Exhibit 10.3


 





 


January 5, 2006


 


Mr. Kevin Lilly


13515 Ballantyne Corporate
Place


Charlotte, North Carolina 28277


 


Dear Kevin:


 


SPX Corporation (the “Company”)
recognizes that your contribution to its growth and success will be substantial
and desires to assure your continued employment.  In this regard, the Board of Directors of the
Company (the “Board”) recognizes that, as is the case with many publicly held
corporations, the possibility of a Change of Control (as defined in Section 2,
below) may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of management personnel to the detriment of the Company and its shareholders.


 


The Board has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company’s management, including
yourself, to their assigned duties without distraction, in the face of
potentially disturbing circumstances arising from the possibility of a Change
of Control.


 


Further, it is the intent of
the Board in adopting this Agreement to assure the Company and its shareholders
(i) of continuity of management in the event of any actual or threatened Change
of Control and (ii) that key executive employees of the Company will be able to
evaluate objectively whether a potential Change of Control is in the best
interests of the shareholders.


 


In order to induce you to
remain in the employ of the Company and to advance the interests of the Company
and its shareholders by providing you with appropriate financial protection,
the Board agrees that you shall receive the severance benefits set forth in
this agreement (“Agreement”) in the event that your employment is terminated
due to a Change of Control.


 


1.             Term of Agreement.  This Agreement will become effective on the
date hereof (the “Commencement Date”) and shall continue in effect through the
third anniversary of the Commencement Date (the “Date of Expiration”).  However, on that initial Date of Expiration,
and on each extended Date of Expiration thereafter, the term of this Agreement
will be extended automatically for one additional year unless, not later than
six (6) months prior to such Date of Expiration, the Company gives written
notice to you that it has elected not to extend this Agreement.  However, if a Change of Control occurs during
the term of


 





















 


this
Agreement, this Agreement will continue in effect for thirty-six (36) months
beyond the end of the month in which the Change of Control occurred.


 


2.             Change of Control
of the Company.  No benefits will be
payable under the terms of this Agreement unless a Change of Control of the
Company has occurred.  A “Change of
Control” shall be deemed to have occurred if:


 


(a)           Any “Person” (as
defined below), excluding for this purpose the Company or any subsidiary of the
Company, any employee benefit plan of the Company or of any subsidiary of the
Company, or any entity organized, appointed or established for or pursuant to
the terms of any such plan which acquires beneficial ownership of common shares
of the Company, is or becomes the “Beneficial Owner” (as defined below) of
twenty percent (20%) or more of the common shares of the Company then
outstanding; provided, however, that no Change of Control shall be deemed to
have occurred as the result of an acquisition of common shares of the Company
by the Company which, by reducing the number of shares outstanding, increases
the proportionate beneficial ownership interest of any Person to twenty percent
(20%) or more of the common shares of the Company then outstanding, but any
subsequent increase in the beneficial ownership interest of such a Person in
common shares of the Company shall be deemed a Change of Control; and provided
further that if the Board of Directors of the Company determines in good faith
that a Person who has become the Beneficial Owner of common shares of the
Company representing twenty percent (20%) or more of the common shares of the
Company then outstanding has inadvertently reached that level of ownership
interest, and if such Person divests as promptly as practicable a sufficient
number of shares of the Company so that the Person no longer has a beneficial
ownership interest in twenty percent (20%) or more of the common shares of the
Company then outstanding, then no Change of Control shall be deemed to have
occurred.  For purposes of this paragraph
(a), the following terms shall have the meanings set forth below:


 


(i)            “Person” shall mean
any individual, firm, limited liability company, corporation or other entity,
and shall include any successor (by merger or otherwise) of any such entity.


 


(ii)           “Affiliate” and
“Associate” shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the “Exchange Act”).


 


(iii)          A Person shall be deemed
the “Beneficial Owner” of and shall be deemed to “beneficially own” any
securities:


 


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(A)          which such Person or any
of such Person’s Affiliates or Associates beneficially owns, directly or
indirectly (determined as provided in Rule 13d-3 under the Exchange Act);


 


(B)           which such Person or
any of such Person’s Affiliates or Associates has (1) the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members with
respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights
(other than rights under the Company’s Rights Agreement dated June 25, 1996
with The Bank of New York, as amended), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange; or (2) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (a) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (b) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or


 


(C)           which are beneficially
owned, directly or indirectly, by any other Person with which such Person or
any of such Person’s Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring, holding, voting (except
to the extent contemplated by the proviso to subparagraph (a)(iii)(B)(2),
above) or disposing of any securities of the Company.


 


Notwithstanding
anything in this definition of Beneficial Ownership to the contrary, the phrase
“then outstanding,” when used with reference to a Person’s beneficial ownership
of securities of the Company, shall mean the number of such securities


 


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then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to own beneficially
hereunder.


 


(b)           During any period of
two (2) consecutive years (not including any period prior to the execution of
this Agreement), individuals who at the beginning of such two-year period
constitute the Board of Directors of the Company and any new director or
directors (except for any director designated by a person who has entered into
an agreement with the Company to effect a transaction described in paragraph
(a), above, or paragraph (c), below) whose election by the Board or nomination
for election by the Company’s shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
of the Board; or


 


(c)           Approval by the
shareholders of (or if such approval is not required, the consummation of) (i)
a plan of complete liquidation of the Company, (ii) an agreement for the sale
or disposition of the Company or all or substantially all of the Company’s
assets, (iii) a plan of merger or consolidation of the Company with any other
corporation, or (iv) a similar transaction or series of transactions involving
the Company (any transaction described in parts (i) through (iv) of this
paragraph (c) being referred to as a “Business Combination”), in each case
unless after such a Business Combination the shareholders of the Company
immediately prior to the Business Combination continue to own at least eighty
percent (80%) of the voting securities of the new (or continued) entity
immediately after such Business Combination, in substantially the same
proportion as their ownership of the Company immediately prior to such Business
Combination.


 


Any other
provision of this Agreement to the contrary notwithstanding, a “Change of
Control” shall not include any transaction described in paragraph (a) or (c),
above, where, in connection with such transaction, you and/or any party acting
in concert with you substantially increase your, his or its, as the case may
be, ownership interest in the Company or a successor to the Company (other than
through conversion of prior ownership interests in the Company and/or through
equity awards received entirely as compensation for past or future personal
services).


 


3.             Definitions.  The following definitions shall be used in
determining whether, under the terms of Section 4 hereof, you are entitled to
receive Accrued Benefits and/or Severance Benefits:


 


(a)           Disability.  “Disability” shall mean that, as a result of
your incapacity due to physical or mental injury or illness, you shall have
been absent from the full-time performance


 


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of your duties
with the Company for at least six (6) consecutive months and, within thirty
(30) calendar days after written notice of suspension is given, you shall not
have returned to the full-time performance of your duties.


 


(b)           Retirement.  “Retirement” shall mean your voluntary
termination of your employment (other than for Good Reason, as defined below)
at a time after you have reached age sixty-five (65).


 


(c)           Cause.  “Cause” shall mean (i) your willful and
continued failure to substantially perform your duties with the Company (other
than any such failure resulting from Disability or occurring after issuance by
you of a Notice of Termination for Good Reason), after a demand for substantial
performance is delivered to you that specifically identifies the manner in
which the Company believes that you have not substantially performed your
duties, and after you have failed to resume substantial performance of your
duties on a continuous basis within fourteen (14) calendar days after receiving
such demand, (ii) you willfully engage in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise, or (iii) your
having been convicted of a felony which impairs your ability substantially to
perform your duties with the Company. 
For purposes of this paragraph (c), no act, or failure to act, on your
part shall be deemed “willful” unless done, or omitted to be done, by you not
in good faith and without reasonable belief that your action or omission was in
the best interest of the Company.


 


(d)           Good Reason.  You shall be entitled to terminate your
employment for Good Reason.  For purpose
of this Agreement, “Good Reason” shall mean, without your express written
consent, the occurrence within three (3) years following a Change of Control of
the Company of any one or more of the following:


 


(i)            The assignment to you
of duties inconsistent with your duties, responsibilities, and the status of
your position as of the day prior to the Change of Control of the Company, or a
reduction or alteration in the nature or status of your responsibilities from
those in effect on the day prior to the Change of Control;


 


(ii)           A reduction by the Company
in your base salary or in your most recent annual target incentive award
opportunity as in effect on the date hereof or as the same shall be increased
from time to time;


 


(iii)          The Company’s requiring
you to be based at a location in excess of two hundred and fifty (250) miles
from the location where you are currently based;


 


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(iv)          The failure by the
Company to continue in effect the Company’s Pension Plan, Retirement Savings
Plan, Supplemental Retirement Savings Plan, Supplemental Retirement Plan,
Executive Bonus Plan, Stock Compensation Plan, any plans substituted for the
above adopted prior to the Change of Control, or any other of the Company’s
employee benefit plans, policies, practices or arrangements in which you
participate, unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) to provide similar benefits has been made with respect to
such plan(s); or the failure by the Company to continue your participation therein
(or in such substitute or alternative plan) on substantially the same basis,
both in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed as of the time of the
Change of Control;


 


(v)           The failure of the
Company to reinstate your employment in full (in the same capacity that you
were employed, or in a mutually agreeable capacity) in the event that your
employment was suspended due to a Disability and, within three years, you
request to be reinstated and are ready, willing, and able to adequately perform
your employment duties;


 


(vi)          The termination,
replacement, or reassignment of twenty-five percent (25%) or more of the
elected officers of the Company existing as of the day prior to a Change of
Control, unless the officer is terminated due to death, Disability, or
Retirement, or by the Company for Cause, or by the officer other than for Good
Reason (all as herein defined);


 


(vii)         The failure of the
Company to obtain a satisfactory agreement from any successor to the Company to
assume and agree to perform this Agreement, as contemplated in Section 5
hereof; and


 


(viii)        Any purported termination
by the Company of your employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of paragraph (f), below, and for
purposes of this Agreement, no such purported termination shall be effective.


 


(ix)           At any time during the
one (1)-year period beginning thirty (30) days following a Change of Control,
you shall be entitled to terminate your employment for any reason, and such
termination shall be deemed to be for Good Reason for all purposes of this
Agreement.


 


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Your right to
terminate your employment pursuant to this paragraph (d) shall not be affected
by your suspension due to Disability. 
Your continued employment shall not constitute a waiver of your rights
with respect to any circumstance constituting Good Reason hereunder.


 


(e)           Notice of
Termination.  Any termination by the
Company for Cause or by you for Good Reason shall be communicated by Notice of
Termination to the other party hereto. 
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 shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provisions so indicated.


 


(f)            Date of Termination.  “Date of Termination” shall mean the date
specified in the Notice of Termination where required (but not less than thirty
(30) calendar days following delivery of the Notice of Termination, except that
termination for Cause may be effective immediately) or in any other case upon
ceasing to perform services to the Company; provided that if within twenty (20)
calendar days after any Notice of Termination one party notifies the other
party that a dispute exists concerning the termination, the Date of Termination
shall be the date finally determined to be the Date of Termination, either by
written agreement of the parties or by a binding and final arbitration
decision.  In the event that a dispute
exists concerning the Date of Termination, you shall continue to receive your
full compensation (including participation in all benefit and insurance plans
in which you were participating) in effect when the notice giving rise to the
dispute was given, until the Date of Termination is finally determined.  In such event, you will be required to
reimburse the Company for all compensation received beyond the finally
determined Date of Termination either by direct cash reimbursement within
thirty (30) calendar days of resolving the conflict or by appropriately
reducing your remaining benefits to be received under the terms of this
Agreement.


 


(g)           Earned Bonus Amount.  For any year for which the Executive EVA
Incentive Compensation Plan (the “EVA Plan”) is in effect prior to the year
during which a Change of Control occurs, your “Earned Bonus Amount” means your
Declared Bonus for that year (as determined under the applicable EVA
Plan).  For the year during which a
Change of Control occurs and any year in which the EVA Plan was not in effect,
your “Earned Bonus Amount” means your total potential bonus for the year as
determined under the 2005 Executive Bonus Plan or applicable successor bonus
plan (the “Bonus Plan”), according to the business performance metric achieved,
and prorated to reflect your length of service during the Bonus Plan year.


 


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4.             Compensation
Upon Termination Following a Change of Control


 


(a)           Accrued Benefits.  In the event that your employment is
terminated for any reason during the term of this Agreement, following a Change
of Control of the Company (as defined in Section 2 herein), you shall receive
your Accrued Benefits through the Date of Termination.  For purposes of this Agreement, your “Accrued
Benefits” shall include the following:


 


(i)            All base salary for
the time period ending with your Date of Termination, at the rate in effect at
the time Notice of Termination is given or on the Date of Termination if no
Notice of Termination is required;


 


(ii)           A bonus payment equal
to one hundred percent (100%) of the greater of (A) your target bonus for the
year in which the Date of Termination occurs, prorated based upon the ratio of
the number of months (full credit for a partial month) you were employed during
that bonus year to the total months in that bonus year, and (B) your Earned
Bonus Amount for the year in which the Date of Termination occurs, calculated
as if the Date of Termination were the end of that year for purposes of the
Bonus Plan;


 


(iii)          A cash equivalent of all
unused vacation to which you were entitled through your Date of Termination;


 


(iv)          Reimbursement for any
and all monies advanced in connection with your employment for reasonable and
necessary expenses incurred by you on behalf of the Company for the time period
ending with your Date of Termination;


 


(v)           Any and all other cash
earned through the Date of Termination and deferred at your election or
pursuant to any deferred compensation plan then in effect;


 


(vi)          An accrued benefit under
the SPX Corporation Supplemental Retirement Plan for Top Management (the “SERP”);


 


(vii)         All other amounts to
which you are entitled under any compensation or benefit plan, program,
practice or policy of the Company in effect as of the Date of Termination; and


 


(viii)        The payments provided for
in paragraphs (i), (ii), (iii), (iv) and (v), above, shall be made not later
than the tenth (10th) business day following the Date


 


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of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Company shall pay to you on such
day an estimate, as determined in good faith by the Company, of the minimum
amount of such payments and shall pay the remainder of such payments (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) calendar day
after the Date of Termination.  In the
event that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the Company
to you payable on the tenth (10th) business day after demand by the Company
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).


 


(b)           Severance Benefits.  In the event that your employment is
terminated during the term of this Agreement following a Change of Control of
the Company (as described in Section 2 herein), unless your termination is (i)
because of your death, Disability, or Retirement; (ii) by the Company for
Cause; or (iii) by you other than for Good Reason, you shall receive, in
addition to your Accrued Benefits, the Severance Benefits.  For purposes of this Agreement, your
“Severance Benefits” shall include the following:


 


(i)            Your annual base
salary at the rate in effect immediately prior to the Change of Control of the
Company or, if greater, at the rate in effect at the time Notice of Termination
is given, or on the Date of Termination if no Notice of Termination is
required, multiplied by two (2);


 


(ii)           An amount equal to two
(2) times the greatest of (I) the highest of your Earned Bonus Amounts for the
three (3) years immediately preceding the year in which the Date of Termination
occurs (the “Year of Termination”) or (II) your target bonus under the Bonus
Plan for the Year of Termination or (III) your Earned Bonus Amount for the Year
of Termination, calculated as if the Date of Termination were the end of that
year for purposes of the Bonus Plan;


 


(iii)          For a two (2)-year
period after your Date of Termination, the Company will arrange to provide to
you the same health care coverage you had prior to your termination, at the
Company’s expense, which includes, but is not limited to, hospital, surgical,
medical, dental, and dependent coverages. 
For purposes of the Retirement Plan health care coverage, you will
receive the same number of additional years of credited service, for computing
your benefit, as


 


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normally
computed under the terms of the Plan. 
Health care benefits otherwise receivable by you pursuant to this
subparagraph (iii) shall be reduced to the extent comparable benefits are
actually received by you from a subsequent employer during the two (2)-year
period following your Date of Termination, and any such benefits actually
received by you shall be reported to the Company;


 


(iv)          For a two (2)-year
period after your Date of Termination, the Company will arrange to provide to
you, at the Company’s expense, life insurance coverage in the amount of two (2)
times your base salary in effect at your Date of Termination and, at the end of
the two (2)-year period, for the remainder of your life the Company will
provide to you life insurance coverage in the amount of your base salary in
effect at your Date of Termination;


 


(v)           Under the Company’s
Pension Plan and Supplemental Retirement Plan for Top Management, you will
receive immediate full vesting as of your Date of Termination and receive two
(2) additional full years of service credit for computing your accrued
retirement benefit under both plans. Further, in computing the accrued
retirement benefits under both plans, two (2) years will be added to your
actual age, and the definition of “Final Average Pay” (base and bonus) shall be
the greater of (A) your highest three (3)-year average or (B) the sum of your
actual base salary in effect at your Date of Termination plus the greatest of
the bonus amounts described in parts (B)(I), (II) and (III) of subparagraph
(ii), above, with the additional benefits, to the extent not payable under the
Pension Plan, to be paid through an additional unfunded arrangement at the same
time and in the same manner as you have elected under the Pension Plan;


 


(vi)          Under the Company’s
Supplemental Retirement Savings Plan, you will receive a cash lump sum payment
of the full balance (vested and unvested);


 


(vii)         Each stock option which
you have been granted by the Company and which is not yet vested shall become
immediately vested and exercisable and shall continue to be exercisable for the
lesser of (A) two (2) years following your Date of Termination or (B) the time
remaining until the originally designated expiration date, unless a longer
exercise period is provided for in the applicable plan or award agreement;


 


(viii)        Any contractual
restrictions placed on shares of restricted stock which you have been awarded
pursuant to the Company’s Stock Compensation Plan shall lapse as of your Date
of Termination;


 


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(ix)           If any portion of the
Severance Payments (in the aggregate, “Total Payments”) will be subject to the
golden parachute “Excise Tax” imposed by Section 4999 of the Code, the Company
shall pay to you an additional amount (the “Gross-Up Payment”) such that the
net amount retained by you after deduction of any Excise Tax (including any
related penalties and interest) on the Total Payments (but not any federal,
state, or local income tax on the Total Payments), and any federal, state, and
local income tax and Excise Tax (including any related penalties and interest)
on the Gross-Up Payment, shall be equal to the Total Payments.  The determination of whether any Excise Tax
will be imposed and of the amount of the Gross-Up Payment will be made by tax
counsel selected by the Company’s independent auditors and acceptable to you.
For purposes of determining whether any of the Total Payments will be subject
to the Excise Tax and the amount of such Excise Tax, (A) any other payments or
benefit received or to be received by you in connection with a Change of
Control of the Company or your termination of employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement, or agreement with
the Company) shall be treated as “parachute payments” within the meaning of
Section 280G(b)(2) of the Code, and all “excess parachute payments” within the
meaning of Section 280G(b)(1) shall be treated as subject to the Excise Tax,
unless in the opinion of such tax counsel such other payments or benefits (in
whole or in part) do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4)(B) of the
Code, and (B) the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company’s independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.  For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation for the calendar year in which
the Gross-Up Payment is made and state and local income taxes at the highest
marginal rates of taxation in the state and locality of your residence (at the
time at which the Gross-Up Payment is made) as effective for the calendar year
in which the Gross-Up Payment is made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.


 


The payments
provided for in this subparagraph (ix) shall be made not later than thirty (30)
calendar days following your Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before such
day, the Company shall pay to you on such day an estimate,


 


11





















 


as determined
in good faith by such tax counsel, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof
can be determined but in no event later than sixty (60) calendar days after
your 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 you payable on the twentieth (20th) calendar day after demand by the Company
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).  Notwithstanding the foregoing,
the sixty (60)- day period for deferment of the Gross-Up Payment shall not
preempt or otherwise eliminate your right to receive any other payments to which
you are entitled under this subparagraph or otherwise under the terms of this
Agreement and to receive additional Gross-Up Payments based on such additional
payments pursuant to this subparagraph;


 


(x)            To the full extent
permitted by law, the Company shall indemnify you (including the advancement of
expenses) for any judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys’ fees, incurred by you in connection with the
defense of any lawsuit or other claim to which you are made a party by reason
of being or having been an officer, director or employee of the Company or any
of its subsidiaries.  In addition, you
will be covered by director and officer liability insurance to the maximum
extent that such insurance maintained by the Company from time to time covers
any officer or director (or former officer or director) of the Company.


 


(xi)           You will be entitled to
receive outplacement services, at the expense of the Company, from a provider
reasonably selected by you.


 


(xii)          The Company also shall
pay to you all legal fees and expenses incurred by you as a result of such
termination of employment (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 or in
connection with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit provided
hereunder); and


 


(xiii)         The payments provided in
paragraphs (i), (ii), (v) if a lump sum is elected, (vi) and (xii), above,
shall be made not later than the tenth (10th) business day following the Date
of Termination, provided, however, that if the


 


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amounts of
such payments cannot be finally determined on or before such day, the Company
shall pay to you on such day an estimate, as determined in good faith by the
Company, of the minimum amount of such payments and shall pay the remainder of
such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of 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 payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to you
payable on the tenth (10th) business day after demand by the Company (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code).  As all of the payments referenced in the
first sentence of this subparagraph (xiii) are included for purposes of
determining the Gross-Up Payment, the thirty (30)-day period identified above
shall not preempt or otherwise eliminate your right to receive any other
payments to which you are entitled under the terms of this Agreement and to
receive additional Gross-Up Payments based on such additional payments.


 


(c)           Any provision in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
your employment with the Company is terminated within six (6) months prior to
the date on which the Change of Control occurs, and if you reasonably
demonstrate that such termination of employment (i) was at the request of a
third party who has taken steps reasonably calculated to effect the Change of
Control, (ii) otherwise arose in connection with or anticipation of the Change
of Control, or (iii) would not have occurred or would be less likely to have
occurred if the Change of Control were not anticipated, then for all purposes
of this Agreement the termination of your employment shall be deemed to have
occurred following the Change of Control.


 


(d)           You shall not be
required to mitigate the amount of any payment provided for in this Section 4
by seeking other employment or otherwise, nor shall the amount of any payment
provided for in this Section 4 be reduced by any compensation earned by you as
the result of employment by another employer after your Date of Termination, or
otherwise, with the exception of a reduction in your insurance benefits as
provided in Section 4(b)(iii).


 


5.             Successors;
Binding Agreements.


 


(a)           The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company or of any division or subsidiary thereof employing you to


 


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expressly
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
had taken place.  Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms to which
you would be entitled hereunder if you terminated your employment for Good
Reason following a Change of Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed your Date of Termination.


 


(b)           This Agreement shall
inure to the benefit of and be enforceable by your personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees.  If you should
die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement, to your devisee, legatee
or other designee or, if there is no such designee, to your estate.


 


6.             No Funding of
Benefits.  Nothing herein contained
shall require or be deemed to require the Company to segregate, earmark, or
otherwise set aside any funds or other assets to provide for any payments to be
made hereunder.  Your rights under this
Agreement shall be solely those of a general creditor of the Company.  However, in the event of a Change of Control,
the Company may deposit cash or property, or both, equal in value to all or a
portion of the benefits anticipated to be payable hereunder into a trust, the
assets of which are to be distributed at such times as are otherwise provided
for in this Agreement and are subject to the rights of the general creditors of
the Company.


 


7.             Withholding of
Taxes.  The Company may withhold from
any amounts payable under this Agreement all federal, state, city, or other
taxes as legally shall be required.


 


8.             Notice.  For the purpose of this Agreement, notices
and all other communications provided for in this 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, addressed to
the respective addresses set forth on the first page of this Agreement.


 


9.             Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be specifically
designated by the Board.  The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Michigan.


 


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10.           Employment Rights.  This Agreement shall not confer upon you any
right to continue in the employ of the Company or its subsidiaries and, except
to the extent that benefits may become payable under Section 4, above, shall
not in any way affect the right of the Company or its subsidiaries to dismiss
or otherwise terminate your employment at any time and for any reason with or
without cause.


 


11.           No Vested Interest.  Neither you nor your beneficiaries shall have
any right, title or interest in any benefit under this Agreement prior to the
occurrence of all of the events specified herein as necessary conditions to
such right, title or interest.


 


12.           Prior Agreements.  This Agreement contains the understanding
between the parties hereto with respect to severance benefits in connection
with a Change of Control of the Company and supersedes any prior such agreement
between the Company (or any predecessor of the Company) and you.  If there is any discrepancy or conflict
between this Agreement and any plan, policy and program of the Company
regarding any term or condition of severance benefits in connection with a
Change of Control of the Company, the language of this Agreement shall govern.


 


13.           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.


 


14.           Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.


 


15.           Arbitration.  Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration
in accordance with the rules of the American Arbitration Association then in
effect.  Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.  However, you shall be entitled to seek in
court specific performance of your right, pursuant to Section 3(f), above, to
be paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.


 


15





















 


If this letter properly sets
forth our agreement on the subject matter hereof, kindly date, sign and return
to the Company the enclosed copy of this letter, which will then constitute our
agreement on this subject.


 


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  SPX
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Kevin L.
  Lilly

  	
   

  	
  By

  	
   /s/Christopher
  J. Kearney

  	
   

  
	
   

  	
  Kevin Lilly

  	
   

  	
  Christopher
  J. Kearney

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  President
  and

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Agreed to
  this 6th day

  
	
   

  	
   

  	
  of January,
  2006.

  
						



 


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