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Exhibit (10)(ct)
 
THIRD AMENDED AND RESTATED
KEY EMPLOYEE SEVERANCE PAY AGREEMENT

This Third Amended and Restated Key Employee Severance Pay Agreement (this
“Agreement”)  is made as of this 31st day of December, 2012 between MET-PRO
CORPORATION, a Pennsylvania corporation with principal offices 160 Cassell Road,
Harleysville, Pennsylvania (the “Corporation”), and RAYMOND J. DE HONT, of 505
Bow Lane, Gilbertsville, PA 19525 (the “Employee”).
 
RECITALS
 
A.            Employee has been employed by the Corporation since  June 5,
1995.   In  July 2000, Employee was appointed to the position of Chief Operating
Officer of the Corporation. Effective March 1, 2003, Employee was appointed
President and Chief Executive Officer, and he was elected Chairman of the Board
of Directors in September 2003. During the period of his employment, he has
performed his duties ably, demonstrating loyalty to the Corporation and greatly
benefiting it.
 
B.            In recognition of Employee’s status as a key employee and to
provide the Employee with a deserved measure of security in the event of a
change in control of the Corporation, the Corporation entered into a Key
Employee Severance Pay Agreement on April 4, 2001 which was replaced in its
entirety by Amended and Restated Key Employee Severance Pay Agreements on April
4, 2008 and on December 3, 2008, respectively (the December 3, 2008 Amended and
Restated Key Employee Severance Pay Agreement hereinafter being referred to as
the “Prior Agreement”).
 
C.            The Corporation and Employee desire to amend and restate the Prior
Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), to make certain other changes, and to replace the Prior
Agreement in its entirety with this Agreement.
 
NOW, THEREFORE, the parties hereto hereby agree as follows:
 
1.             Definitions.
 
 
(a)
Change in Control.  A “Change in Control” shall be deemed to have occurred as of
the date of the first of the following events occur:

 
(i)                  If any “Person” (as hereafter defined) or “Group” (as
hereafter defined) of Persons, which Person or Group of Persons is not part of
present “Management” (as hereafter defined), acting alone or in concert, becomes
the “Beneficial Owner”  (as hereafter defined) directly or indirectly  of
securities of the Corporation representing thirty (30%) percent or more of the
combined voting power of the Corporation’s then outstanding securities; or

 
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(ii)                 If there occurs a change in the composition of the Board of
Directors of the Corporation (the “Board”) within any period of two years or
less, as a result of which the individuals who constitute the “Continuing
Directors” (as hereafter defined) cease for any reason to constitute at least a
majority of the Board in office at the beginning of such period; or
 
(iii)               Consummation of: (a) a reorganization, merger, or
consolidation, in each case with respect to which persons who were shareholders
of the Corporation immediately prior to such transaction do not, immediately
thereafter, own more than 50% of the combined voting power of the reorganized,
merged or consolidated corporation’s then outstanding securities entitled to
vote generally in the election of directors; or (b) the  liquidation or
dissolution of the Corporation; or (c) the sale of all or substantially all of
the Corporation’s assets; or
 
(iv)                If there shall be a change of control as defined by any
other agreement or plan to which the Corporation is party.
 
(b)           Person.        A “Person”  is defined in same manner that the term
“person” is defined and referred to in Sections 13(d)(3) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Act”)).
 
(c)           Continuing Directors. The “Continuing Directors” consist of the
six persons who are members of the Board as constituted as of the date of this
Agreement; provided, however, that any individual who becomes a Director
subsequent to the date hereof whose election or nomination for election by the
Corporation’s shareholders was approved by a vote of at least a majority of the
directors then comprising the Board shall be considered a Continuing Director;
except that any individual whose initial election or appointment as a director
as a result of or in connection with either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a person other than the Board shall not be considered a
Continuing Director.
 
(d)           Beneficial Owner of Securities.  A “Beneficial Owner of
Securities” shall be as defined in Rule 13d-3 promulgated under the Act.
 
(e)           Management.  “Management” shall mean the officers of the
Corporation in office at the effective date of this Agreement or their
successors elected by a majority of the Continuing Directors, either alone or
with any person who is a Continuing Director.
 
 
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(f)           Compensation.  “Compensation” shall mean the sum of (i) the annual
rate of base salary (exclusive of bonuses, sick leave, vacation pay, or other
extra compensation or benefits) being paid to the Employee at the time when a
Change in Control occurs or  as of the date of the Involuntary Termination of
Employment, whichever is higher, and (ii) the annual target bonus amount payable
to the Employee for the fiscal year in which a Change in Control occurs or as of
the date of the Involuntary Termination of Employment, whichever is higher,
pursuant to the Corporation’s Management Incentive Plan or any similar plan to
which the Employee is party providing for the payment of annual cash incentive
compensation.
 
(g)           Involuntary Termination of Employment.  “Involuntary Termination
of Employment” shall mean the Employee’s:
 
(i)                  Involuntary termination of employment with the
Corporation   without “Cause”; or
 
(ii)                Voluntary termination of employment  with the Corporation
for “Good Reason”; provided, however, that a termination of employment by
Employee for Good Reason shall not constitute an Involuntary Termination of
Employment unless: (x) Employee first notifies the Corporation (for purposes of
this subsection “Corporation” shall include any successor to the Corporation) in
writing of the existence of an event constituting Good Reason within ninety (90)
days of the initial existence of such event; (y) the Corporation fails to remedy
the event constituting Good Reason within thirty (30) days of such notice; and
(z) Employee’s termination of employment occurs no later than one (1) year
following the initial existence of the event constituting Good Reason (which
must in any event occur not later than eighteen (18) months after the occurrence
of the Change in Control of the Corporation).
 
(h)           Cause.  “Cause” for the purposes of Section 1(g)(i) shall mean one
or more of the following: (i) a guilty plea, plea of nolo contendere or
conviction for a felony; (ii) commission of any act constituting common law
fraud; (iii) habitual drunkenness or drug abuse; (iv) willful and repeated
failure to perform the duties of the position (other than on account of a
disability); (v) a significant act of dishonesty to the Corporation; or (vi) a
material breach of any of the Corporation’s written codes of conduct and/or
ethics applicable to the Chief Executive Officer or any employee of the
Corporation.
 
(i)            Group. “Group” shall be as used in Rule 13d-1 promulgated under
the Act.
 
(j)            Good Reason.  “Good Reason” shall mean one or more of the
following events: (i) a material diminution in Employee’s base compensation;
(ii) a material diminution in Employee’s authority,  title(s), duties, or
responsibilities in effect immediately before such diminution; (iii) a material
diminution in the budget over which Employee retains authority; or (iv) a change
of more than 50 miles in the primary geographic location at which Employee is
required to perform services as a result of which Employee’s normal commute
immediately thereafter is increased by more than 25 miles each way.
 
 
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2.             Severance Pay.  In the event of a Change in Control of the
Corporation and the Employee’s Involuntary Termination of Employment within
eighteen (18) months after such Change in Control of the Corporation, the
Employee shall be entitled to receive the following:
 
(a) Severance pay equal to Two Hundred Percent (200%) of the Employee’s
Compensation.  Such severance pay shall be due and payable in full in one lump
sum payment (less all income tax, employment tax and other withholdings) on the
30th day following the date of the Employee’s termination of employment (or on
the 60th day in the event the termination may be deemed a “mass layoff”  under
the Older Workers Benefit Protection Act of 1990);
 
(b) Reimbursement to the Employee of his cost for participating in the
Corporation’s health and medical plan to the extent, and for the period of time
(but not to exceed 18 months after the date of the Employee’s Involuntary
Termination of Employment), the Employee is entitled to such continued coverage
under Part 6 of Title I of the Employee Retirement Income Security Act of 1974,
as amended (“COBRA Coverage”). Notwithstanding the foregoing provisions of this
Section 2(b), the COBRA Coverage will terminate immediately upon the Employee
becoming entitled to participate under a health and medical plan of another
employer; and
 
(c) The Employee’s right to exercise then-outstanding and vested options granted
to the Employee to acquire stock of the Corporation shall be extended to the
first to occur of (i) the second anniversary of the date of the Employee’s
Involuntary Termination of Employment or (ii) the date(s) such option or options
would otherwise expire;
 
provided, however, that  no severance compensation or benefits described in this
Section 2 shall be paid or made available to the Employee in the event the
Employee fails, within 21 days (or 52 days in the event the termination may be
deemed a “mass layoff” under the Older Workers Benefit Protection Act of 1990)
of the date of his termination of employment,  to execute and deliver to the
Corporation (or executes and delivers but then revokes or fails to confirm)
within the time periods provided for under the Older Workers Benefit Protection
Act of 1990 or other applicable law permitting the revocation of the Release) a
waiver and release of all claims he, his heirs, executors, administrators,
personal representatives, successors and assigns may have against the
Corporation and its officers, directors, employees, agents, successors and
assigns arising prior to the date that Employee signs the waiver and release
(including without limitation age discrimination claims), such waiver and
release being in the form as determined by the Board (the “Release”), which form
of Release shall be provided to the Employee upon the date of termination of
employment.
 
 
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3.             Continued Performance by Employee.  In consideration of the
granting of the benefits to him provided for by this Agreement, Employee agrees:
 
(a)           That he will continue to use his best efforts to perform his
duties as assigned by the Corporation; and
 
(b)           That, in the event a Change in Control is pending or threatened,
he will not voluntarily terminate his employment by the Corporation prior to an
actual Change in Control, but will continue to perform his duties in the same
manner and with the same effort as he had employed prior to the occurrence of
such events.
 
4.             Rights to Terminate Employment.  This Agreement is not an
employment agreement.  Nothing contained herein shall be deemed to preclude the
present management of the Corporation or the Employee from terminating
Employee’s employment, with or without cause, at any time.
 
5.             No Obligation to Maintain Reserves.  Nothing in this Agreement
shall obligate the Corporation to set aside or earmark any of its assets to fund
the obligation hereunder.
 
6.             Binding Effect.  This Agreement shall be binding upon and inure
to the benefit of the parties hereto, their heirs, executors, administrators,
successors and assigns.
 
7.             Applicable Law.  This Agreement shall be interpreted under and
governed by the laws of the State of Pennsylvania without giving effect to its
conflict of laws provisions.
 
8.             Section 409A.
 
(a)           This Agreement is intended to comply with the requirements of
Section 409A of the Code (“Section 409A”).  Payments of Non-Qualified Deferred
Compensation (as such term is defined under Section 409A and the regulations
promulgated thereunder) may only be made under this Agreement upon an event and
in a manner permitted by Section 409A. Any amounts payable solely on account of
an involuntary separation from service of the Employee within the meaning of
Section 409A shall be excludible from the requirements of Section 409A, either
as involuntary separation pay or as short-term deferral amounts, to the maximum
possible extent. For purposes of Section 409A, the right to a series of
installment payments under this Agreement shall be treated as a right to a
series of separate payments. All reimbursements and in-kind benefits provided
under this Agreement shall be made or provided in accordance with Section 409A
including, where applicable, the requirement that
 
 
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(i) any reimbursement is for expenses incurred during the period of time
specified in this Agreement, (ii) the amount of expenses available for
reimbursement, or the in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits provided, in
any other calendar year, (iii) the reimbursement of an eligible expense will be
made no later than the last day of the calendar year following the year in which
the expense in incurred, and (iv) the right to reimbursement or in-kind benefits
is not subject to liquidation or exchange for another benefit.
 
(b)           To the extent required by Section 409A, and notwithstanding any
other provision of this Agreement to the contrary, no payment of Non-Qualified
Deferred Compensation will be provided to, or with respect to, the Employee on
account of his separation from service until the first to occur of (i) the date
of the Employee’s death or (ii) the date which is one day after the six (6)
month anniversary of his separation from service, and in either case only if he
is a “specified employee” (as defined under Section 409A(a)(2)(B)(i) of the Code
and the regulations promulgated thereunder) in the year of his separation from
service.  Any payment that is delayed pursuant to the provisions of the
immediately preceding sentence shall instead be paid in a lump sum (subject to
all applicable withholding) promptly following the first to occur of the two
dates specified in such immediately preceding sentence.
 
(c)           Any payment of Non-Qualified Deferred Compensation made under this
Agreement pursuant to a voluntary or involuntary termination of the Employee’s
employment with the Corporation shall be withheld until the Employee incurs both
(i) a termination of his employment relationship with the Corporation and (ii)
the first instance of a “separation from service” with the Corporation, as such
term is defined in Treas. Reg. Section 1.409A-1(h).

(d)           The preceding provisions of this Section 8 shall not be construed
as a guarantee by the Corporation of any particular tax effect to the Employee
under this Agreement, under any plan or program sponsored or maintained by the
Corporation or under any other agreement by and between the Employee and the
Corporation. The Corporation shall not be liable to the Employee for any
additional tax, penalty or interest imposed under Section 409A nor for reporting
in good faith any payment made under this Agreement or under any such other
plan, program or agreement as an amount includible in gross income under Section
409A.
 
 
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9.             Section 280G.  In the event that any payments or provisions for
the payment of salary, severance, benefits, perquisites and rights to the
Employee made as a result of a Change in Control of the Corporation  (as defined
above) shall, together with any other payment received by the Employee, be
considered to be an “excess parachute payment” under Section 280G(b)(1) of the
Code, this Agreement shall be construed so that the amounts to be paid to the
Employee that are described as “parachute payments” under Section 280G(b)(2) of
the Code shall equal the greater of (i) the amounts otherwise payable under this
Agreement (determined, solely for purposes of the comparison to clause (ii),
hereof, by netting out any excise tax that may be due under Section 4999 of the
Code) or (ii) the maximum amount that could be paid to the Employee so that no
such amount, along with all other “parachute payments” made to the Employee by
the Corporation, will be deemed to constitute an “excess parachute payment” as
defined under Code Section 280G(b)(1).

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

     
MET-PRO CORPORATION
            /s/ Raymond J. De Hont  
By:
/s/ Neal E. Murphy  
Raymond J. De Hont, Employee
   
Neal E. Murphy, Vice - President—Finance
 

 
 
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