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Exhibit 10.2
EMPLOYMENT AGREEMENT
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THIS AGREEMENT (the "Agreement") is made and entered into as
of this 23rd day of May, 1997, by and between Waterlink, Inc., a Delaware
corporation (the "Company"), and Xxxxxxxx X. Xxxxxxxxx ("Executive").
W I T N E S S E T H :
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WHEREAS, Executive has been employed by the Company, for the
past several years, and is currently the Chairman of the Board of Directors of
the Company;
WHEREAS, the Company desires to assure itself of Executive's
continued employment in an executive capacity and to compensate him for such
employment;
WHEREAS, Executive is willing to continue to be employed by
the Company upon the terms and subject to the conditions contained in this
Agreement;
NOW THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. The Company agrees to continue to employ
Executive and Executive hereby agrees to continue to serve the Company for the
Term (as defined in Section 2 below) of this Agreement, in the position and
with the duties and responsibilities set forth in Section 3 below, and upon the
other terms and subject to the conditions hereinafter stated.
2. TERM. The initial term (the "Initial Term") of this
Agreement shall commence on the date hereof and shall continue until the third
anniversary of the date hereof (the "Initial Expiration Date"); provided,
however, that this Agreement at all times shall be subject to earlier
termination in accordance with the provisions hereof. On the Initial Expiration
Date and each anniversary of the Initial Expiration Date, the term of this
Agreement automatically shall be extended for an additional one year term (the
"Extended Term"). For purposes of this Agreement, "Term" means the Initial Term
and, as so extended, the Extended Term.
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3. POSITION, DUTIES AND RESPONSIBILITIES.
3.1 POSITION, DUTIES AND RESPONSIBILITIES. During the Term,
Executive shall serve as the Chairman of the Board of Directors of the Company,
and shall be responsible for the duties attendant to such office, which duties
will be generally consistent with his position as an executive officer of the
Company and which will generally utilize his experience with the Company prior
to the date hereof, and such other managerial duties and responsibilities with
the Company, its affiliates, subsidiaries or divisions as may be assigned by
the Board of Directors of the Company (the "Board") consistent with Executive's
position, duties and responsibilities with the Company. Executive will report
directly to the Board. The Company intends that Executive will, and the Company
shall use its best efforts to cause Executive to, continue to be elected to and
serve as a member of the Board. Executive shall also serve as an officer and/or
member of the Board of Directors of any subsidiary or affiliate of the Company,
if the Board should so request; provided, that the duties, authority and
responsibilities of Executive with such subsidiaries or affiliates shall be
commensurate, and in all events not less than, Executive's duties, authority
and responsibilities with the Company as set forth in this Agreement.
Executive's duties shall be performed principally at the Company's executive
offices which are located in the Canton, Ohio Metropolitan Area (as defined
below), and Executive shall not be required to perform duties which would
necessitate changing his present residence, unless Executive otherwise agrees
in writing. For purposes of this Agreement, the term "Canton, Ohio Metropolitan
Area" shall encompass the City of Canton and the territory within fifteen (15)
miles from that city in any direction. The Company will promptly pay (or
reimburse Executive for) all reasonable moving expenses incurred by Executive
relating to a change of Executive's residence in connection with any such
relocation to which Executive has consented. Executive acknowledges and agrees
that, in connection with his employment hereunder, he may be required to travel
on behalf of the Company.
3.2 SERVICES TO BE PROVIDED. During the Term, Executive shall
devote all of his working time, attention and energies to the affairs of the
Company and its subsidiaries, affiliates and divisions and use his best efforts
in the performance of his duties to promote its and their best interests;
provided, however, that nothing herein shall preclude Executive from (i)
serving on the boards of directors of a reasonable number of other
corporations, trade associations or charitable organizations, (ii) engaging in
charitable activities and community affairs or (iii) managing his personal
investments and affairs; provided, however, that such activities do not
materially interfere with the performance of Executive's duties under the
Agreement.
4. SALARY.
4.1 BASE SALARY. During the Term, Executive shall be paid a
base salary (the "Base Salary"), payable in equal installments at such intervals
as the other executive officers of the Company are paid but not less often than
bi-weekly, at an annual rate of two hundred forty thousand dollars ($240,000)
until the first anniversary of the date hereof. For each succeeding
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year during the Term, the annual rate of the Base Salary shall be increased (but
not decreased) by such amount, if any, as may be determined by the Board.
4.2 ANNUAL BONUS. During the Term, Executive shall
participate in any long term and annual incentive compensation programs as may
be maintained by the Company for the benefit of its executives. The Company
shall establish an annual incentive bonus plan pursuant to which Executive may
earn, in each year during the Term, commencing with fiscal 1998, an amount
ranging from 0% to 150% of his Base Salary, subject to the achievement of
certain performance goals established by the Board, such performance goals to
be derived from the Company's annual operating plan.
4.3 EQUITY OPPORTUNITY. During the Term, Executive shall be
eligible for stock option grants and similar awards under existing plans of the
Company, and under any future plans in which executive officers of the Company
are entitled to participate. The Company and Xxxxxxxx Venture Partners III, L.P.
("Xxxxxxxx") agree that, upon the earlier to occur of a Change of Control (as
hereinafter defined) or the consummation of an underwritten public offering of
any of the Company's capital stock pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended, all rights they or
either of them may have had, including those contained in the Employment
Agreement among Executive, the Company and Xxxxxxxx, made as of December 9, 1994
(the "Prior Employment Agreement"), to acquire, retain or cancel any shares of
common stock of the Company, or any options, warrants or other rights to acquire
such shares, owned by Executive, shall be terminated and of no further force or
effect.
4.4 SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFITS. During the
Term, Executive shall be eligible to participate in any supplemental executive
retirement plan(s), if any, made available to senior executive officers of the
Company.
4.5 INCENTIVE STOCK OPTION. The provisions of Section 3(c) of
the Prior Employment Agreement shall remain in full force and effect and are
hereby affirmed by the parties hereto; provided, however, that clause (iv)
thereof is hereby amended and restated, and as so amended and restated shall
read in its entirety "(iv) Xxxxxxxxx'x employment is terminated in breach of
the Employment Agreement between Xxxxxxxxx and the Company, dated as of April
__, 1997 (the "Restated Agreement") or Xxxxxxxxx terminates his employment for
Good Reason (as defined in the Restated Agreement)."
5. EMPLOYEE BENEFITS.
5.1 BENEFIT PROGRAMS. During the Term, Executive shall
participate with other members of senior management of the Company in any
pension, profit-sharing, stock option or similar plan or program of the Company
now existing or established hereafter for the benefit of its employees or senior
executives of the Company or its subsidiaries generally, to the extent that he
remains eligible under the general provisions thereof. Executive shall also be
entitled to participate in any group insurance, hospitalization, medical, health
and accident, disability or
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similar or nonsimilar plan or program of the Company now existing or established
hereafter for the benefit of its employees or senior executives of the Company
and its subsidiaries generally, to the extent that he is eligible under the
general provisions thereof.
5.2 AUTOMOBILE. In furtherance of and not in limitation of
Section 5.1 hereof, the Company will provide Executive with an automobile, such
automobile not to be more than three years old, to be used by him in connection
with Company business, and the Company be responsible for all costs of
repairing, maintaining and insuring such automobile; provided, however, that the
cost of leasing such automobile shall not exceed $1,000 per month.
5.3 INSURANCE. During the Term, the Company, at its sole
expense, shall purchase and maintain (a) a life insurance policy on the life of
Executive in the amount of $100,000, the beneficiary or beneficiaries of which
shall be designated by Executive, and (b) a long-term disability insurance
policy which shall provide that, upon the occurrence of a "disability" as
defined in such disability insurance policy, Executive shall be entitled to
long-term disability benefits each year thereafter, up to the age of 65, in an
amount equal to 66 2/3% of Base Salary per month.
5.4 VACATION; PERSONAL DAYS. During the Term, Executive shall
be entitled to annual vacation with pay during each year of his employment
hereunder provided that the vacation days taken are commensurate with past
practice for Executive and do not materially interfere with the operations of
the Company.
5.5 INSURANCE. Executive agrees that the Company may at any
time and for the Company's own benefit, apply for and take out life, health,
accident, and/or other insurance covering Executive either independently or
together with others in any amount which the Company deems to be in its best
interests and the Company may maintain any existing insurance policies on the
life of Executive owned by the Company. The Company shall own all rights in any
such insurance policies and in the cash values and proceeds thereof and, except
as otherwise provided, Executive shall not have any right, title or interest
therein. Executive agrees to assist the Company at the Company's expense in
obtaining any such insurance by, among other things, submitting to the customary
examinations and correctly preparing, signing and delivering such applications
and other documents as may be required by insurers.
6. EXPENSES. The Company shall reimburse Executive upon
presentation of appropriate vouchers or receipts and in accordance with the
Company's expense reimbursement policies, for all reasonable expenses incurred
by Executive in connection with the performance of his duties under this
Agreement.
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7. TERMINATION. Executive's employment under this Agreement
may be terminated without any breach of this Agreement only under the following
circumstances:
7.1 DEATH. Executive's employment shall terminate upon his
death.
7.2 DISABILITY. In the event Executive shall be unable to
render the services or perform his duties hereunder by reason of illness,
injury or incapacity (whether physical, mental, emotional or psychological) for
a period of either (i) one hundred eighty (180) consecutive days or (ii) two
hundred seventy (270) days in any consecutive three hundred sixty-five (365)
day period (either of such events shall constitute a "Disability" for purposes
of this Agreement), the Company shall have the right to terminate this
Agreement.
7.3 TERMINATION OF EMPLOYMENT OF EXECUTIVE BY THE COMPANY FOR
CAUSE. The Company may terminate the employment of Executive for Cause (as
hereinafter defined). The term "Cause," as used herein, shall mean (a)
Executive's willful misconduct or gross neglect in the performance of his
duties hereunder which in either case has resulted, or is likely to result, in
material economic damage to the Company, (b) the material breach of this
Agreement by Executive which has resulted, or is likely to result, in material
economic damage to the Company or (c) the final, non-appealable conviction of
Executive of a felony which constitutes a crime of moral turpitude. For
purposes of Section 7.3(a), no act, or failure to act, on Executive's part,
will be considered "willful" unless done or omitted to be done by him not in
good faith and without a reasonable belief that his action or omission was in
furtherance of the Company's business.
Executive shall not be deemed to have been terminated for
Cause unless and until after reasonable notice to Executive and an opportunity
for him to be heard before the Board, the Board has determined that Executive
was guilty of the conduct described in clause (a) or (b) of the preceding
paragraph, and delivered to Executive a Notice of Termination (as defined
below) stating such determination and specifying the particulars thereof in
detail.
7.4 TERMINATION OF EMPLOYMENT BY EXECUTIVE. Executive may
terminate his employment hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean (A) any assignment to Executive of any
duties inconsistent in any material respect with his present duties as Chairman
of the Board of the Company or a change in his present position, duties,
authority or responsibilities without his express written consent or any other
action by the Company which results in a material diminution of the position,
duties, authority, or responsibility of Executive, (B) any removal of Executive
without his consent from, or any failure to re-elect Executive to, the office of
Chairman of the Board of the Company, except in connection with termination of
Executive's employment for Cause or as a result of his death or disability or by
him other than for Good Reason, (C) a reduction in Executive's Base Salary as in
effect on the date of this Agreement or as the same may be increased from time
to time, or a reduction in Executive's other benefits unless, with respect to a
reduction of benefits, all members of senior management of the Company are
similarly affected, (D) the Company shall materially breach any provision of
this
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Agreement, which breach shall continue unremedied for ten (10) days after the
Company shall have been given notice of such breach, or (E) failure of the
Company to obtain from any successor the assumption of or the agreement to
perform this Agreement (as contemplated in Section 15 hereof), or (F) any
purported termination of the Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section 7.6.
In addition, Executive may terminate his employment hereunder other than for
Good Reason.
7.5 RETIREMENT. Executive's employment under this Agreement
shall terminate upon Executive's attainment of age 65 (such termination being
referred to herein as "Mandatory Retirement").
7.6 NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive (other than a termination pursuant to
Sections 7.1 above) shall be communicated by written Notice of Termination to
the other party. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Any purported termination not
satisfying the requirements of this Section 7.6 shall not be effected.
7.7 DATE OF TERMINATION. "Date of Termination" shall mean (i)
if Executive's employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated pursuant to Section 7.6 above,
the date specified in the Notice of Termination, and (iii) if Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given; provided that if within thirty (30) days after the Notice
of Termination is given pursuant to Sections 7.3, the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of
a court of competent jurisdiction (the time for appeal having expired and no
appeal having been perfected); provided, further that if the Company prevails
in its determination to terminate Executive for Cause in such arbitration or
litigation, the Date of Termination shall be the date specified in the Notice
of Termination.
8. COMPENSATION UPON TERMINATION.
8.1 COMPENSATION UPON TERMINATION UPON DEATH. In the event of
the death of Executive during the Term, Executive's designated beneficiary, or,
in the absence of such designation, the estate or other legal representative of
Executive (collectively, the "Estate"), shall be paid within thirty (30) days
of Executive's death, an amount equal to the sum of Executive's unpaid Base
Salary through the month in which Executive's death occurred, as well as all
accrued bonus compensation through the date of death. Executive, or the Estate,
shall be entitled to other
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death benefits in accordance with the terms of the Company's benefit programs
and plans and the other provisions of this Agreement.
8.2 COMPENSATION UPON TERMINATION FOR DISABILITY. If
Executive's employment hereunder is terminated for Disability, Executive shall
be paid an amount equal to the sum of (x) any unpaid Base Salary for the month
in which the termination occurred and for a period of six months thereafter and
(y) an amount equal to the product of (1) the annual bonus, if any, paid to
Executive pursuant to Section 4.2 hereof with respect to the fiscal year in
which Executive's employment is terminated pursuant to Section 7.2 (including
any bonus deemed to have been paid as set forth below), provided that such
annual bonus is calculable as of the Date of Termination, and if such annual
bonus is not then calculable, then the bonus, if any, paid to Executive with
respect to the fiscal year immediately preceding the year in which Executive's
employment is terminated (which, for fiscal 1996 and fiscal 1997 shall be
deemed to be $240,000) and (2) a fraction, the numerator of which is the number
of days during which Executive rendered services and performed his duties
hereunder during the fiscal year in which his employment hereunder is
terminated and the denominator of which is 365; such amounts to be payable to
Executive in twelve (12) equal bimonthly installments on the fifteenth and last
day of each month commencing on the fifteenth day of the month following the
month in which Executive's employment is terminated. The amount provided for
above shall be reduced by any disability benefits received by Executive under
plans maintained by the Company. Executive shall be entitled to other
disability compensation and benefits in accordance with the Company's benefit
programs and plans and the other provisions of this Agreement.
8.3 COMPENSATION UPON TERMINATION BY THE COMPANY FOR CAUSE OR
BY EXECUTIVE FOR OTHER THAN GOOD REASON OR UPON MANDATORY RETIREMENT. If
Executive's employment is terminated by the Company for Cause or by Executive
for other than Good Reason or upon Mandatory Retirement, the Company shall pay
Executive his Base Salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given, as well as all accrued bonus
compensation through the Date of Termination, and the Company shall have no
further obligations to Executive under this Agreement, except as may be
specifically provided herein.
8.4 IMPROPER TERMINATION; GOOD REASON. (a) Subject to the
provisions of Section 8.4(b) hereof, if (x) in breach of this Agreement, the
Company shall terminate Executive's employment other than pursuant to Section
7.3 (it being understood that a purported termination pursuant to Section 7.3
which is disputed and finally determined not to have been proper shall be a
termination by the Company in breach of this Agreement) or (y) Executive shall
terminate his employment for Good Reason, then
(i) The Company shall pay Executive his
full Base Salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, as well as all accrued bonus compensation
through the Date of Termination.
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(ii) In lieu of all salary and incentive
compensation payments which Executive would have earned under this Agreement
but for his termination, the Company shall pay to Executive, as liquidated
damages, an amount equal to the product of (A) the sum of (1) the Base Salary
in effect as of the Date of Termination and (2) the annual bonus, if any, paid
to Executive pursuant to Section 4.2 hereof with respect to the fiscal year in
which Executive's employment is terminated (including any bonus deemed to have
been paid as set forth below), provided that such annual bonus is calculable as
of the Date of Termination, and if such annual bonus is not then calculable,
then the bonus, if any, paid to Executive with respect to the fiscal year
immediately preceding the year in which Executive's employment is terminated
(which, for fiscal 1996 and fiscal 1997 shall be deemed to be $240,000), and
(B) two (2), such amounts to be payable to Executive in forty eight (48) equal
bi-monthly installments on the fifteenth and last day of each month, commencing
on the fifteenth day of the month following the month in which the Date of
Termination occurs. If the Company fails to make, within five (5) days of the
dates specified above, any two (2) payments required to be made pursuant to
this Section 8.4(a)(i) or (ii), the Company shall pay to Executive, within ten
(10) days of the date of such second failure, in a lump sum, an amount equal to
the sum of the remaining payments (including any payments that the Company
failed to make) to which Executive would have been entitled pursuant to Section
8.4(a)(i) and (ii) if such failures had not occurred.
(b) If, within one (1) year after the occurrence of a Change
of Control, (x) in breach of this Agreement, the Company shall terminate
Executive's employment other than pursuant to Section 7.3 (it being understood
that a purported termination pursuant to Section 7.3 which is disputed and
finally determined not to have been proper shall be a termination by the
Company in breach of this Agreement) or (y) Executive shall terminate his
employment for Good Reason, then
(i) The Company shall pay Executive his
full Base Salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, as well as all accrued bonus compensation
through the Date of Termination.
(ii) In lieu of all salary and incentive
compensation payments which Executive would have earned under this Agreement
but for his termination, the Company shall pay to Executive as liquidated
damages a lump sum amount equal to the present value, based on the Applicable
Federal Rate (as defined in Section 1274(d) of the Internal Revenue Code of
1986, as amended (the "Code")), of the product of (A) the sum of (1) the Base
Salary in effect as of the Date of Termination and (2) the annual bonus, if
any, paid to Executive pursuant to Section 4.2 hereof with respect to the
fiscal year in which Executive's employment is terminated (including any bonus
deemed to have been paid as set forth below), provided that such annual bonus
is calculable as of the Date of Termination, and if such annual bonus is not
then calculable, then the bonus, if any, paid to Executive with respect to the
fiscal year immediately preceding the year in which Executive's employment is
terminated (which, for fiscal 1996 and fiscal 1997 shall be deemed to be
$240,000), and (B) two (2) (such payment being referred to as the "Termination
Payment"). All payments under this Section 8.4(b) shall be made on or before
the fifth day
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following the Date of Termination. In addition, if the receipt of the lump sum
pursuant to the foregoing sentence would cause Executive to pay federal income
tax for the year of receipt at a higher marginal rate than Executive would have
paid for such year had Executive's employment not been terminated (the "Original
Marginal Amount"), Executive shall receive an additional amount such that the
amount retained by executive after the payment of federal income taxes on such
lump sum shall be the same as if such lump sum had been taxed at the Original
Marginal Rate. Executive shall not be required to mitigate the amount of
compensation payable to Executive hereunder, by securing other employment or
otherwise, nor will such compensation be reduced by reason of Executive securing
other employment or for any other reason.
(iii) In the event that executive becomes
entitled to the Termination Payment provided for in Section 8.4(b)(ii), if any
of the Termination Payment will be subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code, the Company shall pay to Executive at the
time specified below, an additional amount (the "Gross-Up Payment") such that
the net amount retained by Executive, after deduction of any Excise Tax on the
Termination Payment and any federal, state and local income tax and Excise Tax
upon the payment provided for by this paragraph, shall be equal to the
Termination Payment. For purposes of determining whether any of the Termination
Payment will be subject to the Excise Tax and the amount of such Excise Tax,
(x) any other payments or benefits received or to be received by Executive in
connection with a change in control of the Company or the termination of
Executive's employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any person whose actions
result in a change in control or any person having such a relationship with the
Company or such person as to require attribution of stock ownership between the
parties under section 318(a) of the Code) 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 Executive 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, (y) the amount of the Termination Payment which
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Termination Payment or (B) the amount of excess
parachute payments within the meaning of Sections 280G(b)(1) and (4) (after
applying clause (x), above, and after deducting any excess parachute payments
in respect of which payments have been made under this Section 8.4(y)), and (z)
the value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company's 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, Executive 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 rates of taxation in the
state and locality of your residence upon 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
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than the amount taken into account hereunder at the time of termination of
Executive's employment, Executive shall repay 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 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 termination of Executive's 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.
For purposes of this Agreement, a "Change in Control" of the
Company shall mean (i) the acquisition of beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), directly or indirectly, by any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Company or
Executive or an entity directly or indirectly controlled by Executive, of
securities of the Company representing a majority or more of the combined
voting power of the Company's then outstanding securities, (ii) the failure,
for any reason, of the individuals who presently constitute the Board of
Directors (the "Incumbent Board") to constitute at least a majority thereof,
provided that any director whose election has been approved in advance by
directors representing at least two-thirds (2/3) of the directors comprising
the Incumbent Board or by Executive shall be considered, for these purposes, as
though such director were a member of the Incumbent Board, (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least a majority
of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation,
and such merger or consolidation occurs; or (iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets.
(c) If termination of Executive's employment arises out of a
breach by the Company of this Agreement, the Company shall pay all other
damages for any and all loss of benefits which Executive would have received
under the Company's employee benefit plans if the Company had not breached this
Agreement and had Executive's employment continued for the full Term as then in
effect (including without limitation benefits Executive would have been
entitled to receive pursuant to any of the Company's pension plans had his
employment continued for such Term at the rate of compensation specified
herein), and including all legal fees and expenses incurred by him as a result
of such termination and in enforcing his rights.
8.5 CONTINUED MAINTENANCE OF BENEFIT PLANS. Unless Executive
is terminated for Cause, death, Mandatory Retirement or by Executive other than
for Good Reason,
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the Company shall maintain in full force and effect, for the continued benefit
of Executive for two (2) years, commencing upon the Date of Termination, all
medical, hospitalization, health and accident insurance benefits, plans or
programs in which Executive was entitled to participate immediately prior to the
Date of Termination. In the event that Executive's participation in any such
benefits, plan or program is barred, the Company shall arrange to provide
Executive with benefits substantially similar to those which Executive would
otherwise have been entitled to receive under such benefits, plans and programs.
9. INDEMNIFICATION.
9.1 The Company agrees to indemnify Executive to the fullest
extent permitted by applicable law consistent with the Company's Certificate of
Incorporation and By-Laws as in effect on the date hereof with respect to any
acts or non-acts he may have committed while he was an officer, director,
and/or employee (i) of the Company or any subsidiary thereof, or (ii) at the
request of the Company, of any other entity.
9.2 The Company agrees to maintain for Executive, during the
Term and for a period of five (5) years thereafter, a directors' and officers'
liability insurance policy not less favorable than any policy that the Company
maintains for its directors and executive officers in general.
10. CONFIDENTIAL INFORMATION.
10.1 Executive hereby acknowledges that, in the course of his
employment by the Company, he has had and will have access to secret and
confidential information which relates to or affects all aspects of the
business and affairs of the Company, its subsidiaries, affiliates or divisions,
and which are not available to the general public ("Confidential Information").
Without limiting the generality of the foregoing, Confidential Information
shall include information relating to inventions developments, specifications,
technical and engineering data, information concerning the filing or pendency
of patent applications, business ideas, trade secrets, products under
development, production methods and processes, sources of supply, marketing
plans, and the names of any customers or prospective customers or of any
persons who have or shall have traded or dealt with the Company. Accordingly,
Executive agrees that, except as required by the performance of his duties
hereunder, he will not, at any time during the Term and for a period commencing
on the Date of the Termination and concluding upon the earlier to occur of (a)
two (2) years after such Date of Termination and (b) the date subsequent to
such Date of Termination upon which the Company is in material breach of any
material provision of this Agreement (provided that Executive notifies the
Company in writing of such breach and the Company does not cure such breach
within ten (10) days of the receipt of such notice from Executive), disclose or
furnish any Confidential Information to any person, firm, corporation or other
entity without the express prior written consent of the Company.
Notwithstanding the foregoing, the term Confidential Information shall not
include information or data which (i) is now or hereafter in the public domain,
other than as a result of the breach of this Section 10 by Executive, (ii)
prior to the
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12
date of commencement of Executive's employment by the Company was known to
Executive, (iii) is, after the Date of Termination, lawfully acquired by
Executive from a third party who, to Executive' s knowledge, is not prohibited
from disclosing such data or information to Executive or (iv) is required to be
disclosed by court order or other legal process. In the event that Executive
receives a request or demand to disclose all or any part of the Confidential
Information under the terms of a subpoena or order issued by a court of
competent jurisdiction or otherwise, Executive agrees to (x) promptly notify the
Company of the existence, terms and circumstances surrounding such a request so
that the Company may seek a protective order or other appropriate relief or
remedy and (y) if disclosure of such information is required, disclose such
information and, subject to reimbursement by the Company of Executive's
expenses, cooperate with the Company in its efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to such portion
of the disclosed information which the Company so designates.
10.2 Executive hereby acknowledges and agrees that any and
all models, prototypes, notes, memoranda, notebooks, drawings, records, plans,
documents or other material in physical form which contain or embody
Confidential Information, whether created or prepared by Executive or by others
("Confidential Materials"), which are in Executive's possession or under his
control, are the sole property of the Company. Accordingly, Executive hereby
agrees that, upon the termination of his employment with the Company, whether
pursuant to this Agreement or otherwise, or at the Company's earlier request,
Executive shall return to the Company all Confidential Materials and all copies
thereof in his possession or under his control and shall not retain any copies
of Confidential Materials.
11. NON-COMPETITION.
11.1 Executive agrees that he shall not, so long as he shall
be employed by the Company in any capacity (whether pursuant to this Agreement
or otherwise) own, manage, operate, control or participate in the ownership,
management, operation or control or be employed by or connected in any manner
with, any business, firm or corporation which is or may be in competition with
the business of the Company, its subsidiaries, affiliates or divisions without
the express written consent of the Company.
11.2 Executive agrees that for a period commencing on the
effective Date of the Termination of his employment with the Company (for any
reason whatsoever) and concluding upon the earlier to occur of (a) twenty four
(24) months after such Date of Termination and (b) the date subsequent to such
Date of Termination upon which the Company is in material breach of any material
provision of this Agreement (provided that Executive notifies the Company in
writing of such breach and the Company does not cure such breach within ten (10)
days of the receipt of such notice from Executive), Executive shall not own,
manage, operate, control or participate in the ownership, management, operation
or control, or be employed by or connected in any manner with, any business,
firm or corporation which is engaged in or competes with the business of the
Company, its subsidiaries, affiliates or divisions as such business is
constituted on the Date of Termination.
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13
11.3 Anything to the contrary herein notwithstanding, the
provisions of this Section 11 shall not be deemed violated by the purchase
and/or ownership by Executive of shares of any class of equity securities (or
options, warrants or rights to acquire such securities, or any securities
convertible into or exchangeable or exercisable for such securities) (x) of
the Company (or any successor thereto), (y) representing (together with any
securities which would be acquired upon the exercise of any such options,
warrants or rights or upon the conversion of any other security convertible
into or exchangeable or exercisable for such securities) three percent (3%) or
less of the outstanding shares of any such class of equity securities of any
issuer whose securities are traded on a national securities exchange or listed
by NASDAQ, the National Quotation Bureau Incorporated or any similar
organization; provided, however, that Executive shall not be otherwise
connected with or active in the business of the issuers described in this
Section 11.3 or (z) of any entity which is then employing Executive.
12. REMEDY FOR BREACH. Executive hereby acknowledges that in
the event of any breach or threatened breach by him of any of the provisions of
Sections 10 or 11 of this Agreement, the Company would have no adequate remedy
at law and could suffer substantial and irreparable damage. Accordingly,
Executive hereby agrees that, in such event, the Company shall be entitled, and
notwithstanding any election by the Company to claim damages, to obtain a
temporary and/or permanent injunction to restrain any such breach or threatened
breach or to obtain specific performance of any such provisions, all without
prejudice to any and all other remedies which the Company may have at law or in
equity.
13. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered
personally or sent by registered or certified mail (return receipt requested),
postage prepaid, or by telecopy (immediately followed by telephone
confirmation of delivery of such telecopy with the intended recipient of such
notice and by notice in writing sent promptly by registered or certified mail
as provided above) to the parties to this Agreement at the following addresses
or at such other address for a party as shall be specified by like notice:
To the Company: Waterlink, Inc.
0000 Xxxxxxx Xxxxxx, X.X.
Xxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: President and Chief
Executive Officer
With copies to: Xxx X. Xxxxxx, Esq.
Benesch, Friedlander, Xxxxxx &
Xxxxxxx, LLP
0000 XX Xxxxxxx Xxxx.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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14
Telecopy: (000) 000-0000
To Executive: Xxxxxxxx X. Xxxxxxxxx
0000 Xxxxxxxxx Xxxx X.X.
Xxxxxx, Xxxx 00000
Telephone: (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxxxx, Esq.
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
All such notices and communications shall be deemed to have
been received on the date of personal delivery, on the date that the telecopy
is confirmed as having been received or on the third business day after the
mailing thereof, as the case may be.
14. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto with respect to the employment matters
contemplated herein and supersedes all prior agreements or understandings
among the parties related to such employment matters, including, without
limitation, the Prior Employment Agreement. Notwithstanding the foregoing, all
stock option agreements between Executive and the Company, including those
contained in Section 3(c) of the Prior Employment Agreement, shall remain in
full force and effect.
15. BINDING EFFECT; THIRD PARTY BENEFICIARIES. Except as
otherwise provided herein, this Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns and upon Executive.
"Successors and assigns" shall mean, in the case of the Company, any successor
pursuant to a merger, consolidation, or sale, or other transfer of all or
substantially all of the assets of the Company. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the Company in the
same amount and on the same terms as if Executive terminated his employment
for Good Reason, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date
of Termination. As
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15
used in this Agreement, "Company" shall mean Waterlink, Inc. and any successor
to its business and/or assets.
16. NO ASSIGNMENT. Except as contemplated by Section 15
above, this Agreement shall not be assignable or otherwise transferable by
either party.
17. AMENDMENT OR MODIFICATION; WAIVER. No provision of this
Agreement may be amended or waived unless such amendment or waiver is
authorized by the Chairman of the Board or the Board and is agreed to in
writing, signed by Executive and by an officer of the Company thereunto duly
authorized. Except as otherwise specifically provided in this Agreement, no
waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or at any prior or subsequent time.
18. FEES AND EXPENSES. The Company will reimburse Executive
for the reasonable attorney's fees incurred by him in connection with the
negotiation and preparation of this Agreement. If either party institutes any
action or proceedings to enforce any rights the party has under this Agreement,
or for damages by reason of any alleged breach of any provision of this
Agreement, or for a declaration of each party's rights or obligations hereunder
or to set aside any provision hereof, or for any other arbitral or judicial
remedy, each party shall be responsible for its own costs and expenses incurred
thereby, including but not limited to, attorneys' fees and disbursements;
provided, however, that if the employment of Executive is purported to be
terminated for Cause subsequent to the occurrence of a Change of Control, the
Company shall promptly pay and be solely responsible for all fees and expenses
incurred by Executive in contesting such purported termination or the grounds
therefor, including, without limitation, attorneys' fees and disbursements.
19. GOVERNING LAW; ARBITRATION. The validity, interpretation,
construction, performance and enforcement of this Agreement shall be governed
by the internal laws of the State of Ohio, without regard to its conflicts of
law rules. Any controversy or claim arising out of or relating to this
Agreement, shall be settled by arbitration in accordance with the rules of the
American Arbitration Association, and judgment upon such award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
arbitration shall be held in Canton, Ohio or such other place as may be agreed
upon at the time by the parties to the arbitration. Subject to Section 18
hereof, the expense of such arbitration shall be borne by the Company.
20. TITLES. Titles to the Sections and subsections in this
Agreement are intended solely for convenience and no provision of this
Agreement is to be construed by reference to the title of any Section.
21. COUNTERPARTS. This Agreement may be executed in one or
more counter parts, which together shall constitute one agreement. It shall not
be necessary for each party to sign each counterpart so long as each party has
signed at least one counterpart.
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22. SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms and provisions of this Agreement in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first set forth above.
WATERLINK, INC.
By: /s/ Xxxx X. Xxxx
---------------------------------------
Name: Xxxx X. Xxxx
Title: President and Chief Executive Officer
/s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------------
Xxxxxxxx X. Xxxxxxxxx
XXXXXXXX VENTURE PARTNERS III,
L.P., a Delaware limited partnership, with
respect to the second sentence of Section 4.3
only
By: /s/ Xxxxxxxx Venture Partners III, L.P.
---------------------------------------
Xxxxxxxx Venture Partners III, L.P.,
its general partner
By: /s/ Pinkas Family Partners, L.P.
---------------------------------------
Pinkas Family Partners, L.P.,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, general partner
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