EXHIBIT 2.2
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EMPLOYMENT, NON-COMPETE AND
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, made this 25th day of September, 1997 but effective as
of July 1, 1997 (the "Effective Date") between NEW XXXXX CO., INC., a Delaware
corporation ("Company") and XXXXXX X. XXXXXXX, an individual residing in
Pennsylvania ("Xxxxxxx").
BACKGROUND
Pursuant to an Asset Purchase Agreement dated September 9, 1997 (the
"Acquisition Agreement"), Company purchased certain of the assets of Xxxxx Co.,
a Pennsylvania corporation ("Xxxxx"). A condition to the acquisition of such
assets was the entering into of this Employment, Non-Compete and Confidentiality
Agreement (this "Agreement"). This Agreement and the Acquisition Agreement are
part of a single integrated transaction arising out of the Company's purchase of
the business related to the assets acquired from Xxxxx (the "Business"). Xxxxxxx
is a shareholder of, and the President of, Xxxxx, and has executed the
Acquisition Agreement. The parties desire to complement the transfer of control
of the Business to the Company, and to provide for a smooth transaction, by
providing that Xxxxxxx shall become an employee of the Company, and by providing
a valid and enforceable covenant by Xxxxxxx not to compete as provided for
herein. The Company would not enter into the transactions contemplated by the
Acquisition Agreement but for Xxxxxxx'x agreement to become an employee of the
Company, to grant the covenant not to compete and to be bound by the
confidentiality covenants, all as contained herein, since Xxxxxxx possesses
substantial expertise in the operation, management, marketing, maintenance of
customer relationships, purchasing and sales aspects of the Business and the
goodwill acquired by the Company pursuant to the Acquisition Agreement. The
parties to the Acquisition Agreement have reached agreement on the purchase
price for such assets and the amounts payable pursuant to this Agreement after
bargaining at arms' length and each party has retained attorneys, accountants
and other consultants of its choice to advise each such party in connection with
all aspects of the transactions contemplated by the Acquisition Agreement and
this Agreement, including the covenant not to compete contained herein.
AGREEMENTS
NOW, THEREFORE, the Company and Xxxxxxx, in consideration of the
promises and undertakings set forth below, and intending to be legally bound,
agree as follows:
1. Employment, Term. The Company hereby employs Xxxxxxx,
and Xxxxxxx hereby accepts the employment with the
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Company, upon the terms and conditions hereinafter set forth. The initial term
of Xxxxxxx'x employment shall be for three years, beginning on the Effective
Date, and ending on June 30, 2000.
2. Duties. The Company hereby employs Xxxxxxx as its
President. Xxxxxxx shall, be the chief operating officer of the Company and
manage the day-to-day operations of the Company (subject to lawful orders and
policies adopted by the Board of Directors of the Company (the "Board")), shall
report to the Chairman of the Board of Directors of the Company (currently
Xxxxxx X. Xxxx) and shall engage in marketing, supplier and customer development
and related activities to assist the Company in realizing growth in profits. The
Board will, from time to time, allocate managerial responsibilities among
Xxxxxxx and the other officers of the Company, in its reasonable discretion
which reasonable allocations Xxxxxxx shall accept. So long as Xxxxxxx'x
employment under this Agreement shall continue, Xxxxxxx (i) shall be responsible
for the operations, and the profit and loss, of the Company, (ii) shall devote
his full business time and energies to the business of the Company, and agrees
to comply with the Company's reasonable and customary policies, standards and
regulations as determined by the Board, (iii) shall not serve as an employee,
executive, director, agent, principal, trustee, consultant, partner, advisor or
supervisor of any other corporation, company, partnership firm, association,
trust or proprietorship without the prior written consent of the Company, except
that Xxxxxxx may continue to render services to or be involved in the affairs
of, (i) Xxxxx Co., (ii) JDA, Inc., the Landlord at the premises leased by the
Company on Mt. Royal Boulevard in Pittsburgh, Pennsylvania, and (iii) Chemical
Separation Technologies, Inc. (where Xxxxxxx serves on the board of directors),
all to the extent that such activities do not interfere with the discharge of
his duties at the Company and do not cause Xxxxxxx to violate the provisions of
Sections 9 and 10 hereof, and (iv) shall devote his best efforts as may be
necessary to perform his duties and to advance the interests of the Company.
3. Compensation. As full and complete compensation for any
and all services which Xxxxxxx may render to the Company and its business, the
Company shall pay to Xxxxxxx, during the term of his employment hereunder, (a) a
$500,000 signing bonus (the "Signing Bonus") upon the execution of this
Agreement and closing under the Acquisition Agreement and (b) a base salary at
the rate of $200,000 per year payable semimonthly provided, however, that if
Xxxxxxx'x employment is terminated for the reasons set forth in either Section
8(a)(i) or 8(a)(ii), the Company shall continue to pay to Xxxxxxx, or his
estate, the base salary described herein. At the option of the Company, and if
requested by Xxxxxxx, the amounts payable to Xxxxxxx under this Section, and
under Sections 6 and 7, may be paid by an affiliate
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of the Company, and, if so paid, all amounts so paid shall be allocated, for
bookkeeping purposes (and for purposes of Section 6 hereof) to the Company.
4. Pension and Health Benefits. Xxxxxxx shall further
receive all rights and benefits under the Company's 401K plan (with Company
contributions matching $.50 for each $1.00 of Xxxxxxx'x contributions up to 6%
of Xxxxxxx'x base salary, subject to the limitations on Xxxxxxx'x contributions
as provided by law) and the Company's health insurance plan (for which the
Company shall pay 100% of the premium). Company shall also pay for an annual
physical for Xxxxxxx and his spouse during each year of Xxxxxxx'x employment
hereunder.
5. Business Expenses; Vacation.
(a) Xxxxxxx shall be authorized to incur reasonable and
necessary expenses for promoting the business of the Company, including expenses
for travel, entertainment, dues and subscriptions, and other similar items which
are related to the business of the Company or which are incident to the position
and responsibility of Xxxxxxx and necessary in order for him to be fully and
currently informed as to new developments in the Company's business, all subject
to the prior approval of the Board.
(b) Unless otherwise provided herein, the Company will
reimburse Xxxxxxx for such expenses upon presentation by Xxxxxxx of an itemized
account of such expenditures as may be prescribed by the Board. It is intended
by the Company and Xxxxxxx that all such expenses be ordinary and necessary
expenses incurred in connection with the business activities of the Company and
Xxxxxxx, and it is agreed that in the event that any reimbursed expenses are
disallowed by the Internal Revenue Service as deductions to the Company, Xxxxxxx
will, if requested by the Board, reimburse the Company for such disallowed
expenses within sixty (60) days after final determination of said disallowance;
or, at the discretion of the Board, proportionate amounts may be withheld from
Xxxxxxx'x future compensation until the amount owed to the Company has been
repaid.
(c) Xxxxxxx shall be entitled to take up to four (4)
weeks vacation per calendar year (pro-rated for the first year), to be scheduled
so as to minimize disruptions to the business of the Company. Any vacation time
not used shall lapse at the end of the first quarter following the calendar year
in which such vacation time accrued.
(d) Xxxxxxx will receive an automobile allowance of
$600, monthly, and Company shall reimburse Xxxxxxx for all reasonable costs
incurred by Xxxxxxx for the use, operation, maintenance and insurance of such
vehicle.
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6. Annual Incentive Program.
(a) In addition to the amounts set forth in Sections 3,
4 and 5 hereof, the Company will pay Xxxxxxx an incentive bonus (the "Incentive
Bonus"), equal to fifty (50%) percent of the amount by which the Company's
"Adjusted EBITDA" (as hereinafter defined) exceeds the "Target EBITDA" (as
hereinafter defined) in each consecutive twelve (12) month period commencing on
the Effective Date (each such twelve month period being sometimes referred
herein as a "Bonus Year"). The first such Bonus Year (July 1, 1997 through June
30, 1998) is hereinafter referred to as "Bonus Year One"; the second such Bonus
Year (July 1, 1998 through June 30, 1999) is hereinafter referred to as "Bonus
Year Two"; and the third such Bonus Year (July 1, 1999 through June 30, 2000) is
hereinafter referred to as "Bonus Year Three."
"Adjusted EBITDA" shall mean, for each Bonus Year, the
sum of the Company's earnings before interest, taxes, depreciation and
amortization as derived from the Company's financial statements, prepared by the
Company's accountants in accordance with Generally Accepted Accounting
Principles, increased by the following amounts to the extent incurred by the
Company and expensed during such Bonus Year (i) all transaction costs with
respect to the acquisition of the Business, (ii) the amount by which Xxxxxxx'x
base salary in such Bonus Year exceeds $100,000, (iii) all non-compete payments
made to Xxxxxxx during such Bonus Year pursuant to Section 7 of this Agreement
and (iv) the Signing Bonus. In addition, for purposes of determining Adjusted
EBITDA, the Company's earnings shall be adjusted, if necessary, to record all
product purchases from, or product sales to, affiliates of the Company at prices
which would have been charged or paid in arms length transactions with unrelated
third parties.
"Target EBITDA" for each Bonus Year is calculated as
follows: The Target EBITDA for Bonus Year One is $550,000. The Target EBITDA for
Bonus Year Two is $550,000 plus the amount, if any, by which the Adjusted EBITDA
for Bonus Year One was less than $550,000. The Target EBITDA for Bonus Year
Three is $550,000 plus the amount, if any, by which the Adjusted EBITDA for
Bonus Year Two was less than the Target EBITDA for Bonus Year Two.
An example of the calculation of the Incentive Bonus is
attached hereto as Exhibit "6(a)."
(b) The amount of the Incentive Bonus for each Bonus
Year shall be calculated and paid within forty-five (45) days following the end
of such Bonus Year. If Xxxxxxx'x employment shall terminate, for any reason,
prior to the end of any Bonus Year, the Incentive Bonus will be prorated for
such
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partial Bonus Year by multiplying the Incentive Bonus otherwise calculated
pursuant to Section 6(a) by the fraction whose numerator is the number of weeks
of such Bonus Year during which Xxxxxxx was employed and whose denominator is
52.
7. Non-Compete Payment; Post Employment Consulting.
(a) As full and complete compensation for Xxxxxxx'x
agreement not to compete or solicit as set forth in Section 10 of this Agreement
and his continued compliance with such section, the Company shall pay to Xxxxxxx
a non-compete payment of $100,000 upon the execution of this Agreement and
closing under the Acquisition Agreement and $200,000 on each of the first,
second, third and fourth anniversaries of the Effective Date, for total
payments, contingent upon Xxxxxxx'x continued compliance with Section 10 of this
Agreement, of $900,000. The non-compete payments as provided in this Section
shall continue notwithstanding a termination of Xxxxxxx'x employment by the
Company upon the occurrence of an event described in Section 8(a)(i), (ii) or
(iii) below, except, with respect to Section 8(a)(iii), if the "cause" was
Xxxxxxx'x breach of Section 10 of this Agreement, in which event all non-compete
payments shall cease.
(b) In addition to the non-compete payments described
in Section 7(a) hereof, and the employment compensation described in Section 3
hereof, Company shall pay to Xxxxxxx, on or before January 31, 2002, a
consulting payment in the amount of $450,000 in consideration of Xxxxxxx'x
providing certain consulting services, as requested, to CECO Filters, Inc., an
affiliate of the Company. Xxxxxxx shall provide these consulting services after
the termination of his employment hereunder, and through the fifth anniversary
of the Effective Date. The amount described in this Section shall be paid,
notwithstanding the fact that Xxxxxxx'x employment by the Company may have
terminated early or that any event described in Section 8(a)(i), (ii) or (iii)
shall have occurred; provided, however, that if Xxxxxxx'x employment hereunder
was terminated as a result of Xxxxxxx'x breach of Section 10 of this Agreement,
the consulting payment described herein shall not be paid.
8. Early Termination.
(a) The Company may terminate the employment of Xxxxxxx
prior to the end of the initial term, upon the occurrence of any one of the
following:
(i) the death of Xxxxxxx;
(ii) upon thirty (30) days' written notice, if, by
reason of physical or mental disability (as determined by a physician selected
by the Company), Xxxxxxx becomes unable to
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render or to perform those duties and responsibilities which he is to discharge
hereunder; or
(iii) for "cause" upon ten (10) days written notice
to Xxxxxxx. As used herein, "cause" shall include, without limitation, Xxxxxxx'x
gross or willful negligence, dishonesty, alcoholism, drug addiction, violation
of any law or regulation relating, in any way, to the Business, material breach
of any of the terms or provisions of this Agreement. Subject to the provisions
of Sections 3, 6 and 7, in the event of termination for cause, the Company shall
have no responsibility, obligation or liability whatsoever to make any severance
or other payment to Xxxxxxx under this Agreement for or incident to such
termination, and the termination of payments under this Agreement shall not be
deemed to constitute a waiver, and shall not prejudice the Company with respect
to, any action for damages and/or injunctive relief which the Company may elect
to pursue.
9. Confidential Information. Xxxxxxx recognizes and
acknowledges that:
(a) he has developed, acquired, been exposed to or had
access to, and will acquire, be exposed to or have access to, during the term
hereof, information concerning the business plans and strategies, marketing
research, sales techniques, methods, identity and requirements of customers and
prospective customers, identity and requirements of sources of supply, computer
programs, system documentation, special hardware, software development, manuals,
equipment, compositions, ideas, improvements, inventions or any other
confidential or proprietary information belonging to or relating to the Company
or its affiliates, including CECO Filters, Inc. (the "CECO Group") which is not
in the public domain (collectively the "Confidential Information");
(b) the Confidential Information is and will be the
property of the Company and the CECO Group;
(c) the unauthorized use, misappropriation or
disclosure of the Confidential Information would constitute a breach of trust
and could cause irreparable injury to the Company or the CECO Group; and
(d) it is essential to the protection of the Company's
goodwill and to the maintenance of the Company's competitive position that the
Confidential Information be kept secret and that Xxxxxxx not disclose the
Confidential Information to others or use the Confidential Information to
Xxxxxxx'x own advantage or the advantage of others.
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Xxxxxxx agrees to, and hereby shall, hold and safeguard the
Confidential Information in trust for each member of the CECO Group, and each of
their successors and assigns and shall not, without the prior written consent of
the Chairman of the Board of Directors of the Company, misappropriate, use in
any manner, disclose or make available to anyone for use outside the CECO Group
at any time, either during or after the term hereof, any of the Confidential
Information, whether or not developed by the Company or Xxxxxxx.
10. Restrictions on Competition: Non-Solicitation of
Employees.
(a) Xxxxxxx acknowledges and agrees that:
(i) The Business is currently being conducted
throughout the world and has the potential
to be expanded;
(ii) Xxxxxxx has been advised and informed that
the CECO Group plans to integrate the
Business (and the Business of Xxxxx would
not have been acquired were its business
not susceptible to integration) with other
businesses of the CECO Group;
(iii) The CECO Group is engaged in the business
of providing air quality solutions,
including, but not limited to, the sale,
lease, installation, maintenance,
ownership, operation, and management of
equipment throughout the world;
(iv) It is reasonable and necessary for the
protection of the business and goodwill of
the CECO Group for Xxxxxxx to enter into
the agreement respecting non-competition as
set forth in this Section;
(v) As a result of negotiations between the
parties, it was reasonable for the parties
to fix the duration of the non-competition
provisions to the period set forth herein;
(vi) The CECO Group would suffer irreparable
injury if Xxxxxxx breaches the
non-competition agreement set forth in this
Section.
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(b) Based on the foregoing, for a period of forty-eight
(48) months from the Effective Date, or twelve (12) months from the termination
date hereof, whichever is later, Xxxxxxx shall not, without the prior written
consent of the Chairman of the Board of Directors of the Board of the Company,
directly or indirectly, engage in any business, whether for profit or otherwise,
which competes with the Business as conducted by Xxxxx within the last two
years, or with the business of the Company or the CECO Group as hereafter
conducted.
(c) Xxxxxxx shall be deemed to be engaged in such
business directly or indirectly if he is (i) a sole proprietor engaged in such
business, or (ii) an employee, officer, director, trustee, agent, independent
representative, or partner of, a consultant or advisor to or for, a shareholder
in, or a holder of any financial interest in any firm, corporation, association,
partnership, trust or other entity which is engaged in such business. The
foregoing shall not be construed to prohibit the mere ownership by Xxxxxxx of
investments representing less than a 5% interest in the securities of any
company if such securities are included in the National Market Securities list
of the National Association of Securities Dealers, Inc. Automated Quotation
System or listed on any national securities exchange.
(d) The geographic scope of the covenant of Xxxxxxx not
to compete shall be any part of the United States, Canada or Mexico.
(e) During the term of this non-competition provision,
Xxxxxxx agrees that he shall not, nor will he permit any affiliated company or
other business entity to, directly or indirectly, solicit or induce, or attempt
to solicit or induce, any employee of the Company or any other member of the
CECO Group to leave the employ of such companies for any reason whatsoever.
11. Unenforceability; Authorization to Modify Restrictions.
The parties intend for the covenants of Sections 9 and 10 to be enforceable to
the maximum extent permitted by law, and if any reviewing court or arbitration
panel deems any of the provisions to be unenforceable or invalid, the parties
authorize such court or arbitration panel to reform (a) the unenforceable or
invalid provisions and to impose such restrictions as reformed and (b) the
remaining provisions as it deems reasonable.
12. Injunctive Relief. Xxxxxxx agrees that the remedy at law
will be inadequate for any breach or threatened breach by Xxxxxxx of any of the
covenants contained in this Agreement and that any breach or threatened breach
of such covenants would cause such immediate and permanent damages as would be
impossible to ascertain. Therefore, Xxxxxxx agrees and consents that in the
event of any breach or threatened breach of any provisions of such covenants, in
addition to any and all legal, equitable and
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arbitration remedies available to the CECO Group for such breach or threatened
breach, including a recovery of damages, the affected member of the CECO Group
shall be entitled to obtain preliminary or permanent injunctive relief without
the necessity of proving actual damages by reason of such breach or threatened
breach and, to the extent permitted by applicable statutes and rules of
procedure, a temporary restraining order (or similar procedural device) may be
granted immediately upon the commencement of such action.
13. Tolling Period. The non-competition and non-solicitation
obligations contained in Section 10 hereof shall be extended by the length of
time during which Xxxxxxx shall have been in breach of any of the provisions of
such sections.
14. Business and Financial Records. All business and
financial records pertaining to the Company or the Business shall at all times
be the property of the Company. Upon the termination of Xxxxxxx'x employment
with the Company, Xxxxxxx shall promptly deliver to the Company, without
retaining any copies, all Confidential Information, correspondence, business
plans, marketing proposals, manuals, letters, notes, notebooks, reports,
flow-charts, programs, computer storage media and any documents concerning the
business of the Company or its customers, products, services or processes and,
without limiting the foregoing, will promptly deliver to the Company any and all
other documents or materials containing or constituting Confidential
Information, together with all copies or reproductions thereof.
15. Representations, Warranties and Covenants of Xxxxxxx.
(a) Xxxxxxx represents and warrants to the Company
that:
(i) he is not a party to, or bound by, any
agreement or covenant (whether called a covenant not-to-compete, confidentiality
agreement, or otherwise) which prohibits, prevents, restricts or restrains him
from competing with any person or entity, or which does or may prohibit,
prevent, restrict or restrain Xxxxxxx'x entering into, or discharging his
responsibilities in connection with, his employment relationship with the
Company;
(ii) The execution and delivery of this
Agreement, and the entering into the employment arrangement with the Company
does not (A) violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to Xxxxxxx or (B) result in a breach or constitute a cause a
default under any agreement to which Xxxxxxx is a party; and
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(b) Xxxxxxx hereby agrees to indemnify, and hold
harmless, the Company, from and against any and all liabilities, losses, costs,
demands, judgments, claims or expenses (including reasonable attorney's fees)
incurred or sustained by the Company accruing, arising out of, or in any way
relating to a breach by Xxxxxxx of any representation, warranty or covenant of
Xxxxxxx contained in this Agreement.
16. Set-Off of Obligations. Pursuant to the terms of the
Acquisition Agreement, Xxxxxxx has, along with Xxxxx, agreed to indemnify the
Company against, inter alia, any breaches of the representations, warranties and
covenants of Xxxxx or Xxxxxxx contained therein, and has agreed to guaranty, and
become surety for, certain obligations of Xxxxx. Xxxxxxx agrees that if any
indemnification claim has been finally established in accordance with Section
11.4 of the Acquisition Agreement (whether by agreement of the parties, or by
third-party determination and resolution), or if Xxxxx fails to timely pay any
obligation owing to the Company, the Company may collect any such
indemnification claim or guarantied amount which is properly payable under the
Acquisition Agreement by way of a set-off against amounts otherwise owing to
Xxxxxxx hereunder and that such set-off shall in no way diminish Xxxxxxx'x
obligations hereunder.
17. Entire Agreement; Amendment. This Agreement represents
the entire agreement of the parties regarding the subject matter hereof and may
be amended only by a writing signed by each of them.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
19. Notices. All notices, requests, demand and other
communications required or permitted hereunder shall be in writing, or if
transmitted by facsimile, confirmed in writing within twenty-four hours of such
facsimile transmission, and shall be deemed to be duly given (i) when delivered,
if delivered by hand, (ii) when transmitted, if delivered by facsimile, or (iii)
three days after mailing, if mailed certified or registered first class mail,
postage prepaid, properly addressed to the party entitled to receive such notice
at the address stated below:
If to Company: New Xxxxx Co., Inc.
0000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxx
Telecopier No.: (000) 000-0000
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With a copy to: White and Xxxxxxxx
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esquire
Telecopier No.: (000) 000-0000
If to Xxxxxxx: Xx. Xxxxxx X. Xxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000-0000
Telecopier No.: (000) 000-0000
With a copy to: Xxxxxx Xxxxxx Xxxxxx & Xxxxxxx, LLC
00xx Xxxxx, 000 Xxxxx Xxxxxx
USX Tower
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxx, Esquire
Telecopier No.: (000) 000-0000
or to such other address as the parties may from time to time designate in
writing.
20. Captions. The captions of the various sections and
paragraphs of this Agreement are included for convenience of reference only and
shall in no way affect the construction or interpretation of this Agreement.
21. Agreement Binding. The non-disclosure obligations of
Xxxxxxx under this Agreement shall continue after the termination of this
Agreement for any reason, and shall be binding on his executors, administrators,
other legal representatives, successors and any permitted assigns and shall
inure to the benefit of any successors and assigns of the Company and other
members of the CECO Group.
22. Waiver. The failure of either party to insist, in any
one or more instances, upon performance of any of the terms or conditions of
this Agreement shall not be construed as a waiver of future performance of any
such term, covenant or condition, and the obligations of either party with
respect thereto shall continue in full force and effect.
23. Review by Counsel. Xxxxxxx represents and warrants that
counsel for Xxxxxxx has reviewed this Agreement and that Xxxxxxx has been
informed by counsel that the terms and provisions contained herein are
enforceable.
XXXXXXX ACKNOWLEDGES THAT HE HAS READ AND UNDERSTANDS
THE FOREGOING PROVISIONS AND THAT SUCH PROVISIONS ARE
REASONABLE AND ENFORCEABLE.
IN WITNESS WHEREOF, the parties hereto have executed this
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Employment, Non-Compete and Confidentiality Agreement as of the day and year
first above written.
NEW XXXXX CO., INC.
By:/s/ Xxxxxx X. Xxxx
---------------------------------
Xxxxxx X. Xxxx, Chairman
WITNESS:
------------------------------ /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxx
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GUARANTY
CECO Filters, Inc. and CECO Environmental Corporation, intending to be legally
bound, hereby guaranty the obligations of New Xxxxx Co., Inc. under the
foregoing Employment, Non-Compete and Confidentiality Agreement.
CECO FILTERS, INC.
By:/s/ Xxxxxx X. Xxxx
------------------------------
Xxxxxx X. Xxxx, President
CECO ENVIRONMENTAL CORP
By:/s/ Xxxxxxx XxXxxxxx
------------------------------
Name:____________________________
Title:___________________________
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EMPLOYMENT, NON-COMPETE AND CONFIDENTIALITY AGREEMENT
EXHIBIT 6(a)
Calculation of Incentive Bonus
If Adjusted EBITDA for Bonus Years One through Three, respectively, is
$500,000, $550,000 and $700,000, no Incentive Bonus would be paid for any year
except Bonus Year Three for which the amount of Incentive Bonus would be $50,000
calculated as set forth below:
Bonus Year One - Because the Target EBITDA of $550,000 is
greater than the Adjusted EBITDA of $500,000, the amount by which the Target
EBITDA is greater than the Adjusted EBITDA ($50,000) is added to the Target
EBITDA for Bonus Year Two and no Incentive Bonus is paid for Bonus Year One.
Bonus Year Two - Because the Target EBITDA of $600,000
($550,000 plus $50,000) is greater than the Adjusted EBITDA of $550,000, the
amount by which Target EBITDA is greater than the Adjusted EBITDA ($50,000) is
added to the Target EBITDA for Bonus Year Three and no Incentive Bonus is paid
for Bonus Year Two.
Bonus Year Three - Because the Adjusted EBITDA of $700,000 is
$100,000 greater than the Target EBITDA for Bonus Year Three ($550,000 plus
$50,000), a bonus of $50,000 is payable (50% of the amount by which Adjusted
EBITDA for Bonus Year Three exceeds the Target EBITDA for Bonus Year Three).
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