EXHIBIT (10.12)
RETIREMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as
of this 28th day of January, 2002, by and between BADGER METER, INC., a
corporation organized and existing under the laws of the State of Wisconsin
("Company"), and XXXXXX X. XXXXX, an individual resident of the State of
Wisconsin ("Xxxxx"):
WITNESSETH:
WHEREAS, Xxxxx has been employed by the Company and currently
holds the position of Executive Vice President; and
WHEREAS, Xxxxx desires to continue in the employ of the
Company, but to retire from employment with the Company on September 30, 2002
(the "Retirement Date"); and
WHEREAS, Xxxxx and the Company are currently parties to a
certain Key Executive Employment and Severance Agreement, dated as of August 16,
1999 (the "KEEP"); and
WHEREAS, Xxxxx is willing to continue as an Executive Vice
President of the Company until the Retirement Date, and to agree not to compete
with the Company for the period set forth below.
NOW, THEREFORE, in consideration for the mutual promises
contained herein, the parties, intending to be legally bound, agree as follows:
1. Employment Until Retirement Date; Duties. During the period from the date of
this Agreement until the Retirement Date (the "Employment Period"), Xxxxx shall
be employed by the Company as an Executive Vice President and shall perform such
duties as the Company's Board of Directors ("Board") and/or President may
reasonably assign to him from time to time. Without limiting the generality of
the foregoing, Xxxxx shall generally assist in the smooth and orderly transition
of: (i) his current duties and responsibilities to the appropriate individuals
within the Company and (ii) Company customer and vendor relationships to the
appropriate individuals within the Company. Xxxxx shall report directly to the
Company's President. Xxxxx will continue to be a member of the Company's
Executive Committee.
2. Compensation and Benefits During the Employment Period. During the Employment
Period, Xxxxx shall be entitled to receive the following compensation and other
benefits:
(a) Xxxxx'x base salary shall be at an annual rate identical to his
current base salary of $285,000.
(b) Xxxxx shall be entitled to participate in the Company's Long-Term
Management Incentive Plan ("LTIP") in the same manner as other Company
officers. Xxxxx shall be entitled to participate in the Company's
short-term incentive plan (maximum potential of 60% of annual base
salary) in the same manner as other Company officers, except that any
amount Xxxxx may be entitled to receive under the short-term incentive
plan shall be equitably prorated based upon that portion of calendar
year 2002 that Xxxxx is actually employed by the Company.
(c) Xxxxx shall continue to be eligible to participate in any Company
health insurance plan that is made available by the Company to its
officers generally.
(d) Xxxxx shall continue to be eligible to participate in any Company
pension, retirement or similar plan made available by the Company to
its officers generally; provided, however, that Xxxxx shall not be
entitled to receive any additional stock options under any Company
stock option plan.
(e) Xxxxx shall continue to receive Company-paid term life insurance
under the Company's current group term life insurance plan in a face
amount equal to $427,500, which is 150% of Xxxxx'x annual base salary.
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(f) Xxxxx shall continue to be eligible for long-term disability
insurance coverage, pursuant to which the benefits, paid on a monthly
basis, would be in an amount equal to sixty percent (60%) of Xxxxx'x
monthly base salary, provided that Xxxxx continues to pay the premiums
associated with such long-term disability insurance coverage.
(g) Xxxxx shall be entitled to receive such number of weeks of vacation
(equitably adjusted for the period of employment) consistent with the
number of weeks of vacation that Xxxxx was entitled to during the
calendar year 2001; provided, however, that Xxxxx shall use all of his
earned vacation prior to the Retirement Date.
(h) Xxxxx shall be entitled to continue to use and occupy his current
office.
(i) Xxxxx'x KEEP shall remain in full force and effect, although the
KEEP shall automatically terminate in accordance with its terms and
without the need for any action on the part of any party on October 1,
2002, since Xxxxx will on that date no longer be an employee of the
Company. In the event that a Change of Control (as that term is defined
in the KEEP) occurs on or before September 30, 2002, the terms and
conditions of such KEEP shall govern the parties hereto, and shall
supercede any conflicting or contradictory provision contained herein.
(j) Xxxxx shall be entitled to reimbursement in accordance with the
then prevailing Company policy for any reasonable and necessary
business expenses incurred by him in connection with the performance of
his duties hereunder upon submission of appropriate documentation.
(k) Xxxxx will continue to participate in the Company's Officers'
Voting Trust on terms consistent with those made available to other
officers of the Company.
3. Benefits After Retirement Date. After the Retirement Date, Xxxxx shall be
entitled to receive the following benefits from the Company:
(a) Xxxxx will be eligible to participate in the Company's retiree
health plan (including prescription drugs) until he is eligible for
Medicare coverage (currently at age 65) and thereafter in the Company's
health plan for retirees on Medicare and over age 65, subject to the
same terms and conditions applicable to other participants generally.
Xxxxx'x spouse will similarly be eligible to participate in such
Company health plan until she is eligible for Medicare coverage and
thereafter as the current spouse (including surviving spouse) of an
eligible retiree over age 65, subject to the same terms and conditions
applicable to other participants generally. To the extent consistent
with law, the Company, upon reasonable request or as required, will
confirm the health plan coverage available to Xxxxx and/or his spouse
to any third party, including without limitation, any health care
provider or third party administrator. If other group health coverage
is available to Xxxxx or his spouse, then Xxxxx and/or his spouse, as
the case may be , will not be eligible to participate in the Company's
retiree health plan. As a retiree, Xxxxx and his current spouse will
receive credit for eighteen (18) years of service, which will partially
offset the premiums required to be paid by retirees under such retiree
health plan.
(b) The Company will pay to Xxxxx (or his beneficiary) a non-qualified
supplemental retirement benefit in an amount which is designed to place
Xxxxx in the same position that he would be in if he had an additional
five (5) years of credited service under the Company's defined benefit
pension plan ("Pension Plan"), at the same compensation as that earned
in 2001.
(c) In addition to the non-qualified supplemental retirement benefit
provided under (b) above, the Company shall also pay Xxxxx (or his
beneficiary) an additional non-qualified supplemental retirement
benefit of $1,187.50 per month for the 10-year period commencing
October 1, 2002, and ending on September 30, 2012.
(d) On and after the Retirement Date, Xxxxx will no longer be entitled
to participate in the Company's group term life insurance program, but
may, subject to the terms and conditions of the then existing group
term life insurance policy, convert his pre-Retirement Date life
insurance coverage to individual coverage.
(e) Xxxxx shall be entitled to exercise his rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA") to continue dental insurance coverage after the Retirement
Date upon payment of the required premiums and compliance with the
provisions of COBRA.
(f) Xxxxx shall have the same right that has been made available to
other retired Company officers under the Company's Officers' Voting
Trust to pay off any outstanding loans from the Company as of the
Retirement Date over a three (3) year period.
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(g) Xxxxx shall continue to enjoy all of his vested rights under one or
more Company Plans as provided in Paragraph 5 hereof.
4. Material Breach By Xxxxx; Consequences. In the event Xxxxx breaches this
Agreement in a material way and such material breach continues, after written
notice from the Company to Xxxxx and a reasonable opportunity for him to cure,
then the Company shall have the right to terminate this Agreement upon written
notice to Xxxxx and Xxxxx shall not be entitled to any compensation under this
Agreement from and after such date of termination. Under all other
circumstances, the compensation and fringe benefits payable to Xxxxx hereunder
shall be paid, except that the compensation and fringe benefits payable to Xxxxx
pursuant to Paragraph 2 above shall terminate upon his death.
5. Other Benefits. Nothing in this Agreement shall affect the rights of Xxxxx or
the Company under any profit-sharing plan, pension plan, insurance plan or other
benefit plan of the Company (individually a "Plan" and collectively "Plans") in
which Xxxxx participates or receives benefits, or under the KEEP; provided,
however, that Xxxxx'x participation in the Company's employee deferred
compensation program, in the LTIP or in any other Plan as an employee shall
cease as of the Retirement Date. On the Retirement Date, all outstanding stock
options granted by the Company to Xxxxx under one or more Company stock option
plans and held by Xxxxx on that date shall fully vest. Xxxxx shall be entitled
to exercise all outstanding stock options in effect as of the Retirement Date
and granted to him under one or more Company stock option plans at any time, or
from time to time, through September 30, 2004; provided, however, that Xxxxx'x
exercise of any such stock option is subject in all cases to the express terms
of any governing Company stock option plan and applicable stock option
agreement.
6. No Assignment of Benefits. Unless ordered by a court of competent
jurisdiction, Xxxxx shall have no right to assign or transfer the right to
receive any benefits hereunder, and in the event of any attempted assignment or
transfer, whether voluntary or involuntary, other than pursuant to an order of a
court of competent jurisdiction, the Company shall have no further liability
hereunder.
7. Taxes. The Company shall deduct from all payments made hereunder any
applicable federal, state, or local taxes required by law to be withheld from
such payments.
8. Covenant Not To Compete.
(a) Xxxxx covenants and agrees that during the Employment Period and
for a period of two (2) years thereafter, neither he nor any of his
affiliates (including, but not limited to, any corporation (other than
the Company), partnership, limited liability company, firm or other
entity in which he or they own in the aggregate two percent (2%) or
more of any class of equity securities) will:
(i) Directly or indirectly engage in, continue or carry on the
business of the design, manufacture and/or sale of flow
measurement and control products, including, but not limited
to, water meters and associated systems, wastewater meters,
industrial meters, small valves and instrumentation related to
any of the foregoing meters, or any business substantially
similar thereto, including owning or controlling any financial
interest in any person, corporation, partnership, limited
liability company, firm or other business entity which
competes with or is engaged in or carries on any aspect of
such business or any business substantially similar thereto.
(ii) Consult with, advise or assist in any way, whether or not
for consideration, any person, corporation, partnership,
limited liability company, firm or other business entity which
is now, becomes or may become a competitor of the Company in
any material respect, including, but not limited to:
advertising or otherwise endorsing the products of any such
competitor; soliciting customers or otherwise serving as an
intermediary for any such competitor; loaning money or
rendering any other form of financial assistance to or
engaging in any business transaction with any such competitor
on other than on an arms' length basis.
(iii) Sell, assign or otherwise transfer, whether or not for
consideration, any customer lists, product specifications or
designs, internal memoranda, bills, receipts or any other form
of business records or documents or other materials in any
form (tangible or intangible) concerning the Company's
business.
(iv) Disclose or cause to be disclosed to any person,
corporation, partnership, limited liability company, firm or
other business entity, any of the trade secrets, techniques,
formulae or processes relating to the Company's business or
any other information about the confidential affairs of such
business (including information about its customers and
employees) the secrecy of which is of value to the Company.
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(v) Engage in any practice the purpose of which is to evade
the provisions of this covenant not to compete or commit any
act which is detrimental to the successful continuation of the
Company's business.
(b) The parties agree that the geographic scope of this covenant not to
compete shall extend worldwide.
(c) The parties agree that the Company may sell, assign or otherwise
transfer this covenant not to compete, in whole or in part, to any
person, corporation, limited liability company, firm or other business
entity that purchases all or any part of the Company's business.
(d) In the event of any breach of this covenant not to compete, the
parties recognize that the remedies at law will be inadequate and that
the Company shall be entitled to equitable remedies (including an
injunction) and other such relief as a court of competent jurisdiction
may deem appropriate.
(e) In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope, prohibited activities or otherwise, the
parties agree that this covenant not to compete shall be reduced or
curtailed to the extent necessary to render it enforceable.
9. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to Xxxxx:
Xxxxxx X. Xxxxx
000 X. Xxxxxxx Xxxxx
Xxxxxx, XX 00000
If to the Company:
Badger Meter, Inc.
Attention: President
0000 Xxxx Xxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
10. Entire Agreement. Except for the KEEP, this Agreement supersedes all prior
agreements or understandings between the parties with respect to the services to
be provided by Xxxxx to the Company and represents the entire agreement among
the parties hereto with respect to such matter, and there are no agreements,
representations or warranties with respect to the matters provided for herein
other than those set forth herein.
11. Headings. The headings set forth in this Agreement are provided for
convenience only and shall not be considered a part of, or employed in the
construction of, this Agreement.
12. Successors. This Agreement shall be binding upon and inure to the benefit of
any successors and assigns of the Company. The term "successor" as used herein
shall include any person, firm, corporation, or other business entity which at
any time, by merger, consolidation, purchase or otherwise, acquires all or
substantially all of the Company's capital stock, assets or business.
13. Amendment. This Agreement may not be released, discharged, abandoned,
changed or amended in any manner except by a written instrument signed by the
parties hereto.
14. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the internal law of the State of Wisconsin.
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15. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of such together will
constitute one and the same instrument.
16. Waiver. No waiver by any party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
IN WITNESS WHEREOF, this Agreement has been executed effective
as of the day and year first above written.
BADGER METER, INC.
("Company")
By: (SEAL)
------------------------------------- -------------------------------
Xxxxx X. Xxxxxx Xxxxxx X. Xxxxx ("Xxxxx")
Chairman and Chief Executive Officer
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