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Exhibit 10.1
EMPLOYMENT AGREEMENT
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 Xxxx X. Xxxx ("Executive").
W I T N E S S E T H :
WHEREAS, Executive has been employed by the Company, for the
past several years, and is currently the President and Chief Executive Officer
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 President and Chief Executive Officer 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 Chairman of the Board of Directors and/or 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
Chairman of the Board and 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 residences 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. In addition, upon the execution of this Agreement,
Executive shall be granted a non-qualified option (the "Stock Option") to
purchase 300,000 shares of the common stock, $.001 par value per share (the
"Common Stock"), of the Company, at an initial exercise price of $12.00 per
share. The Stock Option will be exercisable in cumulative annual increments of
25% of the shares subject thereto, commencing on the first anniversary of the
date hereof, provided, however, that the Stock Option shall become exercisable
in full, without regard to the vesting criteria otherwise contained herein or
therein, upon the occurrence of a Change of Control (as hereinafter defined) or
the termination of Executive's employment hereunder (x) by the Company, other
than for Cause, death or disability or (y) by the Executive for Good Reason. If
the Company consummates a public offering of its capital stock (the "Public
Offering") within six months of the date hereof, and the initial public offering
price per share is less than or greater than the then current exercise price of
the Stock Option, such exercise price will be adjusted to equal the initial
public offering price per share.
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.
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 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.
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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 shall be responsible for all costs of
repairing, maintaining and insuring such automobile; provided, however, that the
costs 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 662/3% 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 President
and Chief Executive Officer of the Company or a change in his 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
President and Chief Executive Officer 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) any failure of the Board to
nominate Executive for election to the Board, except in connection with the
termination of Executive's employment for Cause or as a result of his death or
disability or by him other than for Good Reason, (D) a reduction in Executive's
Base Salary as in effect on the date of this
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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, (E) the
Company shall materially breach any provision of this Agreement, which breach
shall continue unremedied for ten (10) days after the Company shall have been
given notice of such breach, or (F) 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 (G) 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 Executive's employment is terminated pursuant to Section 7.5 above, the
date Executive attains age 65, (iii) if the Executive's employment is terminated
pursuant to Section 7.6 above, the date specified in the Notice of Termination,
and (iv) 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's 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
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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 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 plus
(y) an amount equal to the product of (1) the 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
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(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,
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 (including any bonus deemed to have
been paid as set forth below) with respect to the fiscal year in which
Executive's employment is terminated, 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 (including any bonus deemed to have been paid as
set forth below) with respect to the fiscal year in which Executive's employment
is terminated, provided that such annual bonus is calculable as of the Date of
Termination, and if such annual bonus is not then calculable, then the
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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 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
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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 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
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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
for other than Good Reason, 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 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 ByLaws 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 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
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12
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 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 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
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13
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.
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: Chairman of the Board
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14
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
To Executive: Xxxx X. Xxxx
0000 Xxxx Xxxxx Xxxxxx X.X.
Xxxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (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 Employment Agreement, dated June 1, 1995, between the Company and Executive.
Notwithstanding the foregoing, all stock option agreements between Executive and
the Company 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
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15
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 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.
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16
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.
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/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Chairman of the Board
/s/ Xxxx X. Xxxx
---------------------------------------
Xxxx X. Xxxx
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