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Exhibit 10.23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, effective nunc pro tunc January 5, 1999 (the
"Effective Date"), is made by and between CUNO INCORPORATED, a Delaware
corporation (the "Company"), and XXXXXXXXX X. XXXXX, XX.("Executive")
RECITALS
WHEREAS, Executive has been offered employment as a member of the
Company's Board of Directors (the "Board") and the Senior Vice President-Finance
and Administration, and Chief Financial Officer of the Company and will be an
integral part of its management;
WHEREAS, Executive has accepted the offer of employment from the
Company; and,
WHEREAS, Executive and the Company desire to memorialize the terms and
conditions surrounding the Executive's employment with the Company.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein set forth, the parties hereto have agreed and do hereby
mutually agree as follows:
1. Employment, Contract Period. During the period specified in this
Section 1, the Company shall employ Executive, and Executive shall serve the
Company, on the term and subject to the conditions set forth herein. The term of
Executive's employment hereunder shall commence as of January 5. 1999 (the
"Effective Date") and, subject to prior termination as provided in Section 6
hereof, shall continue through January 4, 2002. The term of Executive's
employment hereunder is sometimes hereinafter referred to as the "Contract
Period."
2. Responsibility. At all times during the Contract Period, Executive
shall serve the Company as the Company's Senior Vice President-Finance and
Administration, and Chief Financial Officer and shall (a) devote his full
business time and effort exclusively to the performance of duties as assigned to
him by the Board that are normally incident to the office of Senior Vice
President-Finance and Administration, and Chief Financial Officer, and (b) use
his best efforts to promote the interests of the Company and its affiliates.
3. Remuneration. At all times during the Contract Period, the Company
shall pay to Executive compensation as provided in this Section 3.
(a) Base Salary. The Corporation shall pay Executive a base salary
at an annual rate of not less than $250,000 paid on a monthly basis. The
annual rate of base salary may be increased at the discretion of the
Compensation Committee of the Board (the "Committee"). If increased, the
annual rate of base salary may not thereafter be decreased during the term
of this Agreement.
(b) Annual Incentive Compensation. The Corporation may pay Executive
an
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annual bonus under the provisions of the Company's Senior Management
Target Incentive Plan and the Salaried Employee Incentive Plan or any
successor plans but only if and when authorized by the Committee. For
1999, the Company will pay Executive a bonus of not less that $100,000,
which shall be paid in December 1999, after the Company' books have been
approved by the Audit Committee of the Board.
(c) Signing Bonus. Upon the Effective Date of this Agreement,
Company shall be obligated to pay Executive a signing bonus to be
determined upon the final bonus received from Executive's previous
employer. Such Signing Bonus has been determined to be $130,000, cash,
which Executive may elect to take in Company Restricted Stock, with a 10%
increase.
(d) Performance Shares. The Company will grant herewith 10,000
Performance Shares under the Company's Performance Share Plan to Executive
with respect to a three-year performance period ending on October 31,
2001. If, while Executive remains employed pursuant to this Agreement, the
Company makes grants of Performance Shares under the Company's Performance
Share Plan, the Executive shall be eligible for consideration to receive
grants as deemed appropriate by the Committee. Each grant of Performance
Shares is subject to the terms of the Company's Performance Share Plan,
and will not be distributed until earned according to the performance
requirements for each performance period.
(e) Restricted Shares. The Company shall grant to Executive,
effective as of the Effective Date, 20,000 restricted shares of the
Company's Common Stock pursuant to the Company's 1996 Stock Incentive Plan
(with 5-year vesting). During the five year restricted period you will
vote the shares, although the share certificates will bare a legend and be
held in escrow by the Company's Corporate Secretary. Should Executive
involuntarily without cause leave the Company at any time during the
five-year period, the shares will vest 20% per year of accrued employment
with the Company.
(f) Options. The Company shall grant to the Executive, effective as
of the Effective Date, options to purchase 13,000 shares of the Company's
Common Stock in the form of non-qualified stock options pursuant to the
Company's 1996 Stock Incentive Plan.
4. Employee Benefits. Executive shall be included, to the extent eligible
thereunder with respect to the requirements applicable to all employees eligible
thereunder, under any and all existing plans (and any plans that later may be
adopted) providing benefits for the Company's employees. These plans, include,
but are not limited to:
(a) The Company's group life insurance plan, under which Executive
shall be eligible for life insurance equal to four times his then-current
base salary as defined in the Plan.
(b) The Company's hospitalization and medical plans, as provided to
all Company employees,
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(c) The Company's long-term disability plan, as provided to all
Company employees.
(d) Any pension, thrift plans, profit-sharing plans, stock purchase
plans, and any and all other similar or comparable benefits.
Executive shall also be provided with a suitable automobile allowance under the
terms of the Company's executive automobile program, automobile insurance, paid
vacation of at least four weeks per year, officers' and directors' liability
insurance coverage in an amount reasonably available, and estate planning
counsel.
5. Termination.
(a) Death or Disability. Executive's employment hereunder will
terminate immediately upon Executive's death. The Company may terminate
Executive's employment hereunder immediately upon giving notice of
termination if Executive is disabled, by reason of physical or mental
impairment, to such an extent that he has been unable to substantially
perform his duties under this Agreement for an aggregate of 180 days
(whether business or non-business days and whether or not consecutive)
during any period of twelve consecutive calendar months.
(b) For "Cause." The Company may terminate Executive's employment
under this Agreement for "Cause" only on the basis of:
(i) Executive's willful failure substantially to perform his
duties with the Company, after a written demand for substantial
performance is delivered to Executive by the Board, which written
demand specifically identifies the manner in which the Board
believes Executive has not substantially performed his duties, or
(ii) Executive's willful engagement in conduct materially
injurious to the Company.
For purposes of this Agreement, no act or failure to act on Executive's
part shall be considered "willful" unless done, or omitted to be done, by
Executive not in good faith and without reasonable belief that his action
or omission was in the best interest of the Company. Executive shall not
be deemed to have been terminated for Cause unless and until there shall
have been delivered to Executive a copy of a resolution duly adopted by
the affirmative vote of not less than two-thirds of the entire membership
of the Board at a meeting of the Board called and held for that purpose,
finding that in good faith opinion of the Board, Executive was guilty of
conduct set forth in clause (i) or clause (ii) of this subsection 5(b) and
specifying the particulars thereof in detail. No termination of
Executive's employment by the Company for "Cause" shall be effective
unless and until it is communicated by the Company to Executive by a
written notice that refers to either or both of clause (i) and clause (ii)
of this subsection 5(b) as the specific termination provision or
provisions relied upon by the Company and that sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of
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Executive's employment under the provision or provisions so indicated.
(c) Without "Cause." The Company may terminate Executive's
employment under this Agreement without "Cause" at any time, effective at
such time as the Board may specify in a motion duly adopted by the
affirmative vote of two-thirds of the members of the Board then in office.
6. Compensation and Benefits Following Termination Without "Cause." If the
Company terminates Executive's employment under this Agreement without "Cause:"
(a) the Company shall pay to Executive, in immediately available
funds, within 10 days of the date of termination of Executive's
employment, a lump sum amount that is equal to the sum of (A) 24 months'
of base salary at the highest rate paid to Executive before the
termination, plus (B) two times the average of the annual cash bonuses, if
any, received by Executive under the provisions of the Company's Incentive
plans or any successor plan with respect to each of the two most recent
fiscal years of the Company ended before the termination;
(b) the restrictions on any restricted shares held by Executive
immediately before the termination of his employment shall expire
simultaneously with the termination of his employment;
(c) any options to purchase shares in the Company held by Executive
immediately before the termination of his employment that were not
otherwise exercisable by Executive shall be exercisable by Executive at
any time during the 90-day period beginning immediately after the date of
termination of his employment; and
(d) with the exception of health and medical benefits, which the
Company will provide for a period of one year after termination, the
Company shall not be obligated to pay any compensation, benefits, or
perquisites to Executive by reason of this Agreement after the termination
of his employment.
If Executive receives any payments under this Agreement as a result of
termination of his employment following a termination without Cause, those
payments shall be in lieu of any and all other claims or rights that Executive
may have for severance, separation, and/or salary continuation pay upon that
termination of his employment.
7. Compensation and Benefits Following Termination on Account of
Disability. If the Company terminates Executive's employment under subsection
5(a) of this Agreement by reason of Executive's disability:
(a) the Company shall pay and provide to Executive, not later than
75 days after the end of the fiscal year in which the termination occurs,
that portion of the total bonus, if any, to which he would have been
entitled had he continued to be employed under this Agreement through the
end of the fiscal year in which the termination occurs, equal to the total
bonus multiplied by a fraction, the numerator of which is the number of
days in the fiscal year ending on or before the date of Executive's
termination and the
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denominator of which is 365;
(b) the restrictions on any restricted shares held by Executive
immediately before the termination of his employment shall terminate
simultaneously with the termination of his employment.
8. Miscellaneous Services following Termination of Employment. Following
termination of his full-time employment under this Agreement, Executive shall
make himself available at all reasonable times for consultation by and with the
Company's officers and directors. If Executive is called upon to render services
of this nature, he shall, in consideration therefor and as a condition thereto,
receive reasonable compensation for the services rendered and reimbursement for
any travel or other out-of-pocket expenses incurred in connection therewith.
9. Benefit. This Agreement shall inure to the benefit of and be
enforceable by Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributed, devisees, and legatees. If
Executive should die while any amounts are still payable to Executive hereunder,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Executive's devisee, legatee, or other
designee or, if there be no such designee, to Executive's estate.
10. Successor to the Company. The Company shall require any successor or
assign (whether direct or indirect by purchase, merger. consolidation or
otherwise) to all or substantially all the business and/or assets of the
Company, by agreement in form and substance satisfactory to Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place.
11. Confidential Information and Noncompetition. Executive agrees and
acknowledges that Executive's talents, skills, and experience are unique, and
that Company has invested considerable efforts and money in developing and
compiling customer lists, supplier lists, and trade and market information, in
developing business techniques and practices, and in maintaining valuable market
relationships; that such items and all other information that relates to the
business of the Company, the business of any customer or supplier of the
Company, or the business of any person, firm, or corporation that consults with
or is affiliated with the Company, constitute for purposes hereof the
"Confidential Information" of the Company; and that the Confidential Information
is valuable property of the company and is vital to the operation and
continuation of the Company's business. Confidential Information shall not
include information so generally known as to be part of the public domain.
Executive acknowledges that the Company has and will disclose Confidential
Information to Executive and afford him access to Confidential Information in
connection with his employment with the Company. Executive agrees that he shall
use such Confidential Information solely for the benefit of the Company.
Executive further acknowledges that Executive has received valuable
consideration commensurate with those restrictions. Accordingly, Executive
agrees and acknowledges that:
(a) Except as required in the performance of his duties as an
employee of the Company, Executive shall not at any time, either directly
or indirectly, use, divulge,
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disclose, or communicate to any person, firm, or corporation in any manner
whatsoever any Confidential Information.
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(b) Executive shall be given access to the Company's Confidential
Information solely for purposes relating to his employment by the Company.
Executive shall have no rights in such Confidential Information or any
letters patent, copyrights, or other proprietary rights relating thereto,
and Executive hereby assigns to the Company any supplemental or additional
information relating to the Confidential Information acquired by
Executive, whether solely or in collaboration with others, that relates in
any manner to either the subject of Executive's work for the Company or
any business of the Company during the Contract Period ("Improvements").
Executive will disclose promptly in writing to the Company all such
Improvements or information supplemental or related thereto, and such
Improvements shall be treated for all purposes as Confidential Information
hereunder.
(c) During the Contract Period and thereafter, at the request of the
Company and without expense to Executive, Executive shall cooperate in the
procurement of any patent, copyright, trademark, or trade name protection
in the Company's name that may be necessary or desirable to vest, or to
perfect the record of, title to the Confidential Information in the
Company. Executive agrees to execute all documents and do all things
necessary or desirable in any controversy or otherwise to aid Company in
obtaining and enforcing proper protection of its Confidential Information.
(d) During the period commencing on the Effective Date and ending on
the second anniversary of the first date on which Executive is neither
employed by the Company nor a member of the Board (the "Restriction
Period"), Executive shall not, directly or indirectly, own, operate, have
any other than a minor financial interest in, be employed by, or in any
other manner take part in or consult with any business that is the same
as, similar to, or competitive with the business of the Company as such
business is conducted during the Contract Period. During the Restriction
Period, Executive shall not solicit (other than for the benefit of the
Company during the Contract Period) any sale or purchase to or from any
person who is or was a customer or supplier of the Company during the term
of Executive's employment by the Company, either as an employee, agent,
consultant, licensee, independent contractor; owner, or otherwise,
(e) At any time upon request of the Company and upon termination of
his employment by the Company, Executive shall deliver to the Company, and
shall not retain for his own or another's Use, any and all lists,
information, notes, memoranda, documents, devices, and any other material,
and all copies thereof, relating to Executive's work or the products or
business of the company of which Executive had knowledge.
(f) if any provision of this Section 11 is determined by any court
of competent jurisdiction to be unenforceable by reason of its extending
for too great a period of time or over too great a geographical area, it
shall be interpreted to extend only over the maximum period of time for
which it may be enforceable, or over the maximum geographical area to
which it may be enforceable, or both; and such partial unenforceability
shall not affect any other provision of this Agreement. Executive
acknowledges that, in light of the proprietary interest of the Company in
the Confidential Information, the restrictions set forth herein are
reasonable and that the remedies at law for the breach of any provision of
this Section 11 are inadequate. Accordingly, in the event of any breach,
or reasonable belief as to the existence or imminence of a breach, of
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the provisions hereof, the Company shall be entitled to injunctive relief
to enjoin the breach (in addition to any other legal and equitable
remedies that the Company may have, including an equitable accounting of
gain to Executive resulting from the breach), together with all costs and
expenses, including reasonable attorney's fees, related to the enforcement
by the Company of its rights hereunder.
12. Anti-dilution. If, at any time after the Effective Date and before the
date on which any grant of Performance Shares is to be made to Executive
pursuant to Section 3(c), above, there occurs any stock dividend, stock split,
or share combination of the shares of Common Stock of the Company or any
reclassification, recapitalization, merger, consolidation, other form of
business combination, liquidation, or dissolution involving the Company or any
spin-off or other distribution to shareholders of the Company (other than normal
cash dividends), the number of shares of the Company's Common Stock to be
granted as Performance Shares shall be appropriately adjusted to the extent
necessary in such manner that the benefit to Executive of the grant of those
Performance Shares is maintained substantially as before the occurrence of the
event.
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 one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. Legal Fees and Expenses. Except for fees and expenses related to the
Company's enforcement of the provisions of Section 11, the Company shall pay all
legal fees and expenses that Executive may incur as a result of the Company's
contesting the validity, enforceability, or Executive's interpretation of, or
determinations under, this Agreement.
16. Notice. All notices under this Agreement shall be in writing and shall
be deemed effective when delivered in person, or three days after deposit
thereof in the official U.S. mails, postage prepaid, for delivery as registered
or certified mail, addressed as follows:
If to the Company:
CUNO Incorporated
Attention: Corporate Secretary
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
If to the Executive:
Xxxxxxxxx X. Xxxxx, Xx.
000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
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In lieu of personal notice or notice by deposit in the official U.S. mails, a
party may give notice by confirmed telegram or fax. Either party may change the
address to which notice to that party may be mailed by notifying the other party
of the change in the manner contemplated in this section.
17. Effect on Termination and Change of Control Agreement. Executive and
the Company shall enter into a Termination and Change of Control Agreement,
pursuant to which Executive may become entitled to severance compensation if
Executive's employment is terminated under certain circumstances following a
Change in Control, as defined in that agreement (the "Change in Control
Agreement'). Executive and the Company intend that if a Change in Control, as
defined in the Change in Control Agreement, occurs and thereafter Executive
receives any payments pursuant to Section 6 of this Agreement (any "Section 6
Payments"), the entire amount of such Section 6 Payments will be treated as
damages paid to the Executive by the Company as a result of the Company's breach
of an employment contract with the Executive with the result that the payments
otherwise due under the Change in Control Agreement will be reduced by the full
amount of the Section 6 Payments. The provisions of this Section 17 shall
prevail over any inconsistent language in the Change in Control Agreement and,
to the extent necessary to be effective shall be deemed to be an amendment to
the Change in Control Agreement.
18. Entire Agreement. This Agreement expresses the entire agreement of the
parties with respect to the subject matter hereof, and all promises,
representations, understandings, arrangements, and prior agreements are merged
herein and superseded hereby. No person, other than pursuant to a resolution of
the Board, shall have any authority on behalf of the Company to agree to modify
or change this Agreement or anything in reference thereto, and any such
modification or change must be in writing and signed by both parties.
19. Governing Law. This Agreement has been entered into in, and is
intended to be performed primarily within, the State of Connecticut and shall be
construed, interpreted, and governed in accordance with the laws of the State of
Connecticut.
IN WITNESS WHEREOF, the parties have executed this Agreement, effective
nunc pro tunc January 5, 1999, as indicated below
EXECUTIVE CUNO INCORPORATED
/s/ Xxxxxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxx
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XXXXXXXXX X. XXXXX XXXX X. XXXXXX
President & Chief Executive Officer
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