EXHIBIT 10.8
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of January 1, 1998,
between United States Filter Corporation (the "Company") and Xxxxxxx X. Xxxxxxxx
(the "Employee").
WITNESSETH
WHEREAS, Employee is currently Chairman of the Board of Directors, Chief
Executive Officer and President of the Company; and
WHEREAS, the Company desires to insure the continued availability to the Company
of the Employee's services, managerial skills and business experience, and the
Employee is willing to render such services, all upon and subject to the terms
and conditions contained in this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants set
forth in this Agreement, the Company and the Employee agree as follows:
1. EMPLOYMENT AND EMPLOYMENT TERM.
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(a) EMPLOYMENT.
Subject to the terms and provisions set forth in this Agreement, the
Company hereby employs the Employee during the Employment Term (as
hereinafter defined) as the Chief Executive Officer and President of
the Company, and agrees
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to use its best efforts to cause the Employee to be a director and
Chairman of the Board of Directors of the Company (the "Board")
during the Employment Term, and the Employee hereby accepts such
employment.
(b) EMPLOYMENT TERM.
The period of employment under this Agreement (the "Employment Term")
shall be deemed to have commenced as of January 1, 1998 (the
"Effective Date") and shall continue for a period of sixty-three (63)
full calendar months thereafter, as herein provided. On May 1, 1998,
and on the first day of each month thereafter, the Employment Term
shall be automatically extended by one full calendar month. The
Employment Term shall continue until the expiration of all automatic
extensions affected as aforesaid unless and until it ceases or is
terminated sooner as provided in this Agreement.
2. POSITIONS, RESPONSIBILITIES AND DUTIES.
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(a) IN GENERAL.
During the Employment Term, the Employee shall be employed as, and
the Company shall at all times cause the Employee to be, the Chief
Executive Officer and President of the Company. In addition to such
positions, the Company shall use its best efforts to ensure that the
Employee is at all
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times during the Employment Term a director and the Chairman of the
Board. In such positions, the Employee shall have the duties,
responsibilities and authority normally associated with the office
and position of chairman, director, chief executive officer and
president of a publicly traded corporation. No other employee of the
Company shall have authority and responsibilities that are equal to
or greater than those of the Employee. The Employee shall report
solely and directly to the Board and all other officers and other
employees shall report directly to the Employee or the Employee's
designees.
(b) TIME.
During the Employment Term, the Employee shall devote such time as is
reasonably necessary to perform the duties associated with his
offices and positions as set forth herein and shall use his best
efforts to perform faithfully and efficiency the duties and
responsibilities contemplated by this Agreement; provided however,
that the Employee shall not be required to perform any duties and
responsibilities which would be likely to result in non-compliance
with or violation or breach of any applicable law or regulation.
Notwithstanding the foregoing, the Employee may devote reasonable
time to activities other than those required under this Agreement,
including the
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supervision of his personal investments, and activities involving
professional, charitable, educational, religious and similar types of
organizations, speaking engagements, membership on the boards of
directors of other orations, and similar type activities, to the
extent that such over activities do not materially inhibit or
prohibit the performance of the Employee's duties under this
Agreement or conflict in any material way with the business of the
Company; provided however, that the Executive shall not serve on the
board of any business or hold any over position unto any business
without the consent of the Board.
3. COMPENSATION AND BENEFITS.
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(a) BASE SALARY.
During the Employment Term, the Employee shall receive a base salary
("Base Salary"), payable in accordance with the Company's payroll
practices generally applicable to the Company's senior executives, of
$500,000 per annum. Such Base Salary shall be reviewed for increase
(but not decrease) in the sole discretion of the Compensation
Committee of tile Board not less frequently the annually during the
Employment Term. In conducting any such annual review, the
Compensation Committee of the Board shall take
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into account any change in the Employee's responsibilities, increases
in the compensation of other senior executives of the Company or of
its competitors or over comparable executes and companies, the
performance of the Employee and other pertinent factors. If so
increased, such increased Base Salary shall then constitute "Base
Salary" for purposes of this Agreement.
(b) INCENTIVE COMPENSATION.
(i) During the Employment Term, the Employee shall be entitled to
participate in all incentive compensation plans and programs
maintained by the Company for the benefit of senior
executives. Such plans and programs, in the aggregate, shall
provide the Employee win compensation opportunities at least
as favorable as the most favorable of such opportunities
provided by the Company to the Employee under such plans and
programs as in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable
to the Employee, as provided at any time thereafter to the
Employee or other senior executives of the Company.
(ii) Without limiting the foregoing, for each fiscal year of the
Company ending with or within the Employment Term, the
Employee shall be paid an annual incentive of not less than
sixty percent (60%) of his base salary
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(subject to such performance goals as the Company and the
Employee may from time to time negotiate in good faith). Each
such annual incentive shall be paid at the same time that
annual incentives are generally paid to the Company's other
senior executives, but no later than the end of the third
month of the fiscal year next following the fiscal year for
which such annual incentive is paid, unless the Employee shall
elect to defer the receipt thereof.
(c) EMPLOYEE BENEFITS.
During the Employment Term, the Employee and/or the Employee's
family, as the case may be, shall be entitled to participate in all
employee benefit plans and programs provided or maintained by the
Company (including, without limitation, pension, profit sharing,
savings, medical, disability, life and accident plans and programs
and the United States Filter Corporation Executive Severance Pay
Plan). Such plans and programs, in the aggregate, shall provide the
Employee and/or the Employee's family, as the case may be, with
benefits at least as favorable as the most favorable of such benefits
provided by the Company to or in respect of the Employee under such
plans and programs as in effect at
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any time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Employee, as provided at any time
thereafter to or in respect of the Employee or over senior executives
of the Company.
(d) VACATION AND FRINGE BENEFITS.
(i) During the Employment Term, the Employee shall be entitled to
paid vacation and fringe benefits at least as favorable as the
most favorable plans and programs of the Company for the
Employee under such plans and programs as in effect at any
time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Employee, as in
effect at any time thereafter for the Employee or other senior
executives of the Company.
(ii) Without limiting the foregoing, during the Employment Tenn,
the Company will lease the Employee an automobile for the
Employee's business and private use, the make and model of
which shall be at least comparable to the make and model
provided to the Employee immediately preceding the Effective
Date, and the Company will pay all deposit requirements,
servicing and maintenance costs, insurance premiums and the
cost of the
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gasoline for authorized business use. (The term of any one
such automobile lease shall not exceed thirty-six months other
than at the discretion of the Employee.)
(e) OFFICE AND SUPPORT STAFF.
During the Employment Term, the Employee shall be entitled to an
office or offices of a size and with furnishings and other
appointments, and to personal secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the
Employee by the Company at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the
Employee, as provided at any time thereafter to the Employee or other
senior executives of the Company.
(f) EXPENSE REIMBURSEMENT
During the Employment Term, the Employee shall be entitled to receive
prompt reimbursement for all usual, customary and reasonable,
business-related expenses incurred by the Employee in performing his
duties and responsibilities hereunder in accordance with the
practices and procedures of the Company as in effect and applied
immediately prior to the Effective Date, or, if more favorable to the
Employee, as in effect at any time thereafter with respect to the
Employee or other senior Executives of the Company.
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(g) INDEMNIFICATION.
The Company shall maintain directors and officers liability insurance
in commercially reasonable amounts (as reasonably determined by the
Board), and the Employee shall be covered under such insurance to the
same extent as other directors and senior executives of the Company.
The Employee shall be eligible for indemnification by the Company
under the Company by-laws as currently in effect, and the Company
agrees that it shall not take any action that would impair the
Employee's rights to indemnification under the Company by-laws, as
currently in effect.
4. TERMINATION OF EMPLOYMENT.
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(a) TERMINATION DUE TO DEATH OR DISABILITY.
The Company may terminate the Employee's employment hereunder due to
Disability (as hereinafter defined). In the event of the Employee's
death or a termination of the Employee's employment by the Company
due to Disability, the Employee or his estate or his legal
representative, as the case may bet shall be entitled to receive:
(i) any unpaid Base Salary through the Date of Termination;
(ii) an immediate prorated annual incentive for the fiscal year
in which the Date of
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Termination occurs equal to the minimum annual incentive
(determined without regard to any performance goals) provided
by Section 3(b)(ii) multiplied by a fraction, the numerator of
which is the number of days such fiscal year through the Date
of Termination and the denominator of which is 365;
(iii) an immediate lump sum amount equal to the sum of (A)
two times the minimum annual incentive (determined
without regard to any performance goals) provided by
Section 3(b)(ii) plus (B) twenty-four (24) times the
monthly rate of Base Salary at the rate in effect on
the Date of Termination;
(iv) any deferred compensation (including, without limitation,
interest or other credits on such deferred amounts), any
accrued vacation pay and any reimbursement for expenses
incurred but not yet paid prior to such Date of Termination;
and
(v) any other compensation or benefits which may be owed or
provided to or in respect of the Employee in accordance with
the terms and provisions of this Agreement or any plans and
programs of the Company.
For purposes of this Agreement, "Disability" means the Employee's
inability to render, for a period
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of six consecutive months, services hereunder by reason of permanent
disability, as determined by the written medical opinion of an
independent medical physician mutually acceptable to the Employee and
the Company. If the Employee and the Company cannot agree as to such
an independent medical physician each shall appoint one medical
physician and those two physicians shall appoint a third physician
who shall make such determination.
(b) TERMINATION BY THE COMPANY FOR CAUSE.
The Company may terminate the Employee's employment hereunder for
Cause (as hereinafter defined). If the Company terminates the
Employee's employment hereunder for Cause, the Employee shall be
entitled to receive;
(i) any unpaid Base Salary through the Date of Termination;
(ii) an immediate prorated annual incentive for the fiscal year in
which the Date of Termination occurs, equal to the minimum
annual incentive (determined without regard to any performance
goals) provided by Section 3(b)(ii) multiplied by a fraction,
the numerator of which is the number of days in such fiscal
year through the Date of Termination and the denominator of
which is 365;
(iii) any deferred compensation (including,
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without limitation, interest or other credits on such deferred
amounts), any accrued vacation pay and any reimbursement for
expenses incurred but not yet paid prior to such Date of
Termination; and
(iv) any other compensation or benefits which may be owed or
provided to or in respect of the Employee in accordance with
the terms and provisions of this Agreement or any plans and
programs of the Company.
The Employee shall be given written notice authorized by a vote of at
least a majority of the members of the Board that the Company
intends to terminate the Employee's employment for Cause;
provided, however, that following a Change of Control (as
hereinafter defined), such written notice must be authorized by a
vote of at least 75% of the members of the Board. Such written
notice shall specify the particular act or acts, or failure to
act, which is/are the basis for the decision to so terminate the
Employee's employment for Cause. The Employee, together with his
legal counsel, shall be given the opportunity within thirty (30)
calendar days of the receipt of such notice to meet with the
Board to defend such act or acts, or failure to act, and, if such
act or failure to act is correctable, the Employee shall
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be given 30 business days after such meeting to correct such act or
failure to act. If such act or failure to act is not correctable or
upon failure of the Employee, within such latter thirty (30) day
period, to correct such act or failure to act, the Employee's
employment by the Company shall automatically be terminated for Cause
as of the date determined in accordance with this Agreement. Anything
herein to the contrary notwithstanding, if, following a termination
of the Employee's employment by the Company for Cause based upon the
conviction of the Employee for a felony, such conviction is
overturned on appeal, the Employee shall be entitled to the payments
and benefits that the Employee would have received as a result of a
termination of the Employee's employment by the Company without
Cause.
For the purposes of this Agreement, "Cause" means (A) the Employee is
convicted of a felony involving moral turpitude or (B) the Employee,
in carrying out his duties and responsibilities under this Agreement,
is guilty of gross neglect or gross misconduct resulting, in either
case, in material economic harm to the Company, and such conduct is
not cured within thirty (30) days of the Company providing written
notice to the Employee, unless such act, or failure to act, was
believed by the Employee in good faith to be in
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the best interests of the Company.
(c) TERMINATION WITHOUT CAUSE OR TERMINATION FOR GOOD REASON.
The Company shall be permitted to terminate the Employee's employment
hereunder without Cause, and the Employee shall be permitted to
terminate his employment hereunder for Good Reason (as hereinafter
defined). If the Corporation terminates the Employee's employment
hereunder without Cause, other than due to death or Disability, or if
the Employee effects a termination for Good Reason, the Employee
shall be entitled to receive:
(i) any unpaid Base Salary through the Date of Termination;
(ii) an annual incentive for the fiscal year in which the Date of
Termination occurs;
(iii) any deferred compensation (including, without limitation,
interest or other credits on the deferred amounts, any accrued
vacation pay and reimbursement for expenses incurred but not
paid prior to such termination of employment; and
(iv) any other compensation or benefits which may be owed or
provided to the Employee in accordance with the terms and
provisions of this Agreement or any plans and programs of the
Company, including but not limited to the
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Xxxxxx Xxxxxx Filter Corporation Executive Severance Pay Plan.
For purposes of this Agreement, "Good Reason" means and shall be
deemed to exist if, without the prior express written consent of
the Employee, (A) the Employee suffers a reduction in duties,
responsibilities or effective authority associated with his
titles and positions as set forth and described in this Agreement
or is assigned any duties or responsibilities inconsistent in any
material respect therewith; (B) the Company fails to
substantially perform any material term or provision of this
Agreement; (C) the Employee's compensation or benefits provided
for hereunder is decreased; (D) the Company's principal execute
office or the Employee's office is relocated to a location more
than fifty (50) miles from its location on the Effective Date;
(E) the Company fails to obtain the full assumption of this
Agreement by a successor entity in accordance with the Agreement;
(F) the Company purports to terminate the Employee's employment
for Cause and such purported termination of employment is not
effected in accordance with the requirements of this Agreement.
The determination of the amount of any compensation and benefits
or other payments to be paid or provided to or in respect of the
Employee hereunder shall be determined without
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regard to any reduction therein constituting Good Reason.
(d) VOLUNTARY TERMINATION
The Employee may effect a Voluntary Termination of his employment
hereunder. A "Voluntary Termination" shall mean a termination of
employment by the Employee on his own initiative other than (i) a
termination due to Disability or (ii) a termination for Good Reason.
A Voluntary Termination shall not be deemed to be a breach of this
Agreement and shall entitle the Employee to all of the rights and
benefits which the Employee would be entitled in the event of a
termination of his employment by the Company for Cause.
(e) CHANGE OF CONTROL
(i) In the event the Employee's employment with the Company is
terminated without Cause or for Good Reason following a Change
of Control, Employee shall receive the compensation and
benefits under this Agreement as if he had terminated his
employment hereunder for Good Reason, (except that the amounts
payable is accordance untie Sections 4(c)(i) and (ii) shall be
paid within five days of such termination in an undiscounted
lump sum).
(ii) "Change of Control" shall mean the occurrence of any of the
following:
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(A) the acquisition by any person (including any syndicate or
group deemed to be a "person" under Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any successor provision
to either of the foregoing, of "beneficial ownership"
directly or indirectly, of shares of capital stock of the
Company entitling such person to exercise 50% or more of
the total voting power of all "Voting Shares" of the
Company;
(B) during any year or any period of two consecutive years
(not including any period prior to the execution of this
Agreement), individuals who at the beginning of such
period constitute the Board, and any new director (other
than a director designated by a person who has entered
into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of
this definition) whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the
directors then still in office who either were directors
at the beginning
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of the period or whose election or nomination for
election was previously so approved (hereinafter referred
to as "Continuing Directors"), cease for any reason to
constitute at least a majority thereof;
(C) any consolidation of the Company with, or merger of the
Company into, any other person, any merger of another
person into the Company, or any sale or transfer of all
or substantially all of the assets of the Company to
another person (other than (x) a consolidation or merger
which does not result in any reclassification,
conversion, exchange or cancellation of outstanding
shares of capital stock other than shares of capital
stock owned by any of the parties to the consolidation or
merger or (y) a merger which is effected solely to change
the jurisdiction of incorporation of the Company or (z)
any consolidation with or merger of the Company into a
wholly owned subsidiary, or any sale or transfer by the
Company of all of substantially all of its assets to one
or more of its wholly owned subsidiaries in any one
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transaction or a series of transactions; or
(D) the stockholders of the Company approve a plan of
complete liquidation of the Company.
Notwithstanding the foregoing, unless otherwise determined by
the Board of Directors, no change in control of the Company
shall be deemed to have occurred if (x) the Employee is a
member of a group which first announces a proposal which, if
successful, would result in a Change of Control, which
proposal (including any modifications thereof) is ultimately
successful, or (y) the Executive acquires a two percent or
more equity interest in the entity which ultimately acquires
the Company pursuant to the transaction described in (x) of
this paragraph.
"Beneficial Ownership" shall be determined in accordance with
Rule 13d-3 promulgated under the Exchange Act, except that a
person shall be deemed to be the "beneficial owner" of all
securities that such person has the right to acquire, whether
such right is exercisably immediately or only after the
passage of time.
"Voting Share" means all outstanding shares
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of any class or classes (however designated) of capital stock
of the Company entitled to vote generally in the election of
the Board of Directors of the Company.
(iii) If any payment or benefit to which the Employee becomes
entitled pursuant to this Agreement will be subject to the tax
imposed by section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code") (or any similar tax that may hereafter
be imposed) (the "Excise Tax"), the Company shall pay to the
Employee at the time specified below, an additional amount
(the "Gross-up Payment") such that the net amount retained by
the Employee, after deduction of any Excise Tax on the Total
Payments (as hereinafter defined) and any federal, state and
local income tax and Excise Tax upon the payment provided for
by this subsection, shall be equal to the Total Payments. For
purposes of determining whether any of such payments or
benefits will be subject to the Excise Tax, and the amount of
such Excise Tax, (if) any over payments or benefits received
or to be received by the Employee in connection with a Change
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of Control or his termination of employment, whether pursuant
to the terms of this Agreement or otherwise (which together
with the payments and benefits pursuant to this Agreement,
constitute the "Total Payments") shall be treated as
"parachute payments" within the meaning of section 280G(b)(2)
of the Code, and all "excess parachute payments" within the
meaning of section 280G(b)(1) shall be treated as subject to
the Excise Tax, unless in the opinion of tax counsel selected
by the Company's independent auditors and acceptable to the
Employee such other payments or benefits (in whole or in part)
do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning
of section 280G(b)(4) of the Code in excess of the base amount
within the meaning of section 280G(b)(3) of the Code, or are
otherwise not subject to the Excise Tax, (B) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser
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of (1) the total amount of the Total Payments or (2)
the amount of excess parachute payments within the
meaning of section 280G(b)(l) (after applying paragraph
(A), above), and (C) the value of any non-cash benefits
or any deferred payment or benefit shall be determined
by the Compass independent auditors in accordance with
the principles of sections 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the
Gross-Up Payment, the Employee shall be deemed to pay
federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation
in the sate and locality of his residence on the Date
of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of
such state and local taxes. In the event that the
Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time of
termination of his employment, the Employee shall repay
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to the Company at the time that the amount of such
reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state
and local income tax imposed on the Gross-Up Payment
being repaid by him if such repayment results in
reduction in Excise Tax and/or a federal and state and
local income tax deduction) plus interest on the amount
of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise
Tax is determined to exceed the amount taken into
account hereunder at the time of the Employee's
termination of employment (including by reason of any
payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest payable with
respect to such excess) at the time that the amount of
such excess is finally determined. If the mounts of any
payments under this Agreement cannot
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be finally determined on or before the payment date
otherwise scheduled for payment, the Company shall pay
to the Employee on such date an estimate, as determined
in good faith by the Company, of the minimum amount of
such payment and shall pay the reminder of such
payments (together with interest at the rate provided
in section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined, but in no event later
than the thirtieth day after the Date of Termination.
In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company
to the Employee payable on the fifth day after demand
by the Company (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code).
(f) CONTINUATION OF EMPLOYEE BENEFITS.
Upon the termination of the Employee's employment hereunder for
whatever reason, the Company shall continue, for such period
after the Date of Termination as it is required (or would be
required absent the requirement in Section 4(e)(i) to pay a lump
sum) in accordance with this Section
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4, to continue to pay Base Salary to or in respect of the
Employee, to cover the Employee and/or the Employee's family
under Dose life, disability, accident and health insurance
benefits that revere applicable to the Employee on the Date of
Termination at the same benefit levels and on the same terms and
conditions then in effect; provided however, that such coverage
shall be no less favorable than that to which the Employee and/or
his family was entitled immediately prior to his Date of
Termination or, if applicable, the occurrence of any event
constituting Good Reason; and further provided that in the event
Employee's employment hereunder is terminated for Disability,
such coverage shall continue for twenty-four (24) months
following the Date of Termination. In the event that the Employee
and/or the Employee's family's participation in any such program
is barred, the Company shall arrange to provide the Employee
and/or the Employee's family with benefits substantially similar
to those which the Employee and/or the Employee's family would
otherwise have been entitled to receive under such plans and
programs Mom which continued participation is barred. Following
the continuation period described in this subsection, the
Employee and the Employee's family shall be entitled to elect
continuation coverage under
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Section 601 et. seq. of the Employee Retirement Income Security
Act.
(g) EQUITY BASED AWARDS.
In the event of the termination of the Employee's employment
hereunder other than pursuant to Section 4(b) or (d), any vesting
or service requirements under any outstanding stock option or
restricted stock awards then held by the Employee shall be deemed
fully satisfied as of the Date of Termination. Anything herein or
in any other agreement, plan or program to the contrary
notwithstanding, in the event of the termination of the
Employee's employment hereunder for whatever reason, all
outstanding vested stock options held by the Employee as of the
Date of Termination, including any for which vesting has been
accelerated pursuant to this Section, shall remain exercisable
for the balance of the respective terms thereof.
(h) NO MITIGATION OR OFFSET.
The Company agrees that, if the Employee's employment with the
Company terminates, the Employee is not required to seek other
employment or to attempt in any way to reduce any amounts payable
to or in respect of the Employee by the Company pursuant to this
Agreement. Further, the amount of any payment or benefit provided
for in this Agreement shall not be reduced by an
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compensation earned by the Employee as the result of employment
by another employer, by retirement benefits, by offset against
any amount claimed to be owed by the Employee to the Company, or
otherwise.
(i) NOTICE OF TERMINATION.
(i) Any termination of the Employee's employment by the Company
(over than due to death) shall be communicated by a notice of
termination to the other party hereto given in accordance with
this Agreement (the "Notice of Termination"). The Notice of
Termination shall be given (A) in the case of a termination for
Cause, within 90 business days after a director of the Company
(excluding the Employee) has actual knowledge of the events
giving rise to such purported termination, (B) in the case of a
termination for Good Reason, within 180 days of the Employee's
having actual knowledge of the event or events constituting Good
Reason; (C) in the case of termination for Disability, not later
than 30 days prior to the date the Company reasonably expects the
six month period referred to in Section 4(a) to expire; and (D)
in the case of Voluntary Termination, not later than 150 days
prior to the date of termination specified in such notice. Such
notice shall (X) indicate the specific termination provision in
this Agreement relied
27
upon, (Y) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
the Employee's employment uncles the provision so indicated,
as applicable, and (Z) if the Date of Termination is other
than the date of actual receipt of such notice, specify the
date on which the Employee's employment is to be terminated
(which date shall not be earlier than the date on which such
notice is actually received).
(ii) If within fifteen (15) days after any Notice of Termination
is given, or, if later, prior to the Date of Termination (as
determined without regard to this Section) the party
receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the
Date of Termination shall be extended until the earlier of
(A) the date on which the Employment Term ends or (B) the
date on which the dispute is finally resolved, either by
mutual written agreement of the parties or by a final
judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired
and no appeal has been perfected); provided however, that
the Date
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of Termination shall be extended by a notice of dispute
given by the Employee only if such notice is given in good
faith and the Employee pursues the resolution of such
dispute with reasonable diligence. If the Date of
Termination is extended in accordance with this Section, the
Company shall continue to pay the Employee his full
compensation and benefits in effect when the notice giving
rise to the dispute was given (including, but not limited
to, Base Salary) and continue the Employee's participation
in all employee benefit plans in which the Employee was
participating and, on the same terms and conditions as, when
the notice giving rise to the dispute was given, until the
Date of Termination, as determined in accordance with this
Section. The determination of the amount of any compensation
and benefits or odder payments to be paid or provided to or
in respect of the Employee hereunder shall be determined
without regard to any reduction therein constituting Good
Reason. Amounts paid under this Section are in addition to
all other amounts due under this Agreement and shall not be
offset against or reduce any other amounts due under this
Agreement.
(iii) For purposes of this Agreement, "Date of
29
Termination" means (A) in the case of a termination for
which a Notice of Termination is required the date of actual
receipt of such Notice of Termination, or if later, the date
specified therein, as the case may be, (B) in the case of
Disability, the last day of the six month period referred to
in Section 4(a), and (C) in all other cases, the actual date
on which the Executive's employment terminates during the
Term of Employment.
5. ENFORCEMENT OF AGREEMENT; DEFENSE OF ACTIONS.
--------------------------------------------
If the Employee determines that it is necessary or desirable for him
to retain legal counsel or incur other costs and expenses in
connection with either enforcing party and all of his rights under
this Agreement or defending against any allegations by the Company of
breach of this Agreement by him, the Employee shall be entitled to
recover from the Company reasonable attorneys' fees, costs and
expenses incurred by him in connection with such enforcement or
defense. Such payments shall be made by the Company to the Employee
(or directly to the Employee's attorney) promptly following submission
to the Company of appropriate documentation evidencing the incurrence
of such attorneys' fees, costs, and expenses. The Employee's rights to
payments under this Section shall not be affected by the final outcome
of any dispute with the Corporation; provided however,
30
that to the extent that the court shall determine that under the
circumstances recovery by the Employee of all or a part of any such
fees and costs and expenses would be unjust or inappropriate, the
Employee shall not be entitled to such recovery.
6. PROTECTIVE COVENANTS.
--------------------
(a) COMPENSATION BENEFITS IF SECTION 6 (b) OR (c) ARE BREACHED.
The Employee agrees that if during the Employment Term, and for a
period of one year thereafter, he (i) in any manner (except as
provided below), directly or indirectly, though any xxxxxx, firm
or corporation, alone or as a member of a partnership or as an
officer, director, stockholder, investor or employee of or
consultant to any other corporation or enterprise or otherwise
engages or assists any other person, firm, corporation or
enterprise in engaging in any business then being conducted by
the Company (but not later than as of the Date of Termination) in
any geographic area in which the Company is then conducting such
business or (ii) breaches his obligations under Section 6(b) or
(c), any compensation benefits to which the Employee would
otherwise have been entitled shall be suspended for one year, or,
if less, the remaining balance of the period unto respect to
which the Employee,
31
would be so entitled to such payment and benefits, which payments
and benefits shall be deemed immediately forfeited. Nothing
herein shall prohibit the Employee from being a stockholder in a
mutual fund or a diversified investment company or a passive
owner of not more than two percent of the outstanding stock of
any class of a corporation any equity securities of which are
publicly traded, so long as the Employee has no active
participation in the business of such corporation. Clause (i) of
this subsection shall not apply following the Employment Term if
the Employee is terminated without Cause or terminates for Good
Reason following a Change of Control.
(b) NO SOLICITATION OF EMPLOYEES.
The Employee further agrees that during the Employment Term and
for one year thereafter, he shall not, in any manner, directly or
indirectly induce or attempt to induce any employee of the
Company to terminate or abandon his or her employment for any
purpose whatsoever. This subsection (b) shall not apply following
the Employment Term if the Employee is terminated without Cause
or terminates for Good Reason following a Change of Control.
(c) NON-DISCLOSURE.
The Employee shall not, at any time during the Employment Term or
thereafter, make use of or
32
disclose, directly or indirectly, any trade secret, customer
lists or other confidential or secret information of the Company
not available to the public generally or to the competitors of
the Company ("Confidential information), except to the extent
that such Confidential Information becomes a matter of public
record or is otherwise available to the general public, other
than as a result of any act or omission of the Employee, or is
required to be disclosed by any law, regulation or order of any
court or regulatory commission, department or agency. Promptly
following the Date of Termination, the Employee shall surrender
to the Company all records, memoranda, notes, plans, reports,
computer tapes and software and other documents and data relating
to any Confidential Information or the business of the Company
that he may then possess or have under his control (together with
all copies thereon; provided however, that the Employee may
retain copies of such documents as are necessary for the
preparation of his federal or state income tax returns.
(d) FALSE, DEFAMATORY, OR DISPARAGING STATEMENTS.
The Employee agrees that, while he is employed by the Company,
and after his Date of Termination, he shall not make any false,
defamatory or disparaging statements about the Company, or the
33
officers or directors of the Company that are reasonably likely
to cause material damage to the Company, or the officers or
directors of the Company. While the Employee is employed by the
Company, and after his Date of Termination, the Company agrees
that neither the officers nor the directors of the Company shall
make any false, defamatory or disparaging statements about the
Employee that are reasonably likely to cause material damage to
the Executive.
(e) INJUNCTIONS TO PREVENT BREACHES OF PROTECTIVE COVENANTS.
The parties hereto agree that the Company would be damaged
irreparably in the event of any provision of paragraphs (b), (c)
or (d), next above, were not performed by the Employee in
accordance with their respective terns or were otherwise breached
and that money damages would be an inadequate remedy for any such
nonperformance or breach. Therefore, the Company or its
successors or assigns shall be entitled, in addition to any other
rights and remedies existing in their favor, to an injunction or
injunctions to prevent any breach or threatened breach of any
such provisions and to enforce such provisions specifically
(without posting a bond or other security). The parties hereto
agree that the Employee would be damaged irreparably in the event
of any provision
34
of paragraph (d), next above, were not performed by the Company
in accordance with its or were otherwise breached and that money
damages would be an inadequate remedy for any such nonperformance
or breach. Therefore, the Employee shall be entitled, in addition
to any other rights and remedies existing in his favor, to an
injunction or injections to prevent any breach or threatened
breach of any such provisions and to enforce such provision
specifically (without posting a bond or other security).
7. SUCCESSORS.
----------
(a) THE EMPLOYEE.
This agreement is personal to the Employee and, without the prior
express written consent of the Company, shall not be assignable
by the Employee, except that the Employee's rights to receive any
compensation or benefits under this Agreement may be transferred
or disposed of pursuant to testamentary disposition, intestate
succession or pursuant to a domestic relations order of a court
of competent jurisdiction. This Agreement shall inure to the
benefit of and be enforceable by the Employee's heirs,
beneficiaries and/or legal representatives.
(b) THE COMPANY.
This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and
35
assigns. The Company shall require any successor to all or
substantially all of the business and/or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form ant
substance satisfactory to the Employee, expressly to assume and
agree to perform this Agreement in the same manner and to the
same extent as the Company would be required to perform if no
such succession had taken place.
8. MISCELLANEOUS.
-------------
(a) APPLICABLE LAW.
This Agreement shell be governed by and construed in accordance
with the laws of the State of California, applied without
reference to principles of conflict of laws.
(b) AMENDMENTS.
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) NOTICES.
All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other park or
by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
36
If to Employer: UNITED STATES FILTER CORPORATION
00-000 Xxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
If to Employee: XXXXXXX X. XXXXXXXX
00000 Xxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
With a Copy to: LAZOF & XXXX
Attn: Xxxxxx X. Xxxxx, Esq.
0000 XxxXxxxxx Xxxxxxxxx,
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notices and
communications shall be effective when actually received by the
addressee.
(d) WITHHOLDING.
The Company may withhold from any amounts payable under this
Agreement such federal, state or local income taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
(e) SEVERABILITY.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(f) CAPTIONS.
The captions of this Agreement are not part of the
37
provisions hereof and shall have no force or effect.
(g) BENEFICIARIES/REFERENCES.
The Employee shall be enabled to select (and change) a
beneficiary or beneficiaries to receive any compensation or
benefit payable hereunder following the Employee's death, and may
change such election, in either case by giving the Company
written notice thereof. In the event of the Employee's death or
a judicial determination of his incompetence, reference in this
Agreement to the Employee shall be deemed, where appropriate, to
refer to other beneficiary(ies), estate or his legal
representative(s).
(h) ENTIRE AGREEMENT.
This Agreement will contain the entire agreement between the
parties concerning the subject matter hereof and will supersede
all prior agreements, understandings, discussions, negotiations
and undertakings, whether written or oral, between the parties
with respect to the subject matter hereof, other than the
Executive Retention Agreement (to the extent provided herein).
However, nothing in this Agreement shall adversely affect the
Employee's rights to benefits accrued prior to the Effective
Date, and, except as contemplated hereby, the Employee's rights
with respect to stock options and restricted stock granted prior
38
to the Effective Date shall be governed by the respective stock
options and restricted stock agreements relating thereto.
(i) ARBITRATION.
Company and Employee agree that any controversy or dispute
arising out of or in connection with this Agreement, its
interpretation, performance of termination, shall upon demand of
a party, be submitted to and decided by binding arbitration. The
arbitration shall be conducted pursuant to Part 3, Title 9 of the
California Code of Civil Procedure Sections 1280-1288.8.
-------------------------------------------------------
Discovery, including depositions for the purpose of discovery,
shall be broadly permitted, and the provisions of the California
----------
Code of Civil Procedure Section 1283.05 shall apply. Any demand
-----------------------
to arbitrate shall be deemed to have been made on the date
actually received by the party upon whom it is served, and, for
the purposes of the statute of limitations, shall have the same
effect as it suit had been filed on the date the demand is made.
The arbitration shall occur in Orange County, California, before
a single retired or former judge of the Superior Court of the
State of California, or the Court of Appeals of the State of
California. The parties shall agree upon an arbitrator within
ten (10) days after the demand is made, and if the parties fail
to so agree, then
39
any of them may apply to the Court for an order appointing an
arbitrator meeting the requirements of this section. The
arbitrator's decision shall be rendered in ninety (90) days after
the hearing and the decision of the arbitrator shall be final and
binding and shall be subject to confirmation, correction or
vacation in accordance with the provisions of California Code of
------------------
Civil Procedure Sections 1285-1287.4. Any application, petition,
---------------
or other proceeding (A) to enforce the award or the provisions of
this Agreement, (B) to the extent that the arbitrator does not
have the power or authority to resolve or grant the relief
sought, and/or (C) for provisions or equitable relief pending
appointment of the arbitrator, shall be commenced in the
appropriate State or Federal Court having jurisdiction in Orange
County, California, and the parties hereby consent to
jurisdiction and venue in such Courts.
(j) REPRESENTATION.
The Company represents and warrants that it is fully authorized
and empowered to enter into this Agreement and Mat the
performance of its obligations under this Agreement will not
violate any agreement between the Company and any other person,
firm or organization or any applicable laws or regulations.
(k) SURVIVORSHIP.
40
The respective rights and obligations of the parties hereunder
shall survive any termination of this Agreement or the Employee's
employment hereunder to the extent necessary to the intended
preservation of such rights and obligations.
41
IN WITNESS WHEREOF, the parties have executed this Agreement on the date set
forth opposite their signatures herein below.
EMPLOYER:
--------
UNITED STATES FILTER CORPORATION,
a California corporation
DATED: ____________, 1998 By:_______________________________
Its:______________________________
(title)
EMPLOYEE:
--------
DATED: ____________, 1998 By:_______________________________
XXXXXXX X. XXXXXXXX
42
