EXHIBIT 10.26
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made effective, nunc pro tunc, of December
1, 2001, by and between CUNO INCORPORATED, a Delaware corporation (the
"Company"), and XXXXXXXXX X. XXXXX, XX. ("Executive").
RECITALS
WHEREAS, Executive is and has been serving as Senior Vice President -
Finance & Administration and Chief Financial Officer of the Company and is an
integral part of its management;
WHEREAS, Executive and the Company are parties to an employment
agreement dated January 5, 1999; and which is set to expire on January 4, 2001;
WHEREAS, Executive and the Company desire to continue their
relationship with each other under the terms of this Agreement;
WHEREAS, the Company wishes to ensure that Executive will not compete
with the Company for a period of two years after the last date on which he is
either an employee of the Company or a member of the Board; and
WHEREAS, Executive is prepared to enter into this employment agreement
with the Company and to give the Company assurances it desires;
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 December 1, 2001
(the "Effective Date") and, subject to prior termination as provided in Section
5 hereof, shall continue through November 30, 2005. 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 Chief Executive Officer that are normally incident to the
offices 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 $277,160 paid at least on a monthly basis.
The annual rate of base salary may be increased at
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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 annual bonus under the provisions of the Company's
Management Incentive Plan and the Executive Management Incentive Plan
or any successor plans but only if and when authorized by the
Committee. The Executive's combined annual incentive compensation
target shall be 60% of his base salary.
(c) Restricted Shares. Provided the Executive remains in
the employ of the Company, the Company shall grant to Executive, a
total of 17,000 restricted shares of the Company's Common Stock, to be
issued in four equal awards of 4,250 shares each - the first award to
be made on December 1, 2001, the second award to be made on December 1,
2002, the third award to be made on December 1, 2003, and the final
award to be made on December 1, 2005. Each award shall be made pursuant
to the Company's 1996 Stock Incentive Plan, as amended, (with 4-year
vesting) or any successor plan.
(d) Options. Provided Executive remains in the employ of the
Company, the Company shall grant to Executive options to purchase
shares of the Company's Common Stock in the form of non-qualified stock
options pursuant to the Company's 1996 Stock Incentive Plan, as
amended, or any successor plan. The option awards shall be as follows:
Date NQSOs
---- -----
December 1, 2001 19,806
December 1, 2002 20,000
December 1, 2003 22,000
December 1, 2004 22,000
The Option Price for options granted pursuant to this paragraph 3(d)
shall be the closing price of the Company's Common Stock on the day of
the grant. If the grant date falls on Saturday, Sunday or any other day
when the Company's Common Stock is not publicly traded, the Option
Price for such grant shall be the closing price of the Company's Common
Stock on the next day when the Stock is publicly traded.
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 or the Group
Replacement Insurance plan, at Executive's option.
(b) The Company's hospitalization and medical plans, as
provided to all Company employees.
(c) The Company's long-term disability plan, as provided
to all Company employees.
(d) Any pension, thrift plans, profit-sharing plans,
stock purchase
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plans, and any and all other similar or comparable benefits.
Executive shall also be provided with a suitable automobile allowance of $1,300
per month under the terms of the Company's executive automobile program,
automobile insurance, gas and maintenance, paid vacation of at least four weeks
per year, and officers' and directors' liability insurance coverage in an amount
reasonably available. Executive shall also be provided tax preparation and
estate planning counsel up to $15,000 per year, not to exceed a total of $37,500
during the term of this Agreement. The Company will also provide the Executive
customary executive reimbursement in an amount not to exceed $65,000 for moving
expenses and normal costs associated with the purchase of a residence and the
sale of his current primary residence.
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
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.
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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
6(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 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.
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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 the grant of restricted shares referred to
in section 3(c) is being made by the Company in order to induce Executive to
agree to the restrictions contained in this Section 11 and 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, disclose. or communicate to any
person, firm, or corporation in any manner whatsoever any Confidential
Information.
(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
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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. Furthermore, during the Restriction Period, Executive shall not,
directly or indirectly, hire or solicit any employee of the Company.
(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 11is 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 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. 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.
13. 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.
14. 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.
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15. 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, XX 00000
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.
16. Effect on Termination and Change of Control Agreement.
(a) Executive and the Company have entered into a
Termination and Change of Control Agreement dated as of January 5, 1999,
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.
(b) Notwithstanding the foregoing, in the event of a
Change of Control resulting in a termination of Executive's employment without
"Cause", to the extent not then issued, Executive immediately shall be issued
the balance of the non-qualified stock options eligible to be issued pursuant to
Paragraph 3(d). In addition, all Restricted Shares issued pursuant to Paragraph
3(c) and all non-qualified stock options issued pursuant to Paragraph 3(d) shall
fully vest and be fully exercisable immediately upon termination of the
Executive's employment without "Cause" following the change of Control.
(c) The provisions of this Section 16 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.
17. 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
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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.
18. 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, as of the date
first written above.
EXECUTIVE CUNO INCORPORATED
/s/ Xxxxxxxxx X. Xxxxx, Xx. By: /s/ Xxxx X. Xxxxxx
---------------------------- ------------------
XXXXXXXXX X. XXXXX, XX XXXX X. XXXXXX
Chairman, President and CEO
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