “Separation
from Service” shall mean the Executive’s ceasing to
perform services for the Company and its successors and affiliates
due to a termination of his employment; provided that, if the
Executive continues thereafter providing services as an independent
contractor for the Company or its successors and affiliates, then
such continuing services must be at a level of less than fifty
percent (50%) of the average level of services performed over the
immediately preceding thirty-six (36) month period, or as
otherwise provided under Section 409A of the Code.
(k) “Share”
shall mean a share of the common stock of the Company or any
successor.
(l) “Stock
Option” shall mean any option on Shares which may be granted
to the Executive under any Stock Incentive Plan of the Company, as
adjusted pursuant to the terms of the agreement between the Company
and the Executive evidencing such option, which option is not fully
exercisable as of the applicable date or event referred to herein;
upon becoming Vested, such option (or the portion of the option
which has become Vested) shall no longer be a Stock Option for
purposes of this Agreement.
(m) “Subsidiary”
shall mean any corporation or other entity which is deemed to be
part of the affiliated group of the Company for purposes of
Section 280G(d)(5) of the Code.
-5-
(n) “Termination
Date” shall mean the date specified in the Notice of
Termination, or the date of receipt of the Notice of Termination if
the Notice is sent by the Company to the Executive and asserts that
the Termination is for Cause.
(o) “Vested”
shall mean, with respect to Restricted Stock Awards, that the
Shares subject to such Restricted Stock Awards have become
nonforfeitable and transferable in accordance with the terms of the
awards and restricted stock agreements between the Company and the
Executive pursuant to which they were issued, and with respect to
Stock Options (or any portion thereof) that the Stock Option (or
such portion of the Stock Option) has become immediately
exercisable by the Executive in accordance with the terms of the
agreement between the Company and the Executive pursuant to which
such Stock Option was granted.
2.
Notice of Termination . Any Separation from Service
due to termination of the Executive’s employment by either
the Company or the Executive shall be communicated by a Notice of
Termination to the other party to this Agreement, given in
accordance with Section 16 hereof. For purposes of this
Agreement, a “Notice of Termination” means a written
notice of the termination of the Executive’s employment which
(i) in the case of a Notice of Termination from the Company,
indicates whether the termination is for Cause or without Cause,
or, in the case of a Notice of Termination from the Executive,
indicates whether the resignation is for Good Reason or not for
Good Reason, (ii) refers to the specific provision in this
Agreement relied upon and briefly summarizes the facts and
circumstances deemed to provide a basis for the termination of
employment under the provision so indicated, and
(iii) specifies the Termination Date, which date shall not be
less than 20 nor more than 30 days after the giving of such
Notice,
-6-
except
for a Notice of Termination from the Company that the Executive is
being terminated for Cause which shall be effective
immediately.
3.
Termination Not in Connection With a Change of Control or for
Cause . If the Executive has a Separation from Service due
to the Executive’s employment being terminated by the Company
without Cause or by the Executive for Good Reason, and such
termination occurs prior to and not in anticipation of a Change of
Control, the following benefits shall be provided to the
Executive:
(a) The
Company shall pay to the Executive, in a lump sum, an amount equal
to two (2) times the Executive’s Cash
Compensation;
(b) All
Awards shall become immediately Vested;
(c) Any
Stock Option (whether previously Vested or which becomes Vested
pursuant to Subsection (b), above), other than a Stock Option which
has been designated as an “incentive stock option”
within the meaning of Section 422 of the Code, shall be
exercisable by the Executive (or following the Executive’s
death, by his estate) for a period of one year from the Termination
Date (but not beyond the expiration date of the Stock
Option);
(d) The
Company shall continue the Executive’s current coverage
(single or family) under (or, at the election of the Company,
provide a tax equivalent monthly payment equal to the cost of) the
Company’s plans or programs to provide health benefits
(including, but not limited to, hospitalization, surgical, major
medical, dental and vision benefits), disability insurance and
death benefits (but Executive will be treated as a terminated
-7-
employee
as of the Termination Date for purposes of the Company’s
Supplemental Executive Death Benefit Plan), as in effect from time
to time for other senior executives of the Company, until the
earliest of (i) the end of the second year following the year
of the Separation from Service, (ii) as applied to health benefit
coverage, the Executive’s eligibility for Medicare,
(iii) as applied to health benefits, disability insurance and
death benefits, considered separately from each other, the
Executive’s commencement of new employment where the
Executive is eligible to participate in substantially similar plans
or programs without a pre-existing condition limitation, or
(iv) the Executive’s death; and
(e) The
Company (i) shall continue to provide the Executive with the
Company provided car available to him at the Termination Date (or a
comparable car, if the lease on such car should expire) and shall
pay (or reimburse Executive) for the reasonable operating expenses
of the car, and (ii) shall continue to reimburse Executive for
the cost of country club or private club dues (at the level in
effect at the Termination Date), until the earliest of the second
anniversary of the Termination Date or the Executive’s death.
The foregoing shall be subject to the following requirements:
(A) the provision of the car pursuant hereto, and the amount
of expenses eligible for reimbursement hereunder, during one
calendar year may not affect the car to be provided or expenses
eligible for reimbursement hereunder in any other calendar year,
(B) the reimbursement of an eligible expense hereunder shall
be made by December 31st of the calendar year next following
the calendar year in which the expense was incurred and
(C) the right to reimbursement or provision of the car
hereunder shall not be subject to liquidation or exchange for
another benefit.
-8-
For
purposes of this Agreement, a termination of employment will be
considered to be in anticipation of a Change of Control if the
Termination Date occurs during the ninety (90) day period
ending on the date of the Change of Control and the substantial
possibility of the Change of Control was known to the Executive and
to a majority of the Board of Directors of the Company on or before
the date the Notice of Termination was delivered.
4.
Change of Control — Awards . If the
Executive is employed by the Company at the date of a Change of
Control, or has a Separation from Service due to having been
terminated without Cause or having resigned for Good Reason in
anticipation of the Change of Control (within the meaning of
Section 3), the following shall apply with respect to the
Executive’s Awards:
(a) All
Awards shall become immediately Vested.
(b) Any
Stock Option (whether previously Vested or which becomes Vested
pursuant to Subsection (a), above), other than a Stock Option which
has been designated as an “incentive stock option”
within the meaning of Section 422 of the Code, shall be
exercisable by the Executive (or following the Executive’s
death, by his estate) for a period which expires one year after the
Executive’s Termination Date (but not beyond the expiration
date of the Stock Option).
(c) If
any Awards become Vested at or following a Change of Control and
the Shares are not publicly traded, then
-9-
(i)
the Executive (or his beneficiary or estate following his death)
shall have the right (“Put Rights”) to compel the
Company to buy back some or all of the Shares which were originally
Restricted Shares or which were acquired by exercise of Stock
Options, held by the Executive (or his beneficiary or estate), for
their fair market value, as established for the year. For purposes
of this Subsection (c), if, at any time following a Change of
Control, the Shares are not publicly traded, the Company, at its
own expense, shall cause a nationally recognized investment banking
firm mutually acceptable to the Executive and the Company to make
an annual valuation, effective as of the first day of the
Company’s fiscal year, which valuation shall establish the
fair market value of a Share. Copies of the valuation shall be
furnished, in writing, to the Executive and the Company within
three (3) months after the effective date of the
valuation;
(ii)
after the Executive’s termination of employment or his death,
the Company shall have the right (“Call Rights”) to
compel the Executive (or his beneficiary or estate, if applicable)
to sell all the Shares which were originally Restricted Shares or
which were acquired by exercise of Stock Options, held by the
Executive (or his beneficiary or estate), to the Company for their
fair market value, as established for the year pursuant to clause
(i) above, as modified by clause (iii) below; and
(iii)
notwithstanding anything to the contrary in clauses (i) and
(ii) above, the Company’s repurchase price pursuant to
any exercise of the
-10-
Put Rights or
the Call Rights shall be the fair market value of such Shares that
are being repurchased, as established for the year pursuant to
clause (i) above, provided that (A) if the Change of Control
is in the form of a merger, consolidation, tender offer, going
private transaction or any similar transaction, the amount per
Share received by shareholders of the Company in the Change of
Control transaction (the “Transaction Price”) shall be
deemed to be the fair market value per Share for a period of twelve
(12) months following the consummation of the Change of
Control unless any fact or circumstance arises within such twelve
(12) month period that may materially affect the value of the
Company (in which case such fact or circumstance shall be taken
into account in determining fair market value), (B) the first
annual valuation pursuant to clause (i) above shall be made as
of the first anniversary of such Chang
| 
