EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of August 26, 1998, by and between UNITED STATES FILTER CORPORATION, a
Delaware corporation (the "Company"), and XXXXXX X. XXXXXXX ("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive desire to enter into this Agreement
to assure the Company of the continuing and exclusive service of Executive and
to set forth the terms and conditions of Executive's employment with the
Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties agree as follows:
1. Employment.
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1.1 Title and Duties. The Company hereby employs Executive as President
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and Chief Operating Officer -- Consumer and Commercial Group of the Company.
Executive's duties, responsibilities and authority shall be consistent with
Executive's position and shall include such other duties, responsibilities and
authority as may be assigned to Executive by the Board of Directors of the
Company (the "Board") or the Chief Executive Officer of the Company (the "CEO").
1.2 Services and Exclusivity of Services. The Company and Executive
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recognize that the services to be rendered by Executive are of such nature as to
be peculiarly rendered by Executive, encompass the individual ability,
managerial skills and business experience of Executive and cannot be measured
exclusively in terms of hours or services rendered in any particular period.
Executive agrees to devote Executive's full business time and to use
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Executive's best efforts, energy and ability exclusively toward advancing the
business, affairs and interests of the Company, and matters related thereto.
1.3 Noncompetition and Nonsolicitation. Executive agrees that during
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the Term (as defined in Section 2 below) of this Agreement (and in the case of
termination pursuant to Section 5 below for a period of one year thereafter),
Executive will neither directly nor indirectly engage in a business competing
with any of the businesses conducted by the Company or any of its subsidiaries
or affiliates, nor without the prior written consent of the Board directly or
indirectly have any interest in, own, manage, operate, control, be connected
with as a stockholder, joint venturer, officer, employee, partner or consultant,
or otherwise engage, invest or participate in any business that is competitive
with any of the businesses conducted by the Company or by any subsidiary or
affiliate of the Company; provided, however, that nothing contained in this
section 1.3 shall prevent Executive from investing or trading in stocks, bonds,
commodities, securities, real estate or other forms of investment for
Executive's own account and benefit (directly or indirectly), so long as such
investment activities do not significantly interfere with Executive's services
to be rendered hereunder and are consistent with the conflict of interest
policies maintained by the Company from time to time. Executive further agrees
that during the Term of this Agreement (and in the case of termination pursuant
to Section 5 below for a period of one year thereafter) Executive will 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 (other than for poor performance of any employee employed by the
Company at such time).
2. Term. The period of employment under this Agreement (the "Term")
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shall commence as of the date first set forth above, (the "Effective Date") and
shall continue for a period of twenty-four (24) full calendar months thereafter,
as herein provided. Unless the Company or the Executive gives written notice to
the other party to the contrary at least 60 days prior to the end of the Term
(including any extension), on the first day of the month following the Effective
Date, and on the first day of each month thereafter, the Term shall be
automatically extended by one full calendar month. The Term shall continue until
the expiration of all
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automatic extensions affected as aforesaid unless and until it ceases or is
terminated sooner as provided in this Agreement.
3. Compensation.
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3.1 Base Salary. During the Term, the Company will pay to Executive
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a base salary at the rate of US $247,000.00 per year, payable in accordance with
the Company practices in effect from time to time ("Base Salary"). Amounts
payable shall be reduced by standard withholding and other authorized
deductions. Such Base Salary shall be reviewed for increase (but not decrease)
in the sole discretion of the Compensation Committee of the Board of Directors
of the Company not less frequently than annually during the Term. In conducting
any such review, the Compensation Committee shall consider and take into
account, among other things, any change in Executive's responsibilities,
performance of Executive, and compensation of other similarly situated
executives of the Company and other comparable companies and other pertinent
factors. Executive's Base Salary shall not be decreased except upon mutual
agreement between the parties.
3.2 Bonuses, Incentive, Savings and Retirement Plans, Welfare Benefit
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Plans. Executive shall be entitled to participate in all annual and long-term
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bonuses and incentive, savings and retirement plans generally available to other
similarly situated executive employees of the Company. Executive, and
Executive's family as the case may be, shall be eligible to participate in and
receive all benefits under welfare benefit plans, practices, programs and
policies provided to other similarly situated executive employees of the
Company, including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs. The Company reserves the right to
modify, suspend or discontinue any and all of its benefits referred to in this
Section 3.2 at any time without recourse by Executive so long as such action is
taken generally with respect to other similarly situated peer executives and
does not single out Executive.
3.3 Fringe Benefits. Executive shall be entitled to receive
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fringe benefits consistent with Executive's duties and position, and in
accordance with the benefits provided to other similarly situated executive
employees of the Company. The Company reserves the right
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to modify, suspend or discontinue any and all of its fringe benefits referred to
in this Section 3.3 at any time without recourse by Executive so long as such
action is taken generally with respect to other similarly situated peer
executives and does not single out Executive.
3.4 Expenses. Executive shall be entitled to reimbursement for expenses
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incurred in the furtherance of the business of the Company in accordance with
the Company's practices and procedures, as they may exist from time to time.
Executive shall keep complete and accurate records of all expenditures such that
Executive may fully account according to the Company's practices and procedures.
3.5 Vacation. Executive shall be entitled to paid vacations and other
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absences from work that are reasonably consistent with the performance of
Executive's duties as provided in this Agreement. Such vacations and absences
shall be in accordance with those generally provided to other similarly situated
executive employees.
3.6 Additional Benefits Upon a Change of Control.
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(a) In the event a Change of Control occurs during the Term, the
Executive shall be entitled to receive, within thirty (30) days after the Change
of Control, a cash lump sum amount equal to:
(i) Executive's Base Salary for the balance of the Term, plus
the target annual incentive bonus scheduled for the year in which there is
a Change of Control and each year thereafter for the balance of the Term
(determined without regard to any performance goals); plus
(ii) the present value (as determined by a nationally recognized
employee benefits consulting firm agreed to by Executive and the Company)
of the health, life insurance, disability and accident insurance plans or
programs covering Executive for the balance of the Term.
(b) "Change of Control" shall mean the occurrence of any of the
following:
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(i) 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;
(ii) 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 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 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;
(iii) 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
transaction or a series of transactions; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company.
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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 Executive 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 exercisable immediately or only after the
passage of time.
"Voting Share" means all outstanding shares 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.
4. Confidential Information.
4.1 General. Executive acknowledges that during employment by and as a
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result of a relationship with the Company, Executive will obtain knowledge of
and gain access to information regarding the Company's business, operations,
products, proposed products, production methods, processes, customer lists,
advertising, marketing and promotional plans and materials, price lists, pricing
policies, financial information and other trade secrets, confidential
information and material proprietary to the Company or designated as being
confidential by the Company which is not generally known to non-Company
personnel, including information and material originated, discovered or
developed in whole or in part by Executive (collectively referred to herein as
"Confidential Information"). Executive agrees that during the Term of this
Agreement and, to the fullest extent permitted by law, thereafter, Executive
will, in a fiduciary
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capacity for the benefit of the Company, hold all Confidential Information
strictly in confidence and will not directly or indirectly reveal, report,
disclose, publish or transfer any of such Confidential Information to any
person, firm or other entity, or utilize any of the Confidential Information for
any purpose, except in furtherance of Executive's employment under this
Agreement.
4.2 Proprietary Interest. All inventions, designs, improvements,
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patents, copyrights and discoveries conceived by Executive during the Term of
this Agreement that are useful in or directly or indirectly related to the
business of the Company or to any experimental work carried on by the Company,
shall be the property of the Company. Executive will promptly and fully disclose
to the Company all such inventions, designs, improvements, patents, copyrights
and discoveries (whether developed individually or with other persons) and shall
take all steps necessary and reasonably required to assure the Company's
ownership thereof and to assist the Company in protecting or defending the
Company's proprietary rights therein.
4.3 Return of Materials. Executive expressly acknowledges that all
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lists, books, records and other Confidential Information of the Company obtained
in connection with the Company's business is the exclusive property of the
Company and that upon the expiration or earlier termination of this Agreement,
Executive will immediately surrender and return to the Company all such items
and all other property belonging to the Company then in the possession of
Executive, and Executive shall not make or retain any copies thereof.
5. Termination Prior to Expiration of Term. Executive's employment, and
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his rights under this Agreement, may be terminated prior to the expiration of
the Term of this Agreement only as provided in this section 5.
5.1 Death or Disability.
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(a) The Company may terminate the Executive's employment
hereunder due to death or Disability (as defined below). If Executive's
employment is terminated as a result of death or Disability, Executive (or
Executive's estate or personal representative in the event of death) shall be
entitled to receive Executive's full Base Salary until the expiration of six
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months from the date on which Executive was first unable to substantially
perform his duties hereunder. Executive and/or Executive's dependents shall be
entitled to continue to participate in the Company's welfare benefit plans and
programs on the same terms as similarly situated active employees for a period
of six months from the date Executive was first unable to substantially perform
Executive's duties hereunder. Executive and/or Executive's dependents shall
thereafter be entitled to any continuation of such benefits provided under such
benefit plans or by applicable law.
(b) "Disability" shall mean a total and permanent physical or mental
impairment that substantially limits a major life activity of Executive and that
renders Executive unable to perform the essential functions of Executive's
position, even with reasonable accommodation that does not impose an undue
hardship on the Company. Executive's Disability shall be determined by the
Company, in good faith, based upon information supplied by Executive and/or
Executive's medical personnel or others selected by the Company or its insurers.
5.2 Termination by the Company for Cause.
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(a) The Company may terminate the Executive's employment hereunder
for Cause (as hereinafter defined). If the Company terminates the Executive's
employment hereunder for Cause, the Executive shall be entitled to receive (1)
all Base Salary due employee as of the date of termination, (2) any previously
authorized bonus (if any) for the period of Executive's employment prior to the
discharge or resignation, and (3) any previously vested benefits, such as
previously vested retirement benefits. Furthermore, the Company shall honor any
rights previously vested in Executive under a stock option or similar plan or
program.
(b) "Cause" shall mean (1) the Executive's conviction of a felony;
(2) a material breach of this Agreement by the Executive and/or the Executive's
gross neglect of his duties hereunder; or (3) the Executive's addiction to
alcohol or to a drug not prescribed by a physician.
5.3 Termination Without Cause or Termination for Good Reason.
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(a) The Company may terminate the Executive's employment
hereunder without Cause, and the Executive shall be permitted to terminate his
employment hereunder for Good Reason (as hereinafter defined). If the Company
terminates the Executive's employment hereunder without Cause, other than due to
death or Disability, or if the Employee effects a termination for Good Reason,
the Executive shall be entitled to receive all the benefits provided for under
Section 3.6 of this Agreement.
(b) "Good Reason" means and shall be deemed to exist if, without
the prior written consent of the Executive, (1) the Executive 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;
(2) the Company fails to substantially perform any material term or provision of
this Agreement; or (3) the Executive's compensation or benefits provided for
hereunder is decreased.
6. Arbitration.
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6.1 General. Any dispute, controversy or claim arising out of or
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relating to this Agreement, the breach hereof or the coverage or enforceability
of this arbitration provision shall be settled by arbitration in Riverside
County, California (or such other location as the Company and Executive may
mutually agree), conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, as such rules are in effect in
Riverside on the date of delivery of demand for arbitration. The arbitration of
any such issue, including the determination of the amount of any damages
suffered by either party hereto by reason of the acts or omissions of the other,
shall be to the exclusion of any court of law. Notwithstanding the foregoing,
either party hereto may seek any provisional remedy in a court, including but
not limited to an action for injunctive relief or attachment, without waiving
the right to arbitration.
6.2 Procedure. There shall be three arbitrators, one to be chosen by
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each party at will within 10 days from the date of delivery of demand for
arbitration and the third arbitrator to be selected by the two arbitrators so
chosen. If the two arbitrators are unable to select a third arbitrator within 10
days after the last of the two arbitrators is chosen by the parties, the third
arbitrator will be designated, on application by either party, by the American
Arbitration
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Association. The decision of a majority of the arbitrators shall be final and
binding on both parties and their respective heirs, executors, administrators,
personal representatives, successors and assigns. Judgement upon any award of
the arbitrators may be entered in any court having jurisdiction, or application
may be made to any such court for the judicial acceptance of the award and for
an order of enforcement.
6.3 Costs and Expenses. The Company shall pay the fees of all
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arbitrators, witnesses and such other expenses as may be generated by the
arbitration, except Executive's attorneys fees, unless a majority of the
arbitrators concludes that such arbitration procedure was not instituted in good
faith by Executive. In such event the arbitrators shall be empowered to allocate
fees and assess costs and other expenses of the arbitrators, except attorneys
fees, as they may deem appropriate, bearing in mind the relative financial
abilities of the parties and the respective merits of their positions.
7. Non-Assignment. This Agreement shall not be assignable nor the duties
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hereunder delegable by Executive. None of the payments hereunder may be
encumbered, transferred or in any way anticipated. The Company shall not assign
this Agreement nor shall it transfer all or any substantial part of its assets
without first obtaining in conjunction with such transfer the express assumption
of the obligations hereof by the assignee or transferee.
8. Remedies. Executive acknowledges that the services Executive is to
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render under this Agreement are of a unique and special nature, the loss of
which cannot reasonably or adequately be compensated for in monetary damages,
and that irreparable injury and damage will result to the Company in the event
of any default or breach of this Agreement by Executive. Because of the unique
nature of the Confidential Information, Executive further acknowledges and
agrees that the Company will suffer irreparable harm if Executive fails to
comply with the obligations in section 4 hereof and that monetary damages would
be inadequate to compensate the Company for such breach. Accordingly, Executive
agrees that the Company will, in addition to any other remedies available to it
at law, in equity or, without limitation, otherwise, be entitled to injunctive
relief and/or specific performance to enforce the terms, or prevent or remedy
the violation, of any provisions of this Agreement. This provision shall not
constitute a waiver by the Company of any rights to damages or other remedies
which it may have pursuant to this Agreement or otherwise.
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9. Survival. The provisions of sections 4, 5, 6 and 8 shall survive the
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expiration or earlier termination of this Agreement.
10. Notices. Any notices or other communications relating to this Agreement
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shall be in writing and delivered personally or mailed by certified mail, return
receipt requested, to the party concerned at the address set forth below:
If to Company: United States Filter Corporation
00-000 Xxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
If to Executive: At Executive's residence address as maintained
by the Company in the regular course of its
business for payroll purposes.
Either party may change the address for the giving of notices at any time by
notice given to the other party under the provisions of this section 10.
11. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties and supersedes all prior written and oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof, other than that certain written letter agreement
dated as of May 4, 1998 by and among Executive, the Company and Culligan
International, Inc. This Agreement may not be changed orally, but only by an
agreement in writing signed by both parties. Such letter agreement is attached
and is incorporated by reference.
12. Counterparts. This Agreement may be executed in counterparts, each of
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which shall be an original, but all of which together shall constitute one
agreement.
13. Construction. This Agreement shall be governed under and construed in
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accordance with the laws of the State of California. The paragraph headings and
captions contained herein are for reference purposes and convenience only and
shall not in any way affect the meaning or
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interpretation of this Agreement. It is intended by the parties that this
Agreement be interpreted in accordance with its fair and simple meaning, not for
or against either party, and neither party shall be deemed to be the drafter of
this Agreement.
14. Severability. If any portion or provision of this Agreement is
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determined by arbitration or by a court of competent jurisdiction to be
invalid, illegal or unenforceable, the remaining portions or provisions hereof
shall not be affected. The covenants in this Agreement are severable and
separate, and the unenforceability of any specific covenant shall not affect the
enforceability of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and this Agreement shall thereby be reformed.
15. Binding Effect. The rights and obligations of the parties under this
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Agreement shall be binding upon and inure to the benefit of the permitted
successors, assigns, heirs, administrators, executors and personal
representatives of the parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and in the year first written above.
UNITED STATES FILTER CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
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Name: Xx. Xxxxxx X. Xxxxxxx, Xx.
Title: Chairman, Compensation Committee of
the Board of Directors
EXECUTIVE
XXXXXX X. XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
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Signature
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