Exhibit 10.1

 

[COMPANY LETTERHEAD]

 

November 1, 2005

 

 

James G. Berges

[Address]

 

 

Dear Jim:

 

I want to express to you on behalf of the entire Emerson Electric Co.
organization our appreciation for your nearly 30 years of service to the company
and the significant contributions you have made to Emerson as an executive
officer and director. This letter agreement (“Agreement”) serves to memorialize
your resignation as an officer and director of Emerson and any other Emerson
Entities of which you are an officer or director, all effective as of November
1, 2005, and your voluntary retirement from Emerson effective as of November 1,
2005, and sets forth our agreements in connection with your resignation and
retirement. In this Agreement, references to “Emerson” means Emerson Electric
Co. and references to “Emerson Entities” means Emerson and its business and
operating units and its direct and indirect subsidiaries and affiliates, as the
same may exist now or in the future, including those corporations or other legal
entities in which Emerson has a direct or indirect ownership or investment
interest of 20% or more.

 

In consideration of the good and valuable consideration provided to you pursuant
to this Agreement, you agree:

 

 

1.

You will not, without first obtaining written approval from Emerson: (a) make
any public statement in the nature of a press release or media interview with
respect to any aspect of your employment with any of the Emerson Entities, or
(b) make any statement, written or oral, with respect to the past or projected
future financial or operational performance, plans or methods of any of the
Emerson Entities or concerning any of the directors, officers, employees or
business or financial activities of any of the Emerson Entities. You also agree
that you will not use, directly or indirectly for yourself or use for or
disclose to any person or legal entity, other than Emerson or another Emerson
Entity, any secret or confidential information or data regarding the business of
any of the Emerson Entities. You will immediately deliver to Emerson without
reproduction all such information or data in your possession. This includes, but
is not limited to, business plans or strategies, product information,
engineering information, customer lists, company policies and procedures,
financial information and information concerning operational methods, employees,
product development techniques or plans and business acquisition plans or
programs.

 

2.

You will not hire or solicit to hire or assist anyone in soliciting or hiring
any employee of Emerson or any of the other Emerson Entities for the longer of
(a) a period of five (5) years from the effective date of your retirement or (b)
a period ending five (5) years after the termination by Emerson or expiration of
the term during which you are required to provide consulting services to Emerson
and the Emerson Entities, as described in more detail in the accompanying
Consulting Contract.

 

 

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James G. Berges

November 1, 2005

Page 2 of 4

 

 

 

3.

Without Emerson’s prior written consent, you will not compete, directly or
indirectly, with Emerson or any of the other Emerson Entities for the longer of
(a) a period of five (5) years from the effective date of your retirement or (b)
a period ending five (5) years after the termination by Emerson or expiration of
the term during which you are required to provide consulting services to Emerson
and the Emerson Entities, as described in more detail in the accompanying
Consulting Contract. For purposes of this Agreement, the term “compete”
includes, without limitation, (a) any investment in, or providing services to
(in any capacity), any equity fund, hedge fund or other investment vehicle
(however structured) that, either directly or indirectly (through portfolio
company investments or otherwise), competes directly or indirectly with Emerson
or any of the other Emerson Entities (provided, however, that such investments
shall not be covered if the fund or investment vehicle is open to the public
and/or your interest is five percent (5%) or less) and/or (b) entering the
employ of, providing consulting services to, or otherwise assisting or having
any interest (financial or otherwise) in, any person, firm, corporation or other
entity engaged in business activities competitive with any business of Emerson
or of any of the other Emerson Entities. The foregoing shall not restrict you,
however, from owning five percent (5%) or less of the securities of any
competitor of Emerson or of any the other Emerson Entities listed on any
national securities exchange or traded over-the-counter as long as you have no
other connection or relationship with the issuer of such securities. You agree
that this non-compete restriction, including the time and scope, is reasonable
in light of your in-depth knowledge of the total business of the Emerson
Entities and as a result of your present and prior positions, duties and
responsibilities with Emerson and the Emerson Entities and as a member of the
Board of Directors of Emerson and as a result of your access to confidential and
trade secret information relating to all of the businesses and units of the
Emerson Entities. Also, we agree that if we have any dispute, which we feel sure
will not occur, then Missouri law will apply and courts in Missouri will have
exclusive jurisdiction. You also hereby reaffirm your obligations under all
existing non-compete agreements that you have with Emerson, including your
obligations (and the rights and remedies of Emerson) under the Emerson
non-qualified supplemental executive retirement plan, the Emerson Incentive
Share plans, the Emerson stock option plans and grant agreements (including the
clawback provisions therein) and the Consulting Contract referred to in
Paragraph A below, and you agree that your obligations under this Paragraph 3
are in addition to, and do not invalidate or otherwise supersede, your
obligations under such other plans, agreements or contracts.

 

4.

You agree to release and discharge Emerson and the other Emerson Entities and
their respective directors, officers, employees and agents from any and all
liability except as set forth herein and, to that end, you agree to sign the
accompanying Release of All Claims and the accompanying Covenant Not to Sue. The
execution by you, and the effectiveness, of these accompanying documents are
conditions precedent to the effectiveness of this Agreement. Further, if said
documents are not effective, then this Agreement shall be null and void.

 

 

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James G. Berges

November 1, 2005

Page 3 of 4

 

 

 

5.

You agree to keep this Agreement and any accompanying agreements or undertakings
and their contents in strictest confidence and you will not divulge this
Agreement or any accompanying agreements or undertakings or their contents to
anyone other than members of your immediate family or financial advisors whom
you ensure will comply with this provision as long as this Agreement and any
accompanying agreements or undertakings and their contents are not made public
by Emerson. You understand and agree that Emerson may disclose this Agreement
and/or the terms hereof in its filings with the Securities and Exchange
Commission or otherwise.

Subject to, and conditioned upon, your compliance with your obligations under
Paragraphs 1 through 5 above, you will receive the compensation and benefits
outlined below in connection with your retirement from Emerson:

 

A.

You will provide consulting services to Emerson and the Emerson Entities as
provided in the accompanying Consulting Contract.

 

B.

In accordance with the terms of the applicable Emerson stock option plans, your
unvested stock options will automatically vest on your retirement date and you
will have up to five years from the date of your retirement (but no longer than
the original term of your respective options) to exercise your stock options.
You should note, however, that any of these stock options that are not exercised
by you within ninety (90) days of the date of your retirement will become
non-qualified stock options as required by Internal Revenue Service regulations.

 

C.

In accordance with the Emerson Incentive Shares Plan, as a result of your
retirement, the Emerson Compensation and Human Resources Committee has approved
that you receive, subject to the other applicable terms of the 2004 Performance
Share Program, a pro rata payout (i.e., 50%) of the performance shares you would
otherwise be eligible to receive under the 2004 Performance Share Program,
consistent with the Emerson performance multiplier to target for all
participants as determined by the Emerson Compensation and Human Resources
Committee and payable at the time(s) provided therefor under the program. You
will forfeit any payment under the 2004 Performance Share Program if you violate
any of your obligations to Emerson or the other Emerson Entities.

 

D.

In accordance with the Emerson Incentive Shares Plan, as a result of your
retirement, the Emerson Compensation and Human Resources Committee has approved
that your unvested Restricted Stock Awards continue to vest at the time that
they were normally scheduled to vest in October, 2007 and October, 2010, as
applicable, and that you will continue to receive dividends and have voting
rights. You will forfeit any dividends and the Restricted Stock will be
cancelled if you violate any of your obligations to Emerson or the other Emerson
Entities.

 

E.

Upon the date of your retirement, you will be eligible to receive your existing
monthly pension benefits earned to date under the qualified all-employee Emerson
Co. Retirement Plan and the related non-qualified supplemental executive
retirement plan (which plan covers the benefits you would have been entitled to
under the all-employee Retirement

 

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James G. Berges

November 1, 2005

Page 4 of 4

 

 

Plan were it not for the compensation limitations imposed under the Internal
Revenue Code (“Code”)). You will forfeit the pension benefits under the
non-qualified supplemental executive retirement plan if you violate any of your
obligations to Emerson or the other Emerson Entities. Payments of your pension
benefits will be paid monthly in the manner set forth in the plans, subject to
the terms and conditions of the plans, including reduction for early retirement
and annuity options provided under the plans; provided, however, that the
portion of your non-qualified supplemental executive retirement plan benefits
which are not “grandfathered” from coverage under Section 409A of the Code shall
be deferred for six months to the extent required by Code Section 409A.

 

F.

This Agreement shall be interpreted in accordance with and governed by the laws
of the State of Missouri, without regard to conflict of law principles. It is
conclusively deemed that this Agreement was entered into in the State of
Missouri.

 

G.

Emerson and you agree that any legal action or proceeding with respect to this
Agreement shall be brought and determined in the federal or state courts located
in the State of Missouri, and Emerson and you submit with regard to any such
action or proceeding to the exclusive jurisdiction of such courts.

 

H.

If I need assistance in reviewing or understanding this Agreement or any of the
documents referenced in this Agreement, I acknowledge Emerson Electric Co. has
advised me to consult with an attorney.

Please confirm that the foregoing represents your understanding of our entire
agreement by signing in the space provided below.

 

Sincerely,

 

/s/ David N. Farr

 

David N. Farr
Chairman & Chief Executive Officer

 

 

ACCEPTED AND AGREED TO THIS 1st

DAY OF NOVEMBER, 2005:

 

      /s/ James G. Berges                                                     

 

James G. Berges