EXHIBIT 10.20
RETENTION AND CHANGE OF CONTROL AGREEMENT
THIS RETENTION AND CHANGE OF CONTROL AGREEMENT ("Agreement") by and among
AMTROL INC., a Rhode Island corporation ("AMTROL"), AMTROL Holdings Inc.
("Holdings", and together with AMTROL, the "Company"), and Xxxxxx XxXxxxx (the
"Executive"), effective as of the 18th day of January, 2006.
WHEREAS, as of the effective date hereof, Executive is the Controller and
Vice President and has agreed to assume the role of Chief Financial Officer,
Executive Vice President, Treasurer and Secretary for each of AMTROL and
Holdings, with all their respective responsibilities and obligations in the wake
of the unexpected resignation of Xxxxxx X. Xxxxxxxxxx the former CEO, President
and Chairman of each of AMTROL and Holdings;
WHEREAS, all of the Company's corporate debt becomes due and payable in
December 2006 and the Company requires Executive's services in connection with
the refinancing or restructuring of the same;
WHEREAS, the Company is also conducting an auction sale process and the
Company has determined the Executive's involvement with such process and any
ensuing reorganization or restructuring to be critical to preserving and
enhancing the going concern value of the company for the benefit of its
creditors and stockholders;
WHEREAS, the Executive has been in the recent past approached by third
parties to solicit the Executive's services in comparable positions at
comparable or higher compensation levels and Executive has been offered such a
position during 2006;
WHEREAS, the Boards of Directors of AMTROL and Holdings (the "Boards")
have determined that it is in the best interests of the Company, its
shareholders and creditors to assure that the Company will have the continued
service and dedication of the Executive;
WHEREAS, the Boards believe it is imperative to diminish the potential
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control (as defined below), and to
provide the Executive with current employment terms and arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
comparable corporations.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
understandings hereinafter set forth, the parties agree as follows:
1. As consideration for the Executive entering into this Agreement,
continuing in the employ of the Company under the current circumstances, and
assuming the additional responsibilities as Chief Financial Officer, Executive
Vice President, Treasurer and Secretary of each of AMTROL and Holdings and
foregoing other opportunities that may continue to be presented to the Executive
by independent third parties, AMTROL agrees to pay the Executive
Xxx Xxxxxxx Xxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars ($160,000) as a stay bonus
("Retention Bonus") upon his execution of this Agreement.
2. Subject to Section 7 below, in the event either (i) Executive's
employment with the Company is terminated without Cause (as defined below) or
(ii) in the event of a Change of Control (as defined below), AMTROL will pay the
Executive, in a single aggregate lump sum amount, an amount equal to 'Three
Hundred Twenty Thousand United States Dollars ($320,000), subject to
withholdings required by law and other applicable deductions (the aggregate
amount hereinafter referred to as the "Benefit Amount"). Additionally, Executive
will be entitled to accelerated payment of any amounts earned pursuant to the
Management Incentive Compensation Plan as described in the summary to such plan
as of the date of termination of employment or Change of Control, it being the
express intent of the parties that the benefits granted to Executive under this
Agreement be in addition to and not in lieu of any existing rights, compensation
or benefits of the Executive, except as set forth in paragraph 5 below. The
Executive will be entitled to the above payments regardless of whether or not
his employment with the Company continues subsequent to a Change of Control and
such payment will be in addition to any other compensation and benefits to which
the Executive is entitled as a result of his continued employment. It is
understood and agreed that provided the above conditions are met, the Executive
shall only be entitled to collect the Benefit Amount once pursuant to this
Agreement.
For the purpose of this Agreement, a "Change of Control" shall mean:
(i) There shall have occurred a change in control which the Company
would be required to report in response to Item 1 of Form 8-K promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or if such regulation is no longer in effect, any regulations
promulgated by the Securities and Exchange Commission pursuant to the
Exchange Act which are intended to serve similar purposes;
(ii) The acquisition, in one or a series of transactions, by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either
the then outstanding shares of stock of AMTROL and/or Holdings (the
"Outstanding Company Stock") or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Company Voting Securities"); provided,
however, that any acquisition by the Company or its subsidiaries, or any
employee benefit plan (or related trust) of the Company or its
subsidiaries, or any corporation with respect to which, following such
acquisition, more than 50% of, respectively, the then outstanding shares
of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Stock and Company
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Voting Securities immediately prior to such acquisition in substantially
the same proportion as their ownership, immediately prior to such
acquisition, of the Outstanding Company Stock and Company Voting
Securities, as the case may be, shall not constitute a Change of Control;
or
(iii) Individuals who, as of January 18, 2006, constitute the Boards
(the "Incumbent Boards") cease for any reason to constitute at least a
majority of the Boards, provided that any individual becoming a director
subsequent to January 18, 2006 whose election, or nomination for election
by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Boards shall be
considered as though such individual were a member of the Incumbent
Boards; or
(iv) Approval by the stockholders of either Holdings or AMTROL of a
complete liquidation or dissolution of the Company or any division or
subsidiary thereof accounting for in excess of 40% of the average annual
revenues for the three immediately preceding years; or
(v) the consummation of (x) the sale or other disposition of all or
a material portion of the assets of the Company or AMTROL, or (y) a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were
the respective beneficial owners of the Outstanding Company Stock and
Company Voting Securities immediately prior to such reorganization, merger
or consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation, or other enterprise form, resulting from such reorganization,
merger or consolidation; provided, however, "reorganization" for the
purposes of this subsection 1(v)(y) shall not include the commencement of
any voluntary or involuntary bankruptcy or insolvency proceeding by the
Company or AMTROL (an involuntary proceeding will constitute a change of
control hereunder), but will include the issuance of securities or sale of
substantially all of the assets out of any such reorganization or
insolvency estate.
For purposes of this Agreement, "Cause" means:
(i) an act or acts of personal dishonesty taken by the Executive and
intended to result in substantial personal enrichment of the Executive at
the expense of the Company,
(ii) the Executive's continued failure to substantially perform the
Executive's employment duties (other than any such failure resulting from
the Executive's incapacity due to physical or mental illness) which are
demonstrably willful and deliberate on the
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Executive's part and which are not remedied in a reasonable period of time
after receipt of written notice from the Company, or
(iii) the Executive's gross negligence, willful misconduct or
conviction of the Executive of a felony in carrying out his duties as an
executive of the Company, or the conviction of the Executive of a crime
involving moral turpitude.
No act or failure to act on the part of the Executive shall be considered
"willful" unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive's action or omission was
in the best interests of the Company.
3. In the event the Executive's employment is terminated at any time for
any reason, the Company agrees to provide Director's and Officer's liability
insurance for Executive for an appropriate tail period (sufficient to survive
applicable statutes of limitations) and to indemnify Executive for any claims
made against Executive as a result of his employment with the Company; provided,
however, such insurance and indemnification shall not cover any acts of fraud,
dishonesty or material misrepresentation by the Executive.
4. Nothing in this Change of Control Agreement alters the "at-will" nature
of Executive's employment with the Company. This Agreement supersedes the Change
of Control Agreement between the Company and the Executive dated as of October
29, 2004.
5. In addition, the payments provided for in paragraph 2 above are in lieu
of any other severance or salary continuation payments to which the Executive
may have been entitled pursuant to the Executive's offer letter dated March 6,
2001 and/or Company policy or practice.
6. The Executive is not entitled to any payments or Benefit Amount
pursuant to this Agreement in the event Executive resigns his employment with
the Company prior to a Change of Control.
7. In order to secure the obligations of the Company and ensure the
payment of the Benefit Amount (and the Retention Bonus in the event the
Executive is required to disgorge the Retention Bonus in connection with any
bankruptcy or other insolvency of the Company), Amtrol agrees to cause an
irrevocable stand-by letter of credit (the "Letter of Credit") to be issued for
the benefit of the Executive. The Executive shall be entitled to draw against
the Letter of Credit (a) for the Benefit Amount in the event that the Executive
has not received the Benefit Amount within 10 business days after a Change of
Control and (b) for an amount equal to any portion of the Retention Bonus that
the Executive is required to disgorge in connection with any bankruptcy or other
insolvency of the Company.
8. The Executive and the Company agree that the Company would suffer
irreparable harm and incur substantial damage if the Executive were to enter
into Competition (as defined herein) with the Company. Therefore, in order for
the Company to protect its legitimate business interests, the Executive agrees
as follows:
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(a) Without the prior written consent of the Company, the Executive
shall not, during the period of employment with the Company, directly or
indirectly, invest or engage in any business that is Competitive (as defined
herein) with the Business of the Company (as defined herein) or accept
employment or render services to a Competitor (as defined herein) of the Company
as a director, officer, agent, employee or consultant or solicit or attempt to
solicit or accept business that is Competitive with the Business of the Company,
except that the Executive may own up to five percent (5%) of any outstanding
class of securities of any company registered under Section 12 of the Securities
Exchange Act of 1934, as amended.
(b) Without the prior written consent of the Company and upon any
termination of the Executive's employment with the Company and for a period of
twenty-four (24) months thereafter, the Executive shall not, either directly or
indirectly, (i) invest or engage in any business that is Competitive with the
Business of the Company, except that the Executive may own up to five percent
(5%) of any outstanding class of securities of any company registered under
Section 12 of the Securities Exchange Act of 1934, as amended, (ii) accept
employment with or render services to a Competitor of the Company as a director,
officer, agent, employee or consultant unless he is serving in a capacity that
has no relationship to that portion of the Competitor's business that is
Competitive with the Business of the Company.
(c) For purposes of this Agreement, (i) "Business of the Company"
shall mean either: (1) the gas cylinder business of the Company; or (2) the
water treatment business of the Company, both as conducted on the date hereof;
(ii) a business or activity is in "Competition" or "Competitive" with the
Business of the Company if it involves, and a person or entity is a
"Competitor", if that person or entity is engaged in, or about to become engaged
in, the development, design, manufacturing, marketing or selling of disposable
gas cylinders, liquid propane gas cylinders, water treatment products or
plumbing and heating products that resemble, compete, or are designed to
compete, with products of the Company.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to the authorization from their Boards, AMTROL and Holdings have caused these
presents to be executed in their name on their behalf, all as of the day and
year first above written.
AMTROL INC. AMTROL Holdings Inc.
By:/s/ Xxxxx X. Xxxxxxxxxxx By: /s/ Xxxxx Xxxxx
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Xxxxx X. Xxxxxxxxxxx Xxxxx Xxxxx
EXECUTIVE
/s/ Xxxxxx XxXxxxx
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Xxxxxx XxXxxxx
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