Employment Agreement between Precision Partners, Inc. and John G. Raos (President and CEO)

Summary

This agreement, dated July 10, 2000, is between Precision Partners, Inc. and John G. Raos, appointing him as President and Chief Executive Officer of the company and its affiliate, Precision Partners Holding Company. Mr. Raos will oversee operations, develop strategies, and assist with acquisitions. He will receive an annual salary of $250,000, with eligibility for a performance-based bonus, and use of company facilities. The initial employment term is two years, with automatic one-year renewals unless terminated earlier under the agreement's terms.

EX-10.15 2 a2041529zex-10_15.txt EXHIBIT 10.15 EXHIBIT 10.15 EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement"), dated as of July 10, 2000, is entered between John G. Raos, residing at 16 Castle Hill Way, Stuart, Florida 34996 ("Executive"), and Precision Partners, Inc., a Delaware corporation (the "Company"). RECITALS A. The Company and Precision Partners Holding Company, a Delaware corporation ("PPHC", and together with the Company collectively, "Precision", and each individually, a "Precision Company"), and their respective Affiliates are engaged in the business of the contract manufacturing of metal parts, tooling and assemblies (the "Business"). B. The Company believes that the future growth, profitability and success of the Business of Precision will be significantly enhanced by the employment of Executive as the President and Chief Executive Officer of each Precision Company during the Employment Term. C. The Company desires to provide Executive with appropriate incentives and rewards related to the performance by Executive and the Company desires to encourage the employment or engagement of Executive in the service of Precision. With capitalized terms used herein having the meanings ascribed to such terms in Section 1.10, the parties agree as follows: I. TERMS OF EMPLOYMENT 1.1 DUTIES, ETC. (a) During the Employment Term, the Company will employ Executive as its President and Chief Executive Officer and the Company will cause PPHC to appoint Executive as PPHC's President and Chief Executive Officer. Executive will report directly to the board of directors of the Company (the "Company Board") and to the board of directors of PPHC (the "PPHC Board" and together with the Company Board, the "Precision Boards"), or to Executive Committees , as may be designated from time to time by the Company Board or the PPHC Board, as the case may be. In such capacity, Executive will perform such duties and exercise such powers commensurate with his position as the President and Chief Executive Officer of each Precision Company subject to the direction of (and any restrictions imposed by) the Precision Boards or Executive Committees as may be designated by the Company Board or the PPHC Board, as the case may be, including but not limited to, (i) Overseeing and managing all facets of the operations of Precision and its Affiliates; (ii) Assisting the Precision Boards in the development of corporate strategies to maximize shareholder value of Precision and its Affiliates; (iii) Assisting the Precision Boards in the identification and implementation of acquisitions related to Precision and its Affiliates; and (iv) Performing such other responsibilities (commensurate with the responsibilities customarily ascribed to a Chief Executive Officer and President of similarly situated Persons) as may be assigned by the Precision Boards (or an Executive Committee) from time to time. Without limiting the generality or effect of the foregoing, during the Employment Term, Executives' titles, responsibilities, reporting relationships and authority will be at least commensurate with those held by or assigned to Executive on the Effective Date. From and after the Notification Date through the effective date of the termination of Executive's employment, Executive will assist the Company in completing a prompt and effective management transition. (b) PRECISION BOARDS; LLC MANAGEMENT COMMITTEE. To the extent that Robert Womack is no longer Chairman of the Precision Boards and the management committee of Precision Partners, L.L.C., a Delaware limited liability company ("LLC"), and PROVIDED, that, at such time, in the case of each Precision Company, Executive is President and Chief Executive Officer and a member of the board of directors of such Precision Company, and in the case of LLC, Executive is a member of the management committee of LLC, the Company will offer Executive the position of Chairman of the Company Board and will cause Executive to be offered the positions of Chairman of the PPHC Board and Chairman of the management committee of LLC, and if all three positions are accepted by Executive , the Company will duly nominate Executive as Chairman of the Company Board and will cause Executive to be duly nominated as Chairman of the PPHC Board and Chairman of the management committee of LLC. As soon as practicable after the Effective Date (as defined below) and, during the Employment Term, once per year thereafter, the Company will cause the election or re-election, as applicable, of Executive to the Company Board (as a member thereof) and will cause the election or re-election, as applicable, of Executive to the PPHC Board (as a member thereof) and to the management committee (as a member thereof) of LLC. (c) PRECISION'S LOCATION AND FACILITIES. During the Employment Term, the Company will provide to Executive use of Company's offices and facilities together with the services of secretarial and other support staff commensurate with his position and duties as set forth in Section 1.1(a). The initial location of Precision's main office will be in Dallas, Texas, with the final location to be in either New Jersey, Florida or any other location mutually agreed upon by the Precision Boards and Executive (the "Location"); provided that such final Location will not be more than 40 miles from Spring Lake, New Jersey or Stuart, Florida. From July 10, 2000 until the earlier of (x) December 31, 2000 or (y) the date on which Precision's headquarters is relocated from Dallas, Texas, the Company will pay (within a reasonable period of time after receipt of reasonably detailed invoices in respect thereof) one-half of the actual costs up to a maximum of $25,000 of maintaining and operating an office for Executive in Florida. 1.2 ACTIVITIES. During the Employment Term, Executive will devote substantially all of his efforts during working hours to the business of Precision and its Affiliates and, absent the approval of the Company Board, Executive will not engage in any business activity other than that required of him in connection with his duties and responsibilities pursuant to Section 1.1(a), including serving as a director or trustee of any entity other than Precision, its Affiliates or LLC; PROVIDED, HOWEVER, that nothing herein will prohibit Executive from (a) serving on the corporate boards of directors listed in ANNEX A attached hereto or 2 (b) managing his personal investments and office; in each case, so long as so doing does not constitute or result in a breach of any provision of Article II hereof or materially interfere with the discharge by Executive of his duties hereunder. 1.3 SALARY; BONUS. During the Employment Term, the Company will pay to Executive an aggregate annual salary of $250,000 which will be subject to annual review commencing January 1, 2001 ("Salary"). Such Salary will be payable consistent with the then current payroll practices of the Company. In addition, Executive will be eligible for an annual cash bonus of up to 100% of his then current salary based on his performance under a bonus plan to be implemented by the Company Board; PROVIDED, HOWEVER, that Executive will receive a bonus of $125,000 for year-end 2000 if Executive is continuously employed as President and Chief Executive Officer of Precision from the Effective Date (as defined below) through and including December 31, 2000. 1.4 EMPLOYMENT TERM. Executive's employment hereunder will commence on July 10, 2000 (as may be adjusted, the "Effective Date") and will, subject to automatic extension described below and subject to earlier termination of Executive's employment in accordance with this Agreement, expire on the second anniversary hereof (the "Initial Employment Term"). Executive's employment will automatically be extended for subsequent one-year terms upon expiration of the Initial Employment Term and each such subsequent one-year term (each such subsequent term, a "Renewal Period") on the terms set forth in this Agreement, unless the Company notifies Executive in writing of its determination not to extend Executive's employment within 60 calendar days prior to the expiration of the Initial Employment Term or any Renewal Period (any such notice, a "Non-Renewal Notice"). The date on which Executive's employment with the Company terminates is referred to herein as the "Termination Date." 1.5 EQUITY INTERESTS. (a) OPTIONS. (i) As of the Effective Date, the Company will cause there to be granted to Executive options to purchase 1,720,000 Investment Units of Class A Equity in LLC, at an exercise price in cash of approximately $0.3735 per unit. Fifty percent of the options referred to in this Section 1.5(a) (the "Time-Based Options") for Executive will vest on a pro rata basis over a four-year time period beginning on the date of grant, PROVIDED, HOWEVER, that in the event (x) of a Change in Control, vesting of all such Time-Based Options shall accelerate immediately, and (y) of termination of Executive's employment by the Company without Cause or by Executive with Good Reason (as set forth in Section 1.8(a)(i)) , vesting of the Time-Based Options shall accelerate immediately to the extent of the number of Time-Based Options scheduled to vest from the Notification Date to the next succeeding anniversary of the Effective Date. The remaining 50% of Executive's options will vest pro rata over such four-year time period based upon Precision's meeting certain financial goals, as determined in advance by the Company Board in consultation with Executive, and will not be subject to accelerated vesting. Upon the termination of Executive for any reason or for no reason as set forth in Section 1.8, vesting of the options will cease immediately on the Termination Date and any unexercised but vested options will be exercisable within 60 days after the Termination Date and will thereafter expire to the extent unexercised. Notwithstanding anything to the contrary contained herein, all vested and unvested options will expire on the 10th anniversary of the Effective Date. The options may not be assigned or transferred in any manner except by will or the laws of descent and distribution and any assignment or transfer in violation 3 of this sentence will be null and void. All of the options to be granted to Executive pursuant to this Section 1.5(a) will be in lieu of Executive's participation in any bonus plan of Precision (other than the bonus referred to in Section 1.3). (ii) The Company represents and warrants to Executive that at least $42.0 million of cash equity capital has been contributed to LLC since its formation. During all periods when the aggregate cash equity contributions to LLC are greater than $42.0 million and equal to or less than $52.0 million (the "Additional Cash Equity"), the Company will cause there to be granted to Executive additional options (50% of which will be time-based from the date of grant and the remaining 50% of which will be performance based) to purchase the number of Investment Units of Class A Equity in LLC equal to 3.5% of the Additional Cash Equity. Executive will not be entitled to such grants in the case of cash equity contributions to LLC which, when added to then existing equity invested in LLC, exceed $52.0 million in the aggregate. The exercise price of such options will be equal to $0.7470 per unit in cash and such options will be subject to the vesting and exercise provisions to be agreed by Executive and the Company but in any event not less favorable to Executive than such vesting and exercise provisions described in Section 1.5(a)(i). (iii) The Company represents and warrants to Executive that EXHIBIT A attached hereto (constituting a summary of the capitalization and ownership structure of LLC, the Company, PPHC and their Affiliates) is correct and complete in all material respects. (b) EQUITY PURCHASE. During the period from the Effective Date through and including the earlier to occur of December 31, 2000 and the fifth calendar day immediately following the sale by Executive of the shares of capital stock issued upon exercise of the USI Options, Executive will purchase and the Company will cause there to be sold to Executive, an aggregate of $2 million of Investment Units in LLC consisting of equal numbers of Preferred Interests at a purchase price of $0.6265 per unit and Class A Equity at a purchase price of $0.3735 per unit. The consummation of such purchases will be subject to Executive then being President and Chief Executive Officer of Precision as of the date of each such purchase. In addition, the Company will cause there to be granted to Executive the opportunity to purchase additional Investment Units in LLC consisting of Preferred Interests and Class A Equity in connection with future additional equity investments in LLC in an amount to be agreed upon by LLC and Executive but in any event on no less favorable terms than which The SKM Equity Fund II, L.P. and the SK Investment Fund, L.P. or any of their respective affiliates are granted the opportunity to purchase additional Investment Units. The Company will grant or cause there to be granted to Executive, as the case may be, customary "piggyback" registration rights (subject to customary underwriter cutback provisions) with respect to his equity interest in LLC in connection with Public Offerings of Voting Securities of LLC or a Precision Company in which Precision Partners Investment Fund, L.L.C. ("Precision Investors") participates. The parties understand that Executive will be entitled to participate (up to 25% of the Voting Securities then owned by Executive) on a pro rata basis with Precision Investors in any Public Offering of Voting Securities of LLC or a Precision Company in which Precision Investors participates. 4 (c) EQUITY REDEMPTION. (i) Notwithstanding anything to the contrary contained herein or in the LLC Agreement, subject to Executive assisting the Precision Boards in completing a prompt and effective management transition, (A) if before the first anniversary of the Effective Date of the Initial Employment Term Executive's employment is terminated for any reason or for no reason as set forth in Section 1.8, within 60 days after the Termination Date Executive will sell to LLC or its designee, and the Company will cause LLC or its designee to purchase in cash from Executive, his equity interest in LLC at cost; (B) if on or after the first anniversary of the Effective Date of the Initial Employment Term the Company terminates Executive's employment without Cause or Executive terminates his employment with Good Reason as set forth in Section 1.8(a)(i), within 60 days after the Termination Date Executive will sell to LLC or its designee, and the Company will cause LLC or its designee to purchase in cash from Executive, his equity interest in LLC at the fair market value thereof as of the Termination Date (as determined by the management committee of LLC in its good faith discretion); or (C) if the Company provides a Non-Renewal Notice to Executive, within 60 days after the Termination Date, at the Executive's election, Executive will sell to LLC or its designee, and the Company will cause LLC or its designee to purchase in cash from Executive, his equity interest in LLC at the lower of cost and the fair market value thereof as of the Termination Date (as determined by the management committee of LLC in its god faith discretion). PROVIDED, HOWEVER, that in the case of Sections 1.5(c)(i)(A), (B) and (C), if Executive breaches his obligation to assist the Precision Boards in completing a prompt and effective management transition, LLC or its designee will retain for a one-year period after such Termination Date the right, but not the obligation, to purchase in cash from Executive, and Executive will sell to LLC or its designee upon notice from LLC or its designee, his equity interest in LLC at cost; PROVIDED, FURTHER, HOWEVER, subject to other applicable provisions of this Agreement, if LLC or its designee has not purchased Executive's equity interest in LLC within 60 days after the Termination Date, simple interest shall accrue at an annual rate of 8% on such payment commencing on the 61st day following the Termination Date to the date such payment is made by LLC or its designee to Executive. (ii) (A) Notwithstanding the foregoing, if Executive disagrees with the good faith determination of fair market value by the management committee of LLC as set forth in Sections 1.5(c)(i)(B) and (C) and provides notice thereof to LLC within 5 days after such determination of fair market value has been made (the "Dispute Notice"), then such fair market value will be determined as follows: (1) Executive and LLC (or its designee) will attempt to agree upon the fair market value of Executive's equity interest in LLC as of the Termination Date. 5 (2) If no such agreement is reached within 30 days after the Dispute Notice, then an appraisal will be undertaken by an Appraiser to be mutually selected by Executive and LLC (or its designee). If Executive and LLC (or its designee) cannot agree on an Appraiser within 10 days thereafter, then Executive and LLC (or its designee) will each choose an Appraiser and such Appraisers will together select and appoint a third Appraiser to conduct the appraisal. (3) Executive and LLC (or its designee) will instruct the Appraiser to render its determination as soon as practicable thereafter, but in no event later than 30 days after the Appraiser is chosen. The Appraiser's determination will be conclusive and binding upon each of Executive and LLC (or its designee). Nothing herein will be construed to authorize or permit the Appraiser to determine any question or matter whatsoever under or in connection with this Agreement except the determination of the fair market value of Executive's equity interest in LLC as of the Termination Date. (4) The fees and expenses of the Appraiser or Appraisers selected hereunder will be shared equally by Executive and the Company. (B) As used herein, "APPRAISER" means a nationally- recognized investment banking or valuation firm (1) that does not (and whose directors, officers, employees and affiliates do not) have a direct or indirect equity interest in the Company, PPHC or any of their Affiliates or LLC or with respect to Executive or in any affiliate of Executive and (2) that is otherwise qualified to serve as an appraiser. (C) Notwithstanding the last proviso in Section 1.5(c)(i), if Executive delivers a Dispute Notice to LLC pursuant to Section 1.5(c)(ii)(A), then the calculation of the 60-day period following the Termination Date will be tolled. (d) LLC AGREEMENT. The Company will (i) to the extent necessary, cause the amendment of the LLC Agreement to effect the grant of the options contemplated by Section 1.5(a) and the issuance of the Investment Units contemplated by Section 1.5(b) and (ii) will use reasonable best efforts to effect all other terms and conditions referred to in Section 1.5. Notwithstanding anything to the contrary contained herein, (x) Section 1.5 constitutes the definitive terms of Executive's equity interest and options in LLC, (y) Section 1.5 will control in the event of any conflict between such definitive terms and the LLC Agreement, and (z) the Company will not cause the LLC Agreement to be amended which amendment would materially and adversely affect the rights of Executive contained in Section 1.5 without the prior written consent of Executive. (e) JOINDER. Executive will execute a joinder to the LLC Agreement in a form reasonably acceptable to LLC and Executive upon the earlier to occur of (x) the exercise of any or all of the options set forth in Section 1.5(a) or (y) the closing of the equity purchase set forth in the first sentence of Section 1.5(b). 6 1.6 BENEFITS, ETC. (a) BENEFITS. During the Employment Term, Executive will be entitled to participate in such pension and other retirement and medical, term life, disability, dental insurance programs and other non-equity-based benefits, together with participation in a matching 401(K) plan if any, as the Company may provide from time to time for other senior executives of the Company generally. Notwithstanding the foregoing, Executive will not, during the Employment Term, be entitled to participate in any severance pay or bonus plan (other than the bonus referred to in Section 1.3) of the Company. Executive's severance benefits will be solely as set forth in Section 1.8. (b) VACATION. During the Employment Term, Executive will be entitled to four weeks of vacation time each calendar year, to be prorated monthly for partial calendar years (ten days for the year 2000). Any vacation not taken will not be carried over and no vacation or other pay will be due in respect thereof, including in respect of any period in which the Termination Date occurs. (c) EXPENSES. Subject to compliance with Precision's policies as from time to time in effect regarding the incurrence, substantiation and verification of business expenses, Executive is authorized to incur on behalf of Precision, and the Company will, or will cause PPHC to, pay, or reimburse Executive for, all customary and reasonable expenses incurred in connection with the performance of duties as set forth in Sections 1.1(a), including cellular phone expenses, travel, home facsimiles, computer on-line charges, meals and entertainment. (d) PREREQUISITES. During the Employment Term, the Company will provide Executive with an automobile allowance of $1,000 per month. 1.7 DEDUCTIONS AND WITHHOLDINGS. All amounts payable or which become payable hereunder will be subject to any deductions and withholdings required by law. 1.8 TERMINATION. (a) Termination of Employment during the Employment Term. (i) TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY EXECUTIVE WITH GOOD REASON. The Company, by action of the Company Board, may terminate Executive's employment hereunder without Cause at any time during the Employment Term, upon 30 calendar days' written notice to Executive, and Executive may terminate his employment hereunder with Good Reason at any time during the Employment Term, upon 30 calendar days' written notice to the Company. In the event Executive's employment is terminated by action of the Company Board without Cause or Executive terminates his employment with Good Reason as aforesaid, the Company agrees that, if Executive executes the release attached hereto as EXHIBIT B (as may be amended by the Company from time to time prior to its execution as necessary to comply with applicable law to the extent necessary in the reasonable judgment of the Company (on the advice of counsel) to make such release valid, binding and enforceable, the "Release"), commencing promptly upon the effective date of the Release, the Company will pay to Executive as consideration for signing the Release an amount equal to Executive's then current Salary for one-year (the "Release Payment"). The Release Payment will be payable periodically, consistent with the then current payroll practices of the Company. Executive agrees that the sum entailed 7 by the Release is good and valuable consideration for the surrender of rights entailed by the Release. In addition, in the event Executive is terminated by the Company without Cause or Executive terminates his employment hereunder with Good Reason during the Employment Term, the Company will (A) pay to Executive accrued but unpaid Salary through the effective date of such termination, (B) pay to Executive all unreimbursed expenses incurred in accordance with this Agreement prior to such termination, which payments in the case of clauses (A) and (B) will become due and payable within ten calendar days following the Termination Date, and (C) provide to Executive such benefits described in Section 1.6(a) that have accrued prior to the Termination Date and which are subject to continuance after the Termination Date in accordance with the terms of such benefits. Other than (x) as set forth in Section 1.5 or otherwise in the LLC Agreement, (y) with respect to any obligations of the Company to indemnify Executive or (z) as set forth in Section 1.8(e), and, except as provided in this subparagraph (i), the Company will have no additional obligations to Executive hereunder and the payments to be made in accordance with this Section 1.8(a)(i) will constitute exclusive liquidated damages payable as a result of the termination of Executive's employment by the Company without Cause or Executive's termination of his employment for Good Reason. (ii) TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. Executive may terminate his employment hereunder during the Employment Term without Good Reason, provided that Executive first gives to the Company a written notice of intent to terminate at least 90 calendar days prior to the effective date of any such termination. In the event Executive terminates his employment without Good Reason during the Employment Term, the Company will (A) pay to Executive accrued but unpaid Salary through the effective date of such termination, (B) pay to Executive all unreimbursed expenses incurred in accordance with this Agreement prior to such termination, which payments in the case of clauses (A) and (B) will become due and payable within ten calendar days following the Termination Date, and (C) provide to Executive such benefits described in Section 1.6(a) that have accrued prior to the Termination Date and which are subject to continuance after the Termination Date in accordance with the terms of such benefits. Other than (x) as set forth in Section 1.5 or otherwise in the LLC Agreement, (y) with respect to any obligations of the Company to indemnify Executive or (z) as set forth in Section 1.8(e), and, except as provided in this subparagraph (ii), the Company will have no additional obligations to Executive after such termination hereunder and the payments to be made in accordance with this Section 1.8(a)(ii) will constitute exclusive liquidated damages payable as a result of the termination of Executive's employment by Executive without Good Reason. (iii) TERMINATION BY THE COMPANY FOR CAUSE. The Company, by action of the Company Board, may terminate Executive's employment hereunder for Cause during the Employment Term upon written notice to Executive. In the event Executive's employment is terminated by action of the Company Board for Cause during the Employment Term, the Company will (A) pay to Executive accrued but unpaid Salary through the effective date of such termination, (B) pay to Executive all unreimbursed expenses incurred in accordance with this Agreement prior to such termination, which payments in the case of clauses (A) and (B) will become due and payable within ten calendar days following the Termination Date, and (C) provide to Executive such 8 benefits described in Section 1.6(a) that have accrued prior to the Termination Date and which are subject to continuance after the Termination Date in accordance with the terms of such benefits. Other than (x) as set forth in Section 1.5 or otherwise in the LLC Agreement, (y) with respect to any obligations of the Company to indemnify Executive or (z) as set forth in Section 1.8(e), and, except as provided in this subparagraph (iii), the Company will have no additional obligations to Executive after such termination hereunder and the payments to be made in accordance with this Section 1.8(a)(iii) will constitute exclusive liquidated damages payable as a result of the termination of Executive's employment by the Company for Cause. (iv) TERMINATION BY DEATH OF EXECUTIVE. In the event of Executive's death, the Company will pay to such Person or Persons as Executive may designate in writing or, in the absence of such designation, to the estate of Executive, the sum of (A) accrued but unpaid Salary through the date of Executive's death, (B) all unreimbursed expenses incurred in accordance with this Agreement prior to such termination, and (C) an amount of life insurance benefit provided to Executive by the Company equal to three (3) times Executive's then current Salary. Any such insurance benefit payment contemplated hereby will be made within 10 calendar days following the insurance payment date under the applicable policies of insurance and the amounts contemplated by clauses (A) and (B) will be paid within 45 calendar days following the date of such death. Additionally, in the event of Executive's death the Company will provide to Executive such benefits described in Section 1.6(a) that have accrued prior to the Termination Date and which are subject to continuance after the Termination Date in accordance with the terms of such benefits. Other than (x) as set forth in Section 1.5 or otherwise in the LLC Agreement, (y) with respect to any obligations of the Company to indemnify Executive or (z) as set forth in Section 1.8(e), and, except as provided in this subparagraph (iv), this Agreement in all other respects will terminate upon the death of Executive and the payments to be made in accordance with this Section 1.8(a)(iv) will constitute exclusive liquidated damages payable as a result of the termination of Executive's employment by reason of death. (v) TERMINATION FOR DISABILITY. In the event Executive's employment is terminated by action of the Company Board during the Employment Term because of Executive's Disability, the Company will pay to Executive the sum of (A) accrued but unpaid Salary at the date of Executive's Disability, (B) all unreimbursed expenses incurred in accordance with this Agreement prior to such termination, and (C) an amount of disability insurance benefit provided to Executive by the Company equal to three (3) times Executives then current Salary. Any such insurance benefit payment will be made within 10 days of the insurance payment date under the applicable policies of insurance and the amounts contemplated by clauses (A) and (B) will be paid within 45 days following the date of Executive's Disability. Additionally, in the event of Executive's Disability the Company will provide to Executive such benefits described in Section 1.6(a) that have accrued prior to the Termination Date and which are subject to continuance after the Termination Date in accordance with the terms of such benefits. Other than (x) as set forth in Section 1.5 or otherwise in the LLC Agreement, (y) with respect to any obligations of the Company to indemnify Executive or (z) as set forth in Section 1.8(e), and, except as provided in this subparagraph (v), this Agreement in all 9 other respects will terminate upon the Disability of Executive and the payments to be made in accordance with this Section 1.8(a)(v) will constitute exclusive liquidated damages payable as a result of the termination of Executive's employment by reason of Disability. The Company acknowledges that the Americans and Disability Act ("ADA") provides certain protections to individuals with disabilities and nothing in this Section 1.8(a)(v) should be interpreted to permit conduct that violates the ADA. (b) NOTICE OF NON-RENEWAL. Unless otherwise specified in the text of a Non-Renewal Notice, the delivery by the Company to Executive of a Notice of Non-Renewal in accordance with this Agreement will not constitute the termination of Executive's employment as contemplated by Sections 1.8(a)(i) or 1.8(a)(iii). In the event of the delivery by the Company to Executive of a Notice of Non-Renewal, the Company will provide to Executive such benefits described in Section 1.6(a) that have accrued prior to the Termination Date and which are subject to continuance after the Termination Date in accordance with the terms of such benefits. Other than (x) as set forth in Section 1.5 or otherwise in the LLC Agreement, (y) with respect to any obligations of the Company to indemnify Executive or (z) as set forth in Section 1.8(e), and, except as provided in this Section 1.8(b), the Company will have no additional obligations to Executive after such Termination Date. (c) MITIGATION. Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise. The amount of any Release Payment provided for in this Agreement shall be reduced by any cash compensation received by Executive as a result of employment by another employer. (e) INSURANCE. During the Employment Term and thereafter, the Company will, or will cause PPHC to, provide to Executive with respect to his duties set forth in Sections 1.1(a) and (b), continuous coverage for Executive under a directors and officers liability insurance on terms that are commercially reasonable for entities similarly situated to the Company and PPHC, as the case may be, on terms no less favorable than the directors and officers liability insurance in effect on the Effective Date. 1.9 EXCISE TAX GROSS-UP PAYMENTS. (a) AMOUNT OF GROSS-UP PAYMENT. Anything in this Agreement to the contrary notwithstanding, in the event that it is determined (as hereinafter provided) that any payment (other than the Gross-Up Payment provided for in this Section 1.9) or distribution by LLC, the Company, PPHC or any of their Affiliates to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation the lapse or termination of any restriction on or the vesting or exercisability of any benefit payable pursuant to any of the foregoing (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or any successor provision thereto) by reason of being considered "contingent on a change in ownership or control" of Precision within the meaning of Section 280G of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the "Excise Tax"), then Executive will be entitled to receive from the Company an additional payment or payments (collectively, a "Gross-Up Payment"). The Gross-Up Payment will be in an amount 10 such that, after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For purposes of determining the amount of the Gross-Up Payment, Executive will be considered to pay (x) federal income taxes at the highest rate in effect in the year in which the Gross-Up Payment will be made and (y) state and local income taxes at the highest rate in effect in the state or locality in which the Gross-Up Payment would be subject to state or local tax, net of the maximum reduction in federal income tax that could be obtained from deduction of such state and local taxes. (b) DETERMINATION OF EXCISE TAX AND GROSS-UP PAYMENT. All determinations required to be made under this Section 1.9, including whether an Excise Tax is payable by Executive and the amount of such Excise Tax and whether a Gross-Up Payment is required to be paid by the Company to Executive and the amount of such Gross-Up Payment, if any, will be made by a nationally recognized accounting firm (the "National Firm") selected and paid for by the Company in its sole discretion, which National Firm may be the Company's independent public accounting firm. The federal, state and local income or other tax returns filed by Executive will be prepared and filed on a consistent basis with the determination of the National Firm with respect to the Excise Tax payable by Executive. (c) CONTESTED AMOUNTS. As a result of the uncertainty in the application of Section 4999 of the Code and the possibility of similar uncertainty regarding applicable state or local tax law at the time of any determination by the National Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (an "Underpayment"), consistent with the calculations required to be made hereunder. Executive will notify the Company in writing of any claim by the Internal Revenue Service or any other taxing authority that, if successful, would require the payment by the Company of a Gross-Up Payment. Such notification will be given as promptly as practicable but no later than 10 business days after Executive actually receives notice of such claim and Executive will further apprise the Company of the nature of such claim and the date on which such claim is requested to be paid (in each case, to the extent known by Executive). Executive will not pay such claim prior to the expiration of the 30-calendar-day period following the date on which he gives such notice to the Company or, if earlier, the date that any payment of amount with respect to such claim is due. If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive will fully cooperate with the Company in contesting such claim, and the Company will bear all costs and expenses of such contest. 1.10 DEFINITIONS. For purposes of this Agreement, the following terms will have the following meanings when used herein with initial capital letters: "ACQUISITION" has the meaning ascribed to such term in Section 2.2(a). "ADA" has the meaning ascribed to such term in Section 1.8(a)(v). "ADDITIONAL CASH EQUITY" has the meaning ascribed to such term in Section 1.5(a)(ii). 11 "AGREEMENT" has the meaning specified in the introductory paragraph hereof. "AFFILIATE" means (i) any Person directly or indirectly controlled by LLC or (ii) any Person engaged in the Business and which is directly or indirectly controlling or under common control with LLC. For purposes of this definition, "CONTROL," when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms "CONTROLLED" and "CONTROLLING" have the meaning correlative to the foregoing. "APPRAISER" has the meaning ascribed to such term in Section 1.5(c)(ii)(B). "BUSINESS" has the meaning ascribed to such term in Recital A. "CAUSE" means (i) the material breach by Executive of this Agreement; (ii) the indictment of Executive of any felony; (iii) fraud, embezzlement or misappropriation by Executive relating to the Company, PPHC, their Affiliates or LLC or any of their funds, properties, corporate opportunities or other assets; (iv) the breach by Executive of any of the terms of Article II; (v) alcohol or substance abuse; or (vi) an act of moral turpitude adversely affecting the ability of Executive to perform his duties hereunder. Notwithstanding anything to the contrary contained herein, Executive's employment shall not be deemed to have been terminated for Cause unless and until a majority of the Company Board shall have approved such termination. "CHANGE IN CONTROL" means the consummation of any transaction (other than a Public Offering or Management Investment) which results (x) in the reduction in the percentage of the issued and outstanding Voting Securities of LLC held in the aggregate by The SKM Equity Fund II, L.P. and SK Investment Fund, L.P. and any of their respective affiliates on the Effective Date by more than 70% or (y) an unrelated third party acquiring at least 90% of the assets of Precision. "CLASS A EQUITY" has the meaning ascribed to such term in the LLC Agreement. "CODE" has the meaning ascribed to such term in Section 1.9(a). "COMPANY" has the meaning ascribed to such term in the introductory paragraph hereof. "COMPANY BOARD" has the meaning ascribed to such term in Section 1.1(a). "CONSOLIDATION" has the meaning ascribed to such term in Section 2.2(a). "CONSOLIDATION PERIOD" has the meaning ascribed to such term in Section 2.2(a). "CONTRACT MANUFACTURER" has the meaning ascribed to such term in Section 2.2(a). 12 "CONTRACT MANUFACTURING ENTITY" has the meaning ascribed to such term in Section 2.2(a). "CONFIDENTIAL INFORMATION" has the meaning ascribed to such term in Section 2.1(a). "CUSTOMERS" has the meaning ascribed to such term in Section 2.1(a)(i). "DISABILITY" means a physical or mental incapacity as a result of which Executive becomes unable to continue to perform fully his duties, with "reasonable accommodation," as defined in the Americans with Disability Act and applicable state laws, hereunder for 90-calendar days or for shorter periods aggregating 90 or more days in any 12-month period or a determination by a physician selected in accordance with this Agreement that Executive will be unable to return to work and perform his duties on a full-time basis within 90 consecutive calendar days following the date of such determination on account of mental or physical incapacity. A determination of Disability will be certified by a medical doctor agreed to by the Company and Executive or, in the event of Executive's incapacity to designate a doctor, Executive's legal representative. In the absence of agreement between Precision and Executive, each party will nominate a medical doctor and the two doctors so nominated will select a third doctor, who will make the determination as to Disability. "DISPUTE NOTICE" has the meaning ascribed to such term in Section 1.5(c)(ii)(A). "EFFECTIVE DATE" has the meaning ascribed to such term in Section 1.4(a). "EMPLOYMENT TERM" means the Initial Employment Term as extended by one or more Renewal Periods. "EXCISE TAX" has the meaning ascribed to such term in Section 1.9(a). "EXCLUDED BUSINESSES" has the meaning ascribed to such term in Section 2.2(a)(i)(B). "EXECUTIVE" has the meaning ascribed to such term in the introductory paragraph hereof. "EXECUTIVE COMMITTEE" means the executive committee of the applicable Precision Board consisting of directors thereof. "GOOD REASON" means without Executive's express prior written consent (i) the material diminution of Executive's positions, titles, authority, duties, responsibilities or status with Precision; (ii) a reduction by the Company in Executive's Salary; (iii) any breach to the LLC Agreement that materially and adversely affects Executive or any other material breach by the Company of this Agreement; or (iv) the failure of any successor to all or substantially all of the assets of the Company and its Affiliates to assume all the obligations of the Company under this Agreement. "GROSS-UP PAYMENT" has the meaning ascribed to such term in Section 1.9(a). 13 "INITIAL EMPLOYMENT TERM" has the meaning specified in Section 1.4(a). "INVESTMENT UNITS" has the meaning ascribed to such term in the LLC Agreement. "LITIGABLE PROVISIONS" has the meaning ascribed to such term in Section 3.7(a). "LLC" has the meaning ascribed to such term in Section 1.1(b). "LLC AGREEMENT" means the Limited Liability Company Agreement of Precision Partners, L.L.C., dated as of September 30, 1998, as may be amended from time to time. "LOSING PARTY" has the meaning ascribed to such term in Section 3.7(c). "LOCATION" has the meaning ascribed to such term in Section 1.1(c). "MANAGEMENT INVESTMENT" means the offer or sale of securities of LLC, the Company, PPHC, or any of their respective Affiliates to directors, members of the management committee, officers, other employees or consultants of LLC, the Company, PPHC or any of their respective Affiliates (including directors, members of the management committee, officers, other employees or consultants of Persons acquired by or to be acquired by LLC, the Company, PPHC or any of their respective Affiliates) pursuant to any agreement, plan or arrangement (including stock option plans, other equity participation plans and the LLC Agreement). "NATIONAL FIRM" has the meaning ascribed to such term in Section 1.9(b). "NON-COMPETITION PERIOD" has the meaning ascribed to such term in Section 2.2(a). "NON-RENEWAL NOTICE" has the meaning ascribed to such term in Section 1.4(a). "NOTIFICATION DATE" means the date on which (i) the Company notifies Executive of the termination of his employment under this Agreement or (ii) Executive notifies the Company of the termination of his employment under this Agreement, as applicable. "OEM" has the meaning ascribed to such term in Section 2.2(a). "PAYMENT" has the meaning ascribed to such term in Section 1.9(a). "PERSON" means any individual, corporation, partnership, trust, association or other entity or organization, including a government or political subdivision or any agency or instrumentality thereof. "PPHC" has the meaning ascribed to such term in Recital A. "PPHC BOARD" has the meaning ascribed to such term in Section 1.1(a). "PRECISION" has the meaning ascribed to such term in Recital A. 14 "PRECISION BOARDS" has the meaning ascribed to such term in Section 1.1(a). "PRECISION COMPANY" has the meaning ascribed to such term in Recital A. "PRECISION IP" has the meaning ascribed to such term in Section 2.3. "PREFERRED INTEREST" has the meaning ascribed to such term in the LLC Agreement. "PRECISION INVESTORS" has the meaning ascribed to such term in Section 1.5(b). "PREVAILING PARTY" has the meaning ascribed to such term in Section 3.7(c). "PUBLIC OFFERING" means the offer or sale of securities of LLC, the Company, PPHC, or any of their respective Affiliates that is registered or required to be registered under the Securities Act of 1933, as amended, or any similar law of any other jurisdiction. "RELEASE" has the meaning ascribed to such term in Section 1.8(a)(i). "RELEASE PAYMENT" has the meaning ascribed to such term in Section 1.8(a)(i). "RENEWAL PERIOD" has the meaning ascribed to such term in Section 1.4(a). "SALARY" has the meaning ascribed to such term in Section 1.3. "TERMINATION DATE" has the meaning ascribed to such term in Section 1.4(a). "TIME-BASED OPTIONS" has the meaning ascribed to such term in Section 1.5(a). "UNDERPAYMENT" has the meaning ascribed to such term in Section 1.9(c). "USI OPTIONS" means the options to purchase 420,000 shares of capital stock of U.S. Industries, Inc. granted to and held by Executive and which are referred to in Section 1.5(b). "VOTING SECURITIES" means, with respect to any Person, securities of such person (including capital stock and membership interests) entitling the holders thereof to vote generally to elect the members of the board of directors or equivalent governing body of such Person. II. CONFIDENTIALITY; NON-COMPETITION, ETC. 2.1 CONFIDENTIALITY. (a) Executive acknowledges that during the Employment Term, Executive will be given and will continue to have in connection with the conduct of the Business, access and exposure to trade secrets and confidential information in written, oral, electronic and other form regarding LLC, the Company, PPHC and their Affiliates and their respective businesses, equipment, products and employees ("Confidential Information"), including but not limited to: 15 (i) the identities of each such Person's customers and key accounts and potential customers and key accounts (hereinafter referred to collectively as "Customers"), including, without limitation, the identity of Customers who or which Executive cultivates or maintains while providing services at Precision using Precision's products, name and infrastructure, and the identities of contact persons at those Customers; (ii) the particular preferences, likes, dislikes and needs of those Customers and contact persons with respect to product types, pricing, sales calls, timing, sales terms, rental terms, lease terms, service plans, and other marketing terms and techniques; (iii) each such Person's business methods, practices, strategies, forecasts, pricing, and marketing techniques; (iv) the identities of each such Person's licensors, vendors and other suppliers and the identities of each such Person's contact persons at such licensors, vendors and other suppliers; the identities of each such Person's key sales representatives and personnel and other employees; (v) advertising and sales materials, research, computer software and related materials; (vi) information provided by or on behalf of Harvey & Co., LLC relating to potential Acquisitions of a Person by LLC, the Company, PPHC and their Affiliates; and (vii) other material facts and financial and other business information concerning or relating to each such Person and its business, operations, financial condition, results of operations and prospects. "CONFIDENTIAL INFORMATION" will not include (i) information which is already in or subsequently enters the public domain, other than as a result of any direct or indirect action or inaction by Executive, and (ii) information which is approved for release by the Precision Boards. (b) Executive will use Confidential Information only for purposes of carrying out his duties for LLC, the Company, PPHC and their Affiliates, and not for any other purpose, including, without limitation, not in any way or for any purpose detrimental to such Persons. During the Employment Term and thereafter, Executive will not at any time use for himself or others, directly or indirectly, any such Confidential Information, and, except as required by law, Executive will not disclose such Confidential Information, directly or indirectly, to any other Person. (c) If Executive is requested or required, by subpoena, oral deposition, interrogatories, request for production of documents, administrative order or otherwise, to disclose any Confidential Information, then Executive will provide the Company with prompt notice of any such request so that the Company (or its designee) may seek, at the Company's 16 expense, an appropriate protective order. If, in the absence of a protective order or waiver, Executive is compelled, in the written opinion of Executive's counsel, to disclose any Confidential Information, then Executive may make such disclosure after notice to the Company. (d) All physical property and all notes, memoranda, files, records, writings, documents and other materials of any and every nature, written or electronic, which Executive will prepare or receive in the course of his association with LLC, the Company, PPHC and their Affiliates and which relate to or are useful in any manner to the Business or any other business now or hereafter conducted by LLC, the Company, PPHC and their Affiliates, are and will remain the sole and exclusive property of such Persons. Executive will not remove from any such Person's premises any such physical property, the original or any reproduction of any such materials nor the information contained therein, except for the purposes of carrying out his duties hereunder, and all such physical property (except for any items of personal property of Executive), materials and information in his possession or under his custody or control will, upon the termination of his employment be immediately turned over to the Company. 2.2 NON-COMPETITION. (a)(i) During the Employment Term and for a period commencing on the Termination Date and terminating on the second anniversary of the Termination Date ("Non-Competition Period"), Executive will not: (A) promote, participate or engage or have any other interest (whether acting as owner, purchaser, shareholder, employee, broker, agent, principal, trustee, corporate officer, director, consultant or in any other capacity) in any Person which is engaged in, or a primary purpose of which is to engage in, the Consolidation (as defined below) of Contract Manufacturers (as defined below); (B) (x) promote, participate or engage or have any other interest (whether acting as owner, purchaser, shareholder, employee, broker, agent, principal, trustee, corporate officer, director, consultant or in any other capacity) in any Person (all such Persons, collectively, "Excluded Businesses") which Executive has visited or with which Executive has had substantial discussions, in each case, at any time during the Employment Term concerning a potential Acquisition (as defined below) of such Person by LLC, the Company PPHC or any of their Affiliate or (y) directly or indirectly solicit, canvass or approach any Person which is an Excluded Business to endeavor to cause or effect an Acquisition involving such Person; (C) directly or indirectly solicit, canvass or approach any Person who, to the knowledge of Executive after due inquiry, was provided with products or services by LLC, the Company, PPHC or any of their Affiliates at any time prior to the Termination Date or with whom LLC, the Company, PPHC or any of their Affiliates was involved in discussions regarding the supply of products or services by LLC, the Company, PPHC or any of their Affiliates as of the Termination Date, to offer that Person products or services similar to or derivative of products or services provided by LLC, the Company, PPHC or any of their Affiliates at any time during the Non-Competition Period; 17 (D) directly or indirectly solicit, canvass or approach any Person who, to the knowledge of Executive after due inquiry, provided products or services to LLC, the Company, PPHC or any of their Affiliates at any time prior to the Termination Date or with whom LLC, the Company, PPHC or any of their Affiliates was involved in discussions regarding the supply or products or services to LLC, the Company, PPHC or any of their Affiliates as of the Termination Date, to endeavor to cause such Person to cease providing products or services to LLC, the Company, PPHC or any of their Affiliates; (E) except for the individuals listed on EXHIBIT C attached hereto, directly or indirectly solicit or entice away any director, management committee member, officer or employee of LLC, the Company, PPHC or any of their Affiliates; and (F) except for the individuals listed on EXHIBIT C attached hereto, directly or indirectly employ any director, management committee member, officer or employee of LLC, the Company, PPHC or any of their Affiliates, unless such individual has not been employed by or has not otherwise performed services for LLC, the Company, PPHC or any of their Affiliates, in each case, for at least 90 consecutive calendar days. As used in this Section 2.2(a), (i) "CONSOLIDATION" means during any consecutive 36-month period within the Consolidation Period, the execution of letters of intent (which have not been terminated in writing other than as a result of execution and delivery of definitive documentation and the transaction contemplated thereby abandoned) relating to, or the consummation of, the Acquisition of more than two Contract Manufacturers; (ii) "ACQUISITION" means, with respect to any Person, the acquisition (in any case, whether, directly or indirectly, by merger, stock purchase, asset purchase, recapitalization or other similar transaction) of all or any portion of the capital stock, assets (other than the purchase of inventory or equipment in the ordinary course of operations) or business of a Person; and (iii) "CONSOLIDATION PERIOD" means the period beginning 36 months immediately preceding the Termination Date through and including the last day of the Non-Competition Period. As used in this Agreement, "CONTRACT MANUFACTURER" means a Person (each a "Contract Manufacturing Entity") more than 50% of the annual gross sales of which for the most recent fiscal year of such Contract Manufacturing Entity is derived from the contract-manufacturing of metal parts, tooling and/or assemblies primarily for original equipment manufacturers ("OEM") for use in such OEM's products; PROVIDED, HOWEVER, that (a) the gross sales of castings, forgings and non-metal tooling produced by such Contract Manufacturing Entity will not be deemed to constitute gross sales of contract-manufactured metal parts, tooling and/or assemblies, and (b) "CONTRACT MANUFACTURER" will not include a Contract Manufacturing Entity primarily engaged in the assembly of metal parts unless more than 30% of the number of such parts and/or 30% of the value of such parts utilized in such assembly during any fiscal year of such Contract Manufacturing Entity consists of parts manufactured by a Person or Persons that is or are controlled by such Contract Manufacturing Entity. 18 (b) For an indefinite period after the Termination Date, Executive will not use in the conduct of any business activities or for Executive's personal use (other than on Executive's resume), the name of LLC, the Company, PPHC or any of their Affiliates or the name "PRECISION PARTNERS", or any names confusingly similar to any of the foregoing, in each case, without the prior written consent of the Company. (c) The provisions of this Section 2.2 will be modified without any action on the part of the parties hereto to conform to the law as determined by the order of any court or other tribunal of competent jurisdiction finding all or any portion of such provisions to be invalid. 2.3 PATENTS, INVENTIONS AND OTHER INTELLECTUAL PROPERTY. (a) If at any time during the Employment Term, Executive, whether alone or with any other Person, makes, discovers or produces any invention, process, development or design which relates to, affects or, in the opinion of the Company Board, is capable of being used or adapted for use in or in connection with the Business or any product, process or intellectual property right of LLC, the Company, PPHC or any of their Affiliates, (i) the invention, process, development or design (collectively, "Precision IP") will be the sole property of the Company and (ii) Executive will immediately disclose Precision IP to the Company in writing. (b) Executive will, if and when required to do so by the Company (whether during the Employment Term or thereafter) and at the Company's expense, (i) apply, or join with Precision in applying, for patents or other protection in any jurisdiction in the world for any Precision IP; (ii) execute or procure to be executed all instruments, and do or procure to be done all things, which are necessary or, in the opinion of the Company, advisable for vesting such patents or other protection in the name of the Company or any nominee thereof, or subsequently for renewing and maintaining the same in the name of the Company or its nominees; and (iii) assist in defending any proceedings relating to, or to any application for, such patents or other protection. 2.4 SPECIFIC PERFORMANCE. Executive acknowledges that the Company will suffer an adverse effect in its Business and have no adequate remedy at law if Executive materially breaches any of the provisions of Section 2.1 or breaches any of the provisions of Section 2.2. In the event of such a breach, Executive agree that the Company will have the right, in addition to any other rights it may have, to seek specific performance (without the need to post a bond or similar collateral) of either of Sections 2.1 or 2.2. Upon a finding by a court of competent jurisdiction that Executive has breached either of Sections 2.1 or 2.2, all expenses, including without limitation reasonable attorneys' fees, disbursements and other expenses, arising out of or in connection with the Company's claim under either of Sections 2.1 or 2.2 will be borne by Executive to the fullest extent permitted by law. This Section 2.4 will not limit the Company's right to such specific performance or injunctive or other equitable relief in connection with any other provision of this Agreement. 2.5 SURVIVAL. The provisions contained in this Article II will survive termination of this Agreement. 19 III. MISCELLANEOUS 3.1 NOTICES. All notices, requests and other communications to any party hereunder will be in writing (including facsimile transmission), unless otherwise provided in this Agreement, will be deemed to have been duly given when delivered in person or by a nationally recognized overnight courier service or when dispatched during normal business hours by electronic facsimile transfer (confirmed in writing by mail simultaneously dispatched) to the appropriate party at the address specified below: (a) If to Company, to it at: Precision Partners, L.L.C. c/o Saunders, Karp & Megrue 262 Harbor Drive Stamford, CT 06902 Facsimile No.: (203) 708-6677 Attn: Mr. Buddy Gumina with a copy to: Jones, Day, Reavis & Pogue 599 Lexington Avenue New York, New York 10022 Facsimile No.: (212) 755-7306 Attention: Sanford B. Kaynor, Jr., Esq. If to Executive, to: Mr. John G. Raos 16 Castle Hill Way Stuart, Florida 34996 Facsimile No.: (561) 221-8201 with a copy to: Salisbury & Ryan 1325 Avenue of the Americas New York, New York 10019 Facsimile No.: (212) 977-4668 Attention: Andrew Ryan, Esq. or to such other address or addresses as any such party may from time to time designate as to itself by like notice. 3.2 AMENDMENTS AND WAIVERS; CUMULATIVE REMEDIES. (a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. 20 (b) No failure or delay by any party in exercising any right, power or privilege hereunder will operate as a waiver thereof nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided will be cumulative and not exclusive of any rights or remedies provided by law. 3.3 EXPENSES. Except as otherwise expressly provided for herein, the parties will pay or cause to be paid all of their own fees and expenses incident to this Agreement and in preparing to consummate and consummating the transactions contemplated hereby, including the fees and expenses of any broker, finder, financial advisor, legal advisor or similar person engaged by such party. 3.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; PROVIDED that Executive may not assign, delegate or otherwise transfer any of his rights or obligations under this Agreement without the prior written consent of Company. 3.5 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied will give or be construed to give to any Person, other than the parties hereto and such permitted assigns any legal or equitable rights hereunder, PROVIDED that it is expressly acknowledged that LLC, PPHC, and its Affiliates are intended third party beneficiaries of this Agreement. 3.6 GOVERNING LAW. This Agreement will be governed by, and construed in accordance with, the laws of the State of New York, without regard to the conflict of laws rules of such state. 3.7 DISPUTE RESOLUTION; JURISDICTION. (a) Any dispute or controversy arising under or in connection with this Agreement, but excluding in its entirety the provisions of Article II or any determination on whether there is or has been a breach by Executive of any of the terms of Article II (all such provisions and determinations concerning Article II, "LITIGABLE PROVISIONS"), shall be settled exclusively by arbitration in New York, New York in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered or the arbitrator's award in any court having jurisdiction. (b) Any suit, action or proceeding seeking to enforce any Litigable Provision of, or based on any matter arising out of or in connection with, any Litigable Provision of this Agreement may be brought in any court of competent jurisdiction in the State of New York and each of the parties hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 3.1 will be deemed effective service of process on such party. 21 (c) Each party (the "Losing Party") agrees to pay the reasonable attorneys' fees and expenses of the other party (the "Prevailing Party") incurred in connection with enforcing the Prevailing Party's rights under this Agreement as contemplated by this Section 3.7 to the extent that the arbitrator or court rules substantially in favor of the Prevailing Party, as determined by such arbitrator or court taking into account the circumstances of the case, the conduct of the parties during the proceeding and the result. 3.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 3.9 COUNTERPARTS. This Agreement may be signed in any number of counterparts, each of which will be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 3.10 HEADINGS. The headings in this Agreement are for convenience of reference only and will not control or affect the meaning or construction of any provisions hereof. 3.11 ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto) and the LLC Agreement constitute the entire agreement among the parties with respect to the subject matter hereof. This Agreement (including the Schedules and Exhibits hereto) and the LLC Agreement supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. 3.12 SEVERABILITY. If any provision of this Agreement or the application of any such provision to any Person or circumstance is held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision hereof. If any provision of this Agreement is finally judicially determined to be invalid, ineffective or unenforceable, the determination will apply only in the jurisdiction in which such final adjudication is made, and such provision will be deemed severed from this Agreement for purposes of such jurisdiction only, but every other provision of this Agreement will remain in full force and effect, and there will be substituted for any such provision held invalid, ineffective or unenforceable, a provision of similar import reflecting the original intent of the parties to the extent permitted under applicable law. 3.13 NO WAIVER. No action or inaction taken or omitted pursuant to this Agreement will be deemed to constitute a waiver of compliance with any covenants contained in this Agreement and will not operate or be construed as a waiver of any subsequent breach, whether of a similar or dissimilar nature. 3.14 CERTAIN INTERPRETIVE MATTERS. (a) Unless the context otherwise requires, (i) all references to Sections and Articles are to Sections and Articles of this Agreement, (ii) each term defined in this Agreement has the meaning assigned to it, (iii) words in the singular include 22 the plural and vice versa and (iv) the term "INCLUDING" means "including but not limited to." All references to $ or dollar amounts will be to lawful currency of the United States. (b) No provision of this Agreement will be interpreted in favor of, or against, any of the parties hereto by reason of the extent to which any such party or his or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof. [Remainder of page intentionally left blank] 23 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. PRECISION PARTNERS, INC. By: /s/ William J. Gumina -------------------------------------- Name: William J. Gumina Title: Member EXECUTIVE /s/ John G. Raos ------------------------------------------ John G. Raos 24 EXHIBIT A See Attached EXHIBIT B R E L E A S E I, ____________, in consideration of and as a precondition to the agreement by ________________ ("Company") to provide payment to me in the amount of $_______, (less applicable local, state and federal taxes and other deductions) for and on behalf of myself, my agents, heirs, executors, administrators, and assigns, do hereby release and forever discharge Company and all of its parents, affiliates, subsidiaries, divisions, successors, and assigns, past and present, and each of them, as well as each of their respective agents, directors, officers, partners, employees, representatives, insurers, attorneys, and joint venturers, and each of them (the "Released Parties"), from any and all claims which are based upon acts or events that occurred on or before the date on which this Release becomes enforceable, including any and all claims arising under any federal, state, or local employment laws or anti-discrimination statutes, which include, but are not limited to, Title VII of the Civil Rights Acts of 1964 (42 U.S.C. Section 2000e), the Age Discrimination In Employment Act (29 U.S.C. Sections 621, ET SEQ.) and the Americans With Disabilities Act (42 U.S.C. Sections 12101, ET SEQ.) The phrase "any and all claims" will be interpreted liberally to preclude any further disputes, litigation, or controversies between myself and any of the Released Parties based upon events that occurred on or before the effective date of this Release. The phrase does not cover such disputes based upon events occurring after the effective date of this Release. I am not waiving any rights or claims that may arise out of acts or events that occur after the date on which I sign this Release. I have been given at least 21 days to consider whether or not to sign this Release and have been advised in writing to consult with an attorney prior to signing it. I understand that I may revoke this Release at any time on or before the date which is seven calendar days after the date of my signature on this Release and that, unless previously revoked, the Release will be effective and enforceable upon the expiration of the seven-day revocation period. I acknowledge that I was not already entitled to receive the severance payment described above and that this payment is valuable consideration in exchange for my waiver of rights and claims in this Release. I have read this Release and understand all of its terms. I execute it voluntarily and with full knowledge of its significance. Signed at ___________, ___________ this ____ day of ___________, _____. EXECUTIVE ----------------------------------- EXHIBIT C Frank R. Reilly Peter J. Statile ANNEX A Numerex Corp. TearDrop Golf Company