EXHIBIT 10.2
 
SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (the “Agreement”) is made and
entered as of this 9th day of January, 2010 (the “Effective Date”), by and among
Colfax Corporation, a Delaware corporation (“Colfax” or the “Company”), and John
A. Young (hereinafter “Mr. Young”).

WHEREAS, Mr. Young has served Colfax as its President, Chief Executive Officer,
and as a member of its Board of Directors;

WHEREAS, Mr. Young and Colfax are parties to an Executive Employment Agreement
dated April 29, 2008, as amended by the Amendment thereto entered into effective
as of January 1, 2010 (the “Executive Employment Agreement”); and

WHEREAS, Mr. Young and Colfax have agreed that Mr. Young will terminate his
employment relationship and resign from all positions with Colfax, and all of
its respective directly and indirectly owned subsidiaries and affiliates,
including all employment, officer and board of directors and other positions,
under the terms and conditions of this Agreement.

NOW, THEREFORE, AND IN CONSIDERATION of the mutual promises of the parties to
this Agreement, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:

1.           Resignation From and Termination of Employment.  Mr. Young hereby
resigns from employment with Colfax and all of its directly and indirectly owned
subsidiaries and affiliates, and resigns from all the offices, directorships and
other positions he holds with Colfax and all of its directly and indirectly
owned subsidiaries and affiliates, including without limitation his positions as
President and Chief Executive Officer of Colfax and his position as a member of
the Board of Directors of Colfax, effective as of January 9, 2010 (the
“Resignation Date”).  After the Resignation Date, Mr. Young shall not be
entitled to the receipt of any further payments or benefits from Colfax other
than those expressly provided for in this Agreement.  The parties hereto agree
that this Agreement constitutes written notice to Colfax of Mr. Young’s
resignation from the Board.  The parties further agree that no additional amount
shall be payable to Mr. Young on account of his resignation under the Executive
Employment Agreement.

2.           Termination Payments.  Provided Mr. Young executes the General
Release Agreement described in Section 5 of this Agreement, Mr. Young shall
receive the following payments and benefits under this Agreement.  The date Mr.
Young executes such General Release Agreement shall be referred to as the
“General Release Effective Date”.

(a)          Compensation and Benefits.

(i)           Mr. Young shall receive a lump sum payment of $1,265,842 within 10
business days of the General Release Effective Date.

 

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(ii)           Mr. Young shall receive $300,000, payable 30 days following
settlement or initial adjudication of the Company’s insurance coverage trial in
the New Jersey Superior Court, currently in Mercer County, but in no event later
than March 15, 2011.

(b)          Health Coverage.  At the Company’s expense, Mr. Young and his
spouse and dependent children shall be entitled to continuation of health
insurance coverage (i.e., medical, dental and vision) under the Company’s group
health plan(s) in which Mr. Young was participating on the Effective Date of
this Agreement for a period of one (1) year from the Effective Date.

(c)          Equity Grants.
 
(i)            Stock Options.  As of the Effective Date, Mr. Young shall become
fully and immediately vested in 50,403 of Colfax employee stock options granted
under the Colfax Corporation 2008 Omnibus Incentive Plan (the “Stock Incentive
Plan”) to Mr. Young on March 13, 2009 and which otherwise would have vested on
March 13, 2010, in 50,403 of Colfax employee stock options granted under the
Stock Incentive Plan on March 13, 2009 and which otherwise would have vested on
March 13, 2011, and in 20,833 of Colfax employee stock options granted under the
Stock Incentive Plan on May 7, 2008 and which otherwise would have vested on May
7, 2010.  Furthermore, all of Mr. Young’s outstanding vested Colfax employee
stock options, whether previously vested or becoming vested pursuant to this
Section 2(c)(i), shall be exercisable until March 31, 2012, notwithstanding any
otherwise applicable provision in the award agreement providing for expiration
of such stock options on the 90th day after the date of termination of
employment.  For the avoidance of doubt, the Company’s records indicate that
20,834 employee stock options were previously vested without regard to this
Section 2(c)(i).
 
(ii)           Performance-Based Stock Units.  Mr. Young’s 25,000
Colfax  employee stock units granted under the Stock Incentive Plan on May 7,
2008 subject to performance criteria, which already have been achieved, and
currently unvested based on additional service vesting criteria, shall, as of
the Effective Date of this Agreement, become fully and immediately vested.  With
respect to such stock units becoming vested, the Company will withhold from the
shares deliverable to Mr. Young the number of shares necessary to satisfy the
minimum statutory federal and state tax withholding requirements which the
Company determines are applicable in connection with such vesting and issuance
of common stock of the Company.
 
3.           Accrued Benefits.  As of his Resignation Date, Mr. Young’s
participation in the benefits programs of Colfax shall terminate in accordance
with the terms of Colfax’s benefits plans and its standard policies and
procedures, except that:  (A) subject to Section 2(b), Mr. Young may elect to
continue the health insurance coverage that he had maintained as an employee
pursuant to the Consolidated Omnibus Budget Reconciliation Act as amended
(“COBRA”); (B) Mr. Young shall be entitled to payment of his pension and
retirement savings benefits accrued under the Retirement Plan for Salaried US
Employees of Imo Industries, Inc. and Affiliates, the Colfax Corporation Excess
Benefit Plan and the Colfax Corporation 401(k) Savings Plan Plus at the time and
in the form elected under the applicable plan; (C) Mr. Young’s 49,933 shares of
Colfax common stock granted on May 7, 2008 that remain subject to the Deferred
Delivery Stock Ownership Agreement between Mr. Young and Colfax (the “Stock
Ownership Agreement”) shall be delivered within 10 business days of the General
Release Effective Date; (D) Mr. Young shall be entitled to indemnification as
provided in the Indemnification Agreement he entered into with the Company at
the time of the Company’s initial public offering; and (E) Colfax shall
reimburse Mr. Young for appropriate and reasonable expenses incurred on or
before the Resignation Date, if any, in accordance with the applicable policies
and procedures.

 
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4.           Effect on Other Agreements, Ongoing Obligations.
 
(a)           Section 6 of the Executive Employment Agreement (Confidentiality,
Non-Competition and Non-Disclosure; Executive Cooperation; and
Non-Disparagement) is incorporated herein by reference and shall remain in full
force and effect in accordance with its terms, except that Sections 6.2 and 6.3
shall be revised to provide as follows:
 
6.2           Noncompetition.  During the term of this Agreement (including any
extensions thereof) and for a period of one (1) year following the termination
of the Executive's employment under this Agreement for any reason, the Executive
shall not, except with the Company's express prior written consent, for the
benefit of any entity or person (including the Executive) compete with the
Business (as hereinafter defined) within the Territory.  For purposes of this
Agreement, “Business” shall mean a company involved in the manufacture and sale
of pumps, valves or fluid handling systems of the kind that are produced by the
Company or that are competitive with the pumps, valves or fluid handling systems
that are produced by the Company.  For purposes of this Agreement, “Territory”
shall mean the United States of America.
 
6.3           Non-Solicitation.  During the term of this Agreement (including
any extension thereof) and for a period of three (3) years following the
termination of the Executive’s termination under this Agreement for any reason,
the Executive shall not, except with the Company’s express prior written
consent, for the benefit of any entity or person (including the Executive)
solicit, induce or encourage any employee of the Company, or any of its
subsidiaries, to leave the employment of the Company or solicit, induce or
encourage any customer, or client of the Company, or any of its subsidiaries, to
cease or reduce its business with the Company or its subsidiaries.

 
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(b)           Mr. Young agrees to provide reasonable cooperation in the
preparation of all Colfax Securities and Exchange Commission filings through the
first fiscal quarter of 2010, including the provision of any internal
certifications that the Company may reasonably request relating to Colfax’s
internal controls, results of operations and financial condition for the periods
prior to the Effective Date, in a form similar to the certification attached
hereto as Exhibit A.  Further, Mr. Young understands and agrees that his ongoing
obligations under Section 6.4 of the Executive Employment Agreement specifically
include, but are not limited to, providing testimony and other assistance that
may be requested in connection with pending asbestos-related insurance coverage
disputes.  Consistent with Section 6.4 of the Executive Employment Agreement,
all expenses paid by Mr. Young in complying with this Section 4(b) shall be
promptly reimbursed to Mr. Young upon submission to the Company.
 
(c)           Except to the extent otherwise expressly provided in this
Agreement, the Company’s obligations to Mr. Young under the Executive Employment
Agreement shall be deemed satisfied and cancelled.
 
5.           General Release.  In consideration of the payments described in
Section 2 of this Agreement, Mr. Young agrees to execute a General Release
Agreement at the time he executes this Agreement in exactly the form attached
hereto as Exhibit B, the terms and conditions of  which are specifically
incorporated herein by reference.  If Mr. Young breaches this commitment, then
the Company shall be released from any further obligation to perform hereunder
(including, but not limited to, any obligation to make any further payments to
or for the benefit of Mr. Young pursuant to Section 2).

6           No Other Consideration.  Mr. Young affirms that the terms stated
herein are the only consideration for signing this Agreement and that no other
representations, promises, or agreements of any kind have been made by any
person or entity to cause him to sign this Agreement.  Mr. Young has accepted
the terms of this Agreement because he believes them to be fair and reasonable
and for no other reason.

7.           No Admission.  It is understood and agreed by all parties that this
Agreement does not constitute an admission of liability or wrongdoing on the
part of Colfax and that by entering into this Agreement Colfax does not admit
that there has been any wrongdoing whatsoever against any person or entity, and
it expressly denies that any wrongdoing has occurred.  It is understood and
agreed by all parties that this Agreement is purely an offer of compromise.

8.           Death.  In the event of Mr. Young’s death (regardless of whether
occurring on or prior to the Resignation Date), the Company shall provide any
benefits and payments set forth in Section 2 that have not previously been paid
to Mr. Young (including the right of such beneficiary to exercise any
unexercised stock options) to the beneficiary designated by Mr. Young in writing
(which designation, where applicable, shall be effected in accordance with the
terms and conditions of the applicable plan documents and procedures) or, if no
such beneficiary shall be named or be living at the time of his death, to his
estate.

9.           Withholding.  All compensation-related payments to be made to Mr.
Young under this Agreement, or otherwise by Colfax, shall be subject to
withholding to satisfy required withholding taxes and other required deductions.

 
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10.           Modification.  This Agreement may not be released, discharged,
abandoned, supplemented, changed, or modified in any manner, orally or
otherwise, except by an instrument in writing signed and duly executed by each
of the parties hereto.

11.           Entire Agreement.  This Agreement contains and constitutes the
entire understanding and agreement between the parties on its subject matter,
and, except as otherwise provided herein, it supersedes and cancels all previous
negotiations, agreements, commitments, and writings in connection herewith.  If
a conflict or inconsistency is found between the terms of this Agreement and any
other agreement, the terms of this Agreement shall prevail.

12.           Waiver.  Failure to insist upon strict compliance with any term,
covenant, or condition of this Agreement shall not be deemed a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of any
right or power under this Agreement at any time or times be deemed a waiver or
relinquishment of such right or power at any other time or times.

13.           Severability.  Invalidity or unenforceability of any provision of
this Agreement shall in no way affect the validity of enforceability of any
other provision.

14.           Assignability.  Colfax may, without the consent of Mr. Young,
assign its rights and obligations under this Agreement to any successor entity.

15.           Choice of Law and Dispute Resolution.  The terms of this Agreement
shall be governed by the laws of the Commonwealth of Virginia.  Any dispute or
other controversy arising from this Agreement shall be resolved in accordance
with the provisions of Sections 6.7 and 7 of the Executive Employment Agreement,
which are incorporated herein by reference.

16.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.

17.           Acknowledgements.  Mr. Young hereby acknowledges that he has
carefully read and fully understands the provisions of this Agreement, including
the General Release Agreement, that he has had the opportunity to fully discuss
it with counsel, and that he knows the contents of the Agreement.  Mr. Young
further acknowledges that he is signing this Agreement voluntarily and without
coercion because he believes it is fair and reasonable and for no other reason.

 
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
set forth below.

COLFAX CORPORATION
 
By: 
/s/ Steven W. Weidenmuller
 
Name: Steven W. Weidenmuller
 
Title: Senior Vice President, Human Resources
 
Date: January 9, 2010
 
JOHN A. YOUNG
 
/s/ John A. Young
 
Date: January 9, 2010

 
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EXHIBIT A

   
CERTIFICATION

I hereby certify that I have read the [Annual Report on Form 10-K][Quarterly
Report on Form 10-Q] and that no facts have come to my attention that cause me
to believe that the Chief Executive Officer of Colfax Corporation should not
sign the certifications required under Section 302 and Section 906 of the
Sarbanes-Oxley Act of 2002.

Dated:    
    
 
    
   
  
John A. Young

 

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EXHIBIT B

   
GENERAL RELEASE AGREEMENT

THIS GENERAL RELEASE AGREEMENT is entered into as of January 9, 2010 (the
“Effective Date”), by John A. Young (the “Executive”) in consideration of the
severance pay provided to the Executive by Colfax Corporation (the “Company”)
pursuant to the Separation Agreement and General Release (the “Employment
Agreement”) by and between the Company and the Executive (the “Severance
Payment”).

1.                          General Release.  The Executive, on his own behalf
and on behalf of his heirs, executors, administrators, attorneys and assigns, to
the fullest extent permitted by law, hereby unconditionally and irrevocably
releases, waives and forever discharges the Company and each of its affiliates,
parents, successors, predecessors, and the subsidiaries, directors, owners,
members, shareholders, officers, agents, and employees of the Company and its
affiliates, parents, successors, predecessors, and subsidiaries (collectively,
all of the foregoing are referred to as the “Employer”), from any and all causes
of action, claims and damages, including attorneys’ fees, whether known or
unknown, foreseen or unforeseen, presently asserted or otherwise arising through
the date of his signing of the General Release Agreement, concerning his
employment or separation from employment.  This release includes, but is not
limited to, any claim or entitlement to salary, bonuses (but not including
payment of any remaining bonus under the Employment Agreement), any other
payments, benefits or damages arising under any federal law (including, but not
limited to, Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, Executive Order 11246, the Family and Medical Leave Act, and
the Worker Adjustment and Retraining Notification Act, each as amended); any
claim arising under any state or local laws, ordinances or regulations
(including, but not limited to, any state or local laws, ordinances or
regulations requiring that advance notice be given of certain workforce
reductions); and any claim arising under any common law principle or public
policy, including, but not limited to, all suits in tort or contract, such as
wrongful termination, defamation, emotional distress, invasion of privacy or
loss of consortium.

The Executive understands that by signing this General Release Agreement he is
not waiving any claims or administrative charges.  He is waiving, however, any
right to monetary recovery or individual relief should any federal, state or
local agency (including the Equal Employment Opportunity Commission) pursue any
claim on his behalf arising out of or related to his employment with and/or
separation from employment with the Company.

The Executive further agrees without any reservation whatsoever, never to sue
the Employer or become a party to a lawsuit on the basis of any and all claims
of any type lawfully and validly released in this General Release Agreement.

2.                          Acknowledgments.  The Executive is signing this
General Release Agreement knowingly and voluntarily.  He acknowledges that:

(a)           He is hereby advised in writing to consult an attorney before
signing this General Release Agreement;

 

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(b)           He has relied solely on his own judgment and/or that of his
attorney regarding the consideration for and the terms of this General Release
Agreement and is signing this General Release Agreement knowingly and
voluntarily of his own free will;

(c)           He is not entitled to the Severance Payment unless he agrees to
and honors the terms of this General Release Agreement;

(d)           He has read and understands the General Release Agreement and
further understands that it includes a general release of any and all known and
unknown, foreseen or unforeseen claims presently asserted or otherwise arising
through the date of his signing of this General Release Agreement that he may
have against the Employer; and

(e)           No statements made or conduct by the Employer has in any way
coerced or unduly influenced him to execute this General Release Agreement.

3.                          No Admission of Liability.  This General Release
Agreement does not constitute an admission of liability or wrongdoing on the
part of the Employer, the Employer does not admit there has been any wrongdoing
whatsoever against the Executive, and the Employer expressly denies that any
wrongdoing has occurred.

4.                          Entire Agreement.  There are no other agreements of
any nature between the Employer and the Executive with respect to the matters
discussed in this General Release Agreement, except as expressly stated herein,
and in signing this General Release Agreement, the Executive is not relying on
any agreements or representations, except those expressly contained in this
General Release Agreement.

5.                          Execution.  It is not necessary that the Employer
sign this General Release Agreement following the Executive's full and complete
execution of it for it to become fully effective and enforceable.

6.                          Severability.  If any provision of this General
Release Agreement is found, held or deemed by a court of competent jurisdiction
to be void, unlawful or unenforceable under any applicable statute or
controlling law, the remainder of this General Release Agreement shall continue
in full force and effect.

7.                          Governing Law.  This General Release Agreement shall
be governed by the laws of the State of Delaware, excluding the choice of law
rules thereof.

8.                          Headings.  Section and subsection headings contained
in this General Release Agreement are inserted for the convenience of reference
only.  Section and subsection headings shall not be deemed to be a part of this
General Release Agreement for any purpose, and they shall not in any way define
or affect the meaning, construction or scope of any of the provisions hereof.

 
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IN WITNESS WHEREOF, the undersigned has duly executed this Agreement as of the
day and year first herein above written.

EXECUTIVE:
 
/s/ John A. Young
 
JOHN A. YOUNG

 
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