Document:

Exhibit 10.4

 

 

Mr. David Kowalski

40 Oak Hollow Street, Suite 265

Southfield, MI 48034

 

Dear David:

 

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:

 

(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);

 

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(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 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.

 

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(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 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.

 

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(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;

 

(iv)          The
failure by the Company to continue in effect the Company’s Pension Plan,
Retirement Savings Plan, Supplemental Retirement Savings Plan,

 

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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.

 

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.

 

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(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
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

 

8

 

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 normally computed under the terms of
the Plan.  Health care benefits otherwise
receivable by you pursuant to this subparagraph (iii) shall be

 

9

 

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, as determined in good faith by such
tax counsel, of the minimum amount of

 

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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 amounts of
such payments cannot be finally determined on or before such

 

12

 

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 expressly assume and agree to perform this Agreement in the same manner
and to the

 

13

 

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.

 

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

 

14

 

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/ David
  Kowalski

  	
   

  	
  By

  	
   

  	
  /s/ Christopher J. Kearney

  
	
   

  	
  David Kowalski

  	
   

  	
  Christopher
  J. Kearney

  
	
   

  	
   

  	
   

  	
  President
  and

  
	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Agreed to
  this 21st day

  
	
   

  	
   

  	
   

  	
  of December,
  2005.

  
						

 

16Exhibit 10.5

 

Schedule

 

Following
is the Amendment to the Employment Agreement of Christopher J. Kearney
Regarding Vacation Accrual.

 

Amendments
were also executed by each of the following executives.  Each Amendment is identical to the following
Amendment in all respects other than the parties thereto.  Pursuant to Instruction 2 to Item 601 of
Regulation S-K, only the Agreement with Mr. Kearney is being filed, together
with the following schedule setting forth the names of the parties to the other
Agreements.

 

	
  Name

  
	
   

  
	
  Robert
  B. Foreman

  
	
  Thomas
  J. Riordan

  
	
  Patrick
  O’Leary

  

 

 

Amendment to Employment Agreement

Regarding Vacation Accrual

 

 

This shall constitute an amendment to the Employment agreement dated February 23,
2005 (the “Agreement”) between Christopher J. Kearney (the “Executive”) and SPX
Corporation (“SPX”) pursuant to Section 9 of the Agreement, and shall be
effective as of October 26, 2005.

 

WHEREAS, the Agreement specifies a minimum annual vacation entitlement
and permits the Executive to carry over unused vacation for up to twelve (12)
months; and

 

WHEREAS, the parties wish to cap the maximum permitted accrual at the
amount of the Executive’s annual vacation entitlement on a prospective basis
and without forfeiture of any previously earned and accrued entitlement;

 

NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties agree as follows:

 

Section 4(f) states as follows:

 

Vacation.  The Executive will be entitled to vacation in
accordance with the Company’s vacation policy for senior executive officers,
but in no event less than 5

 

 

weeks per calendar year.  Unused vacation shall be carried over for a
period not in excess of twelve (12) months.

 

Section 4(f) shall be superseded and replaced in its entirety
by the following provision:

 

Vacation.  The Executive will be entitled to vacation in
accordance with the Company’s vacation policy for officers, but in no event
less than 5 weeks per calendar year.  The
maximum vacation accrual allowed from year to year and at any given time will
equal Executive’s annual entitlement. 
Once the maximum accrual is reached, Executive will no longer accrue
vacation until the unused amount accrued is below the maximum level allowed.

 

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

 

	
  EXECUTIVE ACCEPTANCE

  	
   

  	
          SPX CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Christopher J. Kearney

  	
   

  	
  By

  	
  :     /s/ Ross B.
  Bricker

  
	
  Christopher J. Kearney

  	
   

  	
          Ross
  B. Bricker

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
          Its:

  	
  Senior Vice President, Secretary

  
	
   

  	
   

  	
   

  	
  and General Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
          Date:

  	
  December 21, 2005

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