EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT made as of August 28, 2003 (the "Agreement")
by and between Ionics, Incorporated, a Massachusetts corporation with principal
offices at 00 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000 (the "Corporation"), and Xxxx X.
Xxxxxx, an individual residing at 0 Xxxxx Xxxxx, Xxxxx, Xxxxxxxxxxxxx 00000 (the
"Employee").
W I T N E S S E T H
WHEREAS, the Corporation desires that the Employee be employed as its
Vice President, Strategy and Operations on the terms and conditions set forth in
this Agreement; and
WHEREAS, the Employee desires to be employed by the Corporation in such
capacity, on the terms and conditions set forth in this Agreement; and
WHEREAS, the Employee has represented and warranted to the Corporation
that he has no commitment, obligation or contract of any kind that is
inconsistent with his being employed by the Corporation on the terms contained
herein;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements contained in this Agreement, the parties hereby agree as follows:
1. Duties. The Corporation hereby hires and agrees to employ the Employee, and
the Employee agrees to be employed by the Corporation, in an executive capacity
for the Term (as defined below) and on the terms and conditions set forth in
this Agreement. During the Term, the Corporation shall employ the Employee as
its Vice President, Strategy and Operations. During the term of his employment
hereunder, the Employee shall report directly to, and shall be subject to the
direction and control of, the Corporation's Chief Executive Officer, and the
Employee shall be primarily based at the Corporation's headquarters in
Watertown, Massachusetts, except for reasonably required travel on the
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Corporation's business. During the Employment Term, the Employee shall devote
substantially all of his business time, best efforts, and business judgment,
skill, ability, knowledge, and energies to the advancement of the Corporation's
best interests in the discharge of his responsibilities hereunder, which shall
be the responsibilities commensurate with such positions in a corporation with
securities publicly traded in the United States.
2. Compensation.
(a) Base Salary. During the Term, as compensation for the Employee's
services hereunder, the Corporation shall pay to the Employee a base salary of $
29,166.67 per month (for an annual rate of $350,000), subject to such salary
increases as may be granted by the Corporation's Board of Directors. The base
salary shall be payable in installments in accordance with the Corporation's
regular practices, as such practices may be modified from time to time, but in
no event less often than monthly.
(b) Bonus. In addition to his base salary, during the Term, the
Employee will be entitled to participate in a bonus program to be established
by the Corporation. The Employee will be entitled to a minimum bonus with
respect to the Corporation's fiscal year ending December 31, 2003 of $75,000,
a minimum bonus with respect to the Corporation's fiscal year ending December
31, 2004 of $150,000, and a minimum bonus with respect to the Corporation's
fiscal year ending December 31, 2005 of $75,000, which minimum amounts may be
exceeded pursuant to the final terms of the bonus program. The bonuses shall
be payable as determined by the Board of Directors.
(c) Stock Options. Pursuant to the recommendation of the Compensation
Committee of the Board of Directors and as a material inducement to the
Employee to enter into this Agreement and to become employed by the
Corporation, the Corporation, effective as of the date hereof, shall grant to
the Employee inducement nonqualified stock options to purchase 200,000 shares
of the Corporation's Common Stock, par value $1.00 per share, which option
shall be substantially in the form of Exhibit A attached hereto. In 2004 and
subsequent years during the Term, the Employee shall be eligible for annual
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grants of additional nonqualified stock options to purchase 50,000 shares
(subject to appropriate adjustment to reflect stock dividends, stock splits,
recapitalizations, etc.) of the Corporation's Common Stock, par value $1.00
per share, under the Corporation's 1997 Stock Incentive Plan (or another stock
option plan maintained by the Corporation), subject to the approval of each
such grant by the Compensation Committee of the Board of Directors.
(d) Benefits. During the Employment Term, the Employee shall be
eligible to participate in all benefit plans of the Corporation, including,
without limitation, the Ionics, Incorporated Section 401(k) plan, the Ionics,
Incorporated Retirement Plan (a defined benefit pension plan), the
Corporation's Supplemental Employee Retirement Plan, and group medical,
dental, accident, disability, life and other health benefit plans of the
Corporation, as may be provided by the Corporation from time to time to the
Corporation's executives of comparable status, subject to, and to the extent
that, the Employee is eligible under such benefit plans in accordance with
their respective terms. The Employee will be entitled to first-class air
travel for all domestic air travel, and business-class air travel on all
overseas flights taken on behalf of the Corporation in furtherance of his
duties as an executive employee. The Corporation will pay for the maintenance
of all airline club memberships held by the Employee, to the extent not
already provided on a complimentary basis in conjunction with Employee's
credit card accounts.
(e) Vacation. The Employee shall be entitled to four weeks of vacation
for each calendar year during the Term, at such times as shall be mutually
agreed upon by the Corporation and the Employee, and otherwise in accordance
with the Corporation's regular practices, as such practices may be modified
from time to time.
(f) Expenses. During the Employment Term, the Employee is authorized to
incur reasonable expenses in the performance of his duties hereunder. The
Corporation shall reimburse the Employee for all such expenses upon the
presentation by the Employee, not less frequently than monthly, of signed,
itemized expense reports, together with any receipts or vouchers, in
accordance with the Corporation's policies and procedures as adopted and in
effect from time to time applicable to its executive officers.
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(g) Indemnity. During the Employment Term and for six years thereafter,
the Corporation will provide to the Employee indemnification rights available
to its directors and officers generally, including the benefit of such
policies of directors' and officers' liability insurance as the Corporation
maintains for the benefit of all its directors and officers during such
period.
3. Term and Termination.
(a) The term of this Agreement shall be for the period commencing on
the date hereof and terminating on the date that is three years after the date
hereof, unless earlier terminated pursuant to any of the provisions of this
Section 3 (the "Initial Term"). Subject to earlier termination as provided in
this Section 3 and unless the Corporation or Employee gives written notice to
the other at least 90 days prior to the expiration of the Initial Term (or any
subsequent one-year extension thereof) of the Corporation's or Employee's,
respectively, intention not to continue Employee's employment beyond the end
of such period, the Initial Term (or any subsequent one-year extension
thereof) shall be automatically extended for an additional one-year period.
The Initial Term, together with any extensions, shall be referred to as the
"Term." The period commencing on the date hereof and ending on the last day of
the Employee's employment with the Corporation shall be referred to as the
"Employment Term."
(b) The Corporation may terminate Employee's employment upon ten (10)
days' prior written notice for Cause (as defined below). "Cause" shall mean
any of the following: (i) the Employee's dishonesty, malfeasance, disloyalty
or breach of fiduciary duties to the Corporation; (ii) the conviction of, or
plea of guilty or nolo contendere by, the Employee for any felony involving
moral turpitude (or for any lesser crime or offense involving the
Corporation); (iii) the failure or refusal, except due to incapacity as a
result of illness or disability, of the Employee to perform the lawful duties
appropriate to his office assigned to him pursuant to this Agreement, provided
that such failure or refusal continues uncorrected for a period of 30 days
after the Employee shall have received specific written directions in respect
thereof from the Chief Executive Officer; or (iv) any breach by the Employee
of Section 4 of this Agreement or of the Employer's Agreement With Employee in
the form of Exhibit B attached hereto. The Employee's employment shall also
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terminate immediately upon his death. The Corporation may terminate the
Employee's employment upon ten (10) days' prior written notice following a
determination by the Board of Directors that the Employee has a Permanent
Disability (as hereinafter defined); provided, however, that no such
termination shall be effective (i) prior to the expiration of the 180-day
period following the date the Employee first incurred the condition which is
the basis for the Permanent Disability or (ii) if the Employee begins to
substantially perform the significant aspects of his regular duties prior to
the proposed effective date of such termination. For purposes of this
Agreement, "Permanent Disability" shall mean the Employee's inability, by
reason of any physical or mental impairment, to substantially perform the
significant aspects of his regular duties, as contemplated by this Agreement,
which inability is reasonably contemplated to continue for at least one (1)
year from its incidence and at least 90 days from the date of such
determination. Any question as to the existence, extent, or potentiality of
the Employee's Permanent Disability shall be determined by a qualified
independent physician selected by the Employee (or, of the Employee is unable
to make such selection, by an adult member of the Employee's immediate family)
and reasonably acceptable to the Board. If the Employee's employment is
terminated due to any of the reasons stated in this Section 3(b), or if the
Employee terminates his employment ((other than for Good Reason (as defined
below) within 24 months after a Change in Control (as defined below)), then
the Corporation shall have no further obligation to the Employee under this
Agreement except for payment pursuant to Section 2 of this Agreement for
services theretofore rendered by the Employee and for benefits required to be
paid or provided by law and payment of the Employee's normal post-termination
benefits in accordance with the Corporation's retirement, insurance and other
benefit plans and arrangements.
(c) If the Corporation terminates this Agreement prior to its
expiration for any reason other than any of the reasons stated in Section
3(b), then the Employee shall receive (i) a severance benefit equal to (A) the
sum equal to eighteen months of his then-current base salary, plus (B) an
amount equal to 1.5 times the Employee's target bonus for the fiscal year in
which such termination occurs, and (ii) benefits required to be paid or
provided by law and payment of the Employee's normal post-termination benefits
in accordance with the Corporation's retirement, insurance and other benefit
plans and arrangements, including without limitation thereto the bonus earned
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for any fiscal year in which such termination occurs or any previous fiscal
year but not fully paid at the time of such termination. In the event, during
the term of this Agreement, the Employee is no longer a member of the
Corporation's executive/top management team, or the Employee suffers a
significant diminution in the Employee's position, duties, responsibilities,
power, title, or offices from those in effect as of the first day of his
employment without the prior written approval of the Employee and the Employee
terminates this Agreement, then the Corporation shall be deemed to have
terminated this Agreement for a reason other than any of the reasons stated in
Section 3(b).
(d) As used herein, the following terms shall have the following
respective meanings:
(i) A "Change in Control" shall occur or be deemed to have
occurred only if any of the following events occur: (A) any "person," as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), (other than the Corporation, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Corporation, or any corporation owned directly or indirectly by the stockholders
of the Corporation in substantially the same proportion as their ownership of
stock of the Corporation) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 30% or more of the combined voting power of the
Corporation's then outstanding securities; (B) individuals who, as of the date
hereof, constitute the Board (as of the date hereof, the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Corporation's stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Corporation,
as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act)
shall be, for purposes of this Agreement, considered as though such person were
a member of the Incumbent Board; or (C) the stockholders of the Corporation
approve a merger or consolidation of the Corporation with any other corporation,
other than (1) a merger or consolidation which would result in the voting
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securities of the Corporation outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 70% of the combined voting power
of the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation, or (2) a merger or consolidation
effected to implement a recapitalization of the Corporation (or similar
transaction) in which no "person" (as hereinabove defined) acquires more than
30% of the combined voting power of the Corporation's then outstanding
securities; or (D) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets.
(ii) "Good Reason" shall mean, without the Employee's written
consent, the occurrence within 24 months after a Change in Control of the
Corporation of any of the following circumstances unless, in the case of
paragraphs (A), (C), (D) or (F), such circumstances are fully corrected prior to
the Employee's date of termination specified in the notice of termination given
in respect thereof:
(A) any significant diminution in the Employee's
position, duties, responsibilities, power, title or
office as in effect immediately prior to a Change in Control;
(B) any reduction in the Employee's annual base
salary as in effect on the date hereof or as the same
may be increased from time to time;
(C) the failure of the Corporation to continue in
effect any material compensation or benefit plan in
which the Employee participates immediately prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the failure by the
Corporation to continue the Employee's participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of the Employee's
participation relative to other participants, as existed at the time of the
Change in Control, or the failure by the Corporation to award cash bonuses to
its executives in amounts substantially consistent with past practice in light
of the Corporation's financial performance;
(D) the failure by the Corporation to continue to
provide the Employee with benefits substantially
similar to those enjoyed by the Employee under any of the Corporation's life
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insurance, medical, accident, or disability plans in which the Employee was
participating at the time of the Change in Control, the taking of any action by
the Corporation which would directly or indirectly materially reduce any of such
benefits, or the failure by the Corporation to provide the Employee with the
number of paid vacation days to which he is entitled under the terms of this
Agreement;
(E) any requirement by the Corporation or of any
person in control of the Corporation that the
location at which the Employee performs his principal duties for the Corporation
be changed to a new location outside a radius of 50 miles from his principal
residence at the time of the Change in Control; or
(F) the failure of the Corporation to obtain a
satisfactory agreement from any successor to assume and
agree to perform this Agreement.
4. Employee's Obligations.
(a) Trade Secrets and Confidential Information. The Employee shall hold
in confidence and not disclose at any time (including any time subsequent to the
termination of this Agreement) any and all trade secrets, confidential
information or proprietary rights made known to him as such by the Corporation,
including, without limiting the generality of the foregoing, customer lists;
financial information of the Corporation and its customers; customer
requirements; product information, formulations and content; new invention
disclosures, patent applications, know-how and other proprietary intellectual
property; and plans, systems, processes and preparations for the Corporation's
current and proposed business activities. The Employee shall return all written
or printed materials (whether in the form of reports, memoranda, lists, computer
programs or otherwise) and all copies thereof belonging to the Corporation or
relating to any aspect of its business upon the termination of this Employment
Agreement.
(b) Non-Competition. The Employee acknowledges that as Vice President,
Strategy and Operations of the Corporation, he will make a significant
contribution to the goodwill of its business. The Employee further acknowledges
that he will receive a significant economic benefit as a result of his
employment by the Corporation hereunder. In consideration thereof, the Employee
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agrees that while he is employed by the Corporation and for a period of 12
months thereafter, he will not, without the prior written consent of the
Corporation:
(i) sell or offer to sell to, or solicit or give advice
regarding the solicitation of, any customer or account of the Corporation with
respect to any products or services which are competitive with the products or
services of the Corporation;
(ii) be employed by, consult with, or serve as a shareholder,
partner, member, proprietor, principal, director, officer, investor, or any
other direct or indirect participant, in any enterprise or endeavor which
competes in any manner, directly or indirectly, with the business of the
Corporation, as conducted, under active development, or actively under
consideration while the Employee was employed by the Corporation, or whose
business is directed at developing, manufacturing or marketing any products or
processes that compete with any products or processes of the Corporation
available, or under development, or actively under consideration while the
Employee was employed by the Corporation, provided that nothing in this
Agreement shall prevent the Employee from owning, as an investor, less than one
percent of the stock of any corporation;
(iii) induce, entice, hire or attempt to hire or employ any
employee of the Corporation; or
(iv) interfere with, disrupt or attempt to disrupt any
relationship, contractual or otherwise, between the Corporation and any of the
Corporation's customers, suppliers, lessors, lessees, employees, consultants, or
research partners.
The restrictions imposed by clauses (i) and (ii) above shall apply within such
geographic areas in which the Corporation is engaged directly or indirectly in
business during the period during which the Employee is employed by the
Corporation or during the 12-month period thereafter.
(c) Injunctive Relief. The parties hereto agree that (i) irreparable
injury will result to the Corporation, its business and property and its
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shareholders in the event of a breach of the provisions of this Section 4; and
(ii) the remedy which the Corporation may have at law for any breach or threat
of breach of the provisions of this Section 4 is inadequate. Therefore, the
Employee agrees that in the event of breach or threat of breach of the
provisions hereof by the Employee, the Corporation shall be entitled to
injunctive relief against the Employee restraining him from such a breach. The
Employee agrees that the provisions contained in this Section 4 shall remain in
full force and effect notwithstanding the breach or claimed breach of any other
provision hereof by any party hereto. Nothing contained herein shall be
construed as prohibiting the Corporation from pursuing any other remedy
available to it for any breach or threatened breach of the terms hereof.
(d) Judicial Intervention. If any of the restrictions contained in
this Section 4 shall be deemed to be unenforceable by reason of the extent,
duration, or geographical scope thereof, or otherwise, then the court making
such determination shall have the right to reduce such extent, duration,
geographical scope, or other provisions hereof, and in its reduced form this
Section 4 shall be enforceable in the manner contemplated hereby.
5. Waiver of Breach. The waiver by either party hereto of a breach of any
provision of this Agreement by the other party hereto shall not operate as or be
construed to be a waiver of any subsequent breach of such other party.
6. Notices. Any notice or other communication required by or which may be given
to either party hereunder shall be in writing and shall be deemed given
effectively if delivered personally to such party (or the Clerk, in the case of
the Corporation) or if mailed by registered or certified mail, postage prepaid,
return receipt requested, to the address stated for each party in the first
paragraph of this Agreement. Either party may designate a different address by
giving notice of change of address in the manner herein provided.
7. Construction. This Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to the principles of conflicts of laws thereof.
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8. Arbitration. Any controversy or claim arising out of or relating to this
Agreement or breach thereof (except those for which injunctive or other
equitable relief may be sought) shall be settled by arbitration administered by
the American Arbitration Association in Boston, Massachusetts in accordance with
the commercial arbitration rules then obtaining of the American Arbitration
Association and judgment upon the award may be entered in any court having
jurisdiction thereof.
9. Entire Agreement. This Agreement, together with the agreements attached
hereto as Exhibits, constitutes the entire agreement of the parties hereto
relating to the employment of the Employee by the Corporation. This Agreement
may not be changed except by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification, extension or discharge is
sought.
10. Assignment. This Agreement is a personal contract, and the Employee may not
assign any of his rights or delegate any of his duties under this Agreement, but
the rights of the Employee hereunder shall inure to the benefit of his heirs,
executors, administrators and legal representatives. The rights and obligations
of the Corporation under this Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Corporation. The Company shall
have the right to assign this Agreement to any successor of substantially all of
its business or assets, and any such successor shall be bound by all of the
provisions hereof.
11. Severability.
(a) It is further understood and agreed by the parties hereto that if
any of the provisions of this Agreement shall contravene, or be invalid under,
the laws of the jurisdiction where invoked, such contravention or invalidity
shall not invalidate the whole Agreement, but it shall be construed as it not
containing the particular provision or provisions held to be invalid in the said
particular jurisdiction, and the rights and obligations of the parities shall be
construed and enforced accordingly.
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(b) Survival. Sections 4, 5, 7, 8, 9 and 11 of this Agreement shall
survive the expiration or earlier termination of this Agreement.
12. Miscellaneous.
(a) The Employee shall sign the Agreement With Employee (dealing with
inventions and proprietary information) attached hereto as Exhibit B
simultaneously herewith.
(b) Each of the parties hereto shall, at any time and from time to time
hereafter, upon the reasonable request of the other, take such further action
and execute acknowledge and deliver such instruments and documents of further
assurance, as may be necessary to carry out the provisions of this Agreement.
(c) The Employee currently serves as a director of Viatris Group
(Germany), the American Institute of Contemporary German Studies, and Lista
International Corp. The Employee agrees that he will not become a member of the
Board of Directors (or any comparable governing body) of any additional
companies without the prior approval of the Chief Executive Officer of the
Corporation.
(d) The Employee will be permitted to continue to advise Ernst &
Young/Advent International Corp. on matters related to Sandvik.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
as of the date hereinabove first set forth.
IONICS, INCORPORATED
By: /s/Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer
/s/Xxxx X Xxxxxx
-----------------------------------------------
Xxxx X. Xxxxxx
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EXHIBIT A
IONICS, INCORPORATED
Inducement Non-Qualified Stock Option Agreement
This Inducement Non-Qualified Stock Option Agreement (the "Agreement")
made as of August 28, 2003 (the "Date of Grant") by and between Ionics,
Incorporated, a Massachusetts corporation (the "Company"), and Xxxx X. Xxxxxx
(the "Employee"):
1. Option Grant. The Company hereby grants as of the Date of Grant to
the Employee an option to purchase a maximum of 200,000 shares (the "Option
Shares") of its common stock, $1.00 par value ("Common Stock"), at the price of
$22.00 per share, on the terms and conditions set forth in this Agreement.
2. Grant as Non-Qualified Option; Other Options. This option shall be
treated for federal income tax purposes as a Non-Qualified Option (rather than
an incentive stock option). This option is in addition to any other options
heretofore or hereafter granted to the Employee by the Company or any present or
future parent or subsidiary of the Company (such parents or subsidiaries
referred to collectively as the "Related Corporations"), but a duplicate
original of this instrument shall not effect the grant of another option.
3. Vesting of Option if Employment Continues. If the Employee has
continued to serve the Company or any Related Corporation in the capacity of an
employee, officer or consultant, as the case may be (such service is described
herein as maintaining or being "employed by the Company") on the following
dates, the Employee may exercise this option at any time from and after the
applicable date for the number of shares of Common Stock set forth opposite the
applicable date:
Applicable Date Shares
--------------- ------
Date of Grant 50,000 shares
First Anniversary of Date of Grant an additional 50,000 shares
Second Anniversary of Date of Grant an additional 50,000 shares
Third Anniversary of Date of Grant an additional 50,000 shares
Notwithstanding the foregoing, (i) if the Employee's employment with
the Company is terminated by the Company for any reason other than for Cause (as
defined in the Employment Agreement dated as of August 28, 2003 by and between
the Company and the Employee (the "Employment Agreement")), or by the Employee
for Good Reason (as defined in the Employment Agreement) within 24 months after
a Change in Control (as defined in the Employment Agreement), or by reason of
the Employee's death or Permanent Disability (as defined in the Employment
Agreement), the Employee shall be deemed for purposes of this Section 3 to have
remained employed by the Company for 18 months after such termination, and any
shares that would have become exercisable during such 18-month period shall
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become exercisable immediately prior to such termination of the Employee's
employment with the Company; and (ii) if the Employee's employment with the
Company is terminated by the Company for Cause, or by the Employee other than
for Good Reason within 24 months after a Change in Control, no further shares
shall become exercisable from and after such termination of the Employee's
employment with the Company. For avoidance of doubt, a termination pursuant to
the last sentence of Section 3(c) of the Employment Agreement shall be deemed a
termination by the Company for a reasons other than for Cause.
Notwithstanding the foregoing, the Compensation Committee of the
Company's Board of Directors (the "Committee") may, in its discretion,
accelerate the date that any installment of this option becomes exercisable. The
foregoing rights are cumulative and (subject to Sections 3 or 4 hereof if the
Employee ceases to be employed by the Company and all Related Corporations), may
be exercised up to and including the date that is ten years from the date this
option is granted (the "Scheduled Expiration Date").
4. Termination of Employment Relationship.
(a) Termination Other than for Cause. If the Employee's
employment with the Company is terminated by the Employee or by the Company,
other than by reason of Cause, this option may be exercised, to the extent
otherwise exercisable on the date of his termination (including any portions of
this option that become exercisable on or before his termination in accordance
with Section 3), at any time prior the Scheduled Expiration Date. In such case,
the Employee's only rights hereunder shall be those which are properly exercised
before the termination of this option.
(b) Termination for Cause. If the Employee's employment with
the Company is terminated by the Company for Cause, all vested options will be
forfeited and this option shall terminate upon the Employee's receipt of written
notice of such termination and shall thereafter not be exercisable to any extent
whatsoever.
5. Death; Disability.
(a) Death. If the Employee dies while employed by the Company, this option may
be exercised, to the extent otherwise exercisable on the date of his death
(including any portions of this option that become exercisable on or before his
termination in accordance with Section 3), by the Employee's estate, personal
representative or beneficiary to whom this option has been assigned pursuant to
Section 9, at any time prior to the Scheduled Expiration Date.
(b) Disability. If the Employee's employment with the Company is terminated by
reason of his Permanent Disability, this option may be exercised, to the extent
otherwise exercisable on the date employment was terminated (including any
portions of this option that become exercisable on or before his termination in
accordance with Section 3), at any time prior to . the Scheduled Expiration
Date.
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6. Partial Exercise. This option may be exercised in part at any time
and from time to time within the above limits, except that this option may not
be exercised for a fraction of a share.
7. Payment of Price.
(a) Form of Payment. The option price shall be paid in the
following manner:
(i) in cash or by check;
(ii) subject to Section 7(b) below, by delivery of shares of
the Company's Common Stock having a fair market value
(as determined by the Committee) equal as of the date
of exercise to the option price;
(iii)by delivery of an assignment satisfactory in form and
substance to the Company of a sufficient amount of the
proceeds from the sale of the Option Shares and an
instruction to the broker or selling agent to pay that
amount to the Company; or
(iv) by any combination of the foregoing.
(b) Limitations on Payment by Delivery of Common Stock. If the
Employee delivers Common Stock held by the Employee ("Old Stock") to the Company
in full or partial payment of the option price, and the Old Stock so delivered
is subject to restrictions or limitations imposed by agreement between the
Employee and the Company, an equivalent number of Option Shares shall be subject
to all restrictions and limitations applicable to the Old Stock to the extent
that the Employee paid for the Option Shares by delivery of Old Stock, in
addition to any restrictions or limitations imposed by this Agreement.
Notwithstanding the foregoing, the Employee may not pay any part of the exercise
price hereof by transferring Common Stock to the Company unless such Common
Stock has been owned by the Employee free of any substantial risk of forfeiture
for at least six months.
8. Restrictions of Transfer; Legend. Unless registered pursuant to the
provisions of the Securities Act of 1933, as amended (the "Securities Act"),
Option Shares may not be transferred without the Company's written consent
except by will, or by the laws of descent and distribution. Option Shares will
be of an illiquid nature and will be deemed to be "restricted securities" for
purposes of the Securities Act, unless registered. Accordingly, such shares must
be sold in compliance with the registration requirements of the Securities Act
or an exemption therefrom.
9. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company,
at the principal executive office of the Company, in the form of Exhibit A
annexed hereto. Such notice shall state the election to exercise this option and
the number of Option Shares for which it is being exercised and shall be signed
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by the person or persons so exercising this option. Such notice shall be
accompanied by payment of the full purchase price of such shares (unless payment
is being made pursuant to Section 7(a)(iii) hereof), and the Company shall
deliver a certificate or certificates representing such shares as soon as
practicable after the notice shall be received. Such certificate or certificates
shall be registered in the name of the person or persons so exercising this
option (or, if this option shall be exercised by the Employee and if the
Employee shall so request in the notice exercising this option, shall be
registered in the name of the Employee and another person jointly, with right of
survivorship). In the event this option shall be exercised, pursuant to Section
5 hereof, by any person or persons other than the Employee, such notice shall be
accompanied by appropriate proof of the right of such person or persons to
exercise this option.
10. Transferability of Option. This option may be transferred by the
Employee to (i) the spouse, children, or grandchildren of the Employee
("Immediate Family Members"); (ii) a trust or trusts for the exclusive benefit
of the Employee or the Immediate Family Members; or (iii) a partnership, limited
liability company, corporation or other entity in which the Employee or the
Immediate Family Members are the only partners, members, or stockholders. Any
subsequent transfer of this option shall be prohibited other than by will or the
laws of descent and distribution.
11. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Employee to exercise it.
12. No Obligation to Continue Employment. Neither this Agreement nor
the grant of this option imposes any obligation on the Company or any Related
Corporation to continue to employ the Employee.
13. No Rights as Stockholder until Exercise. The Employee shall have no
rights as a stockholder with respect to the Option Shares until such time as the
Employee has exercised this option by delivered a notice of exercise and has
paid in full the purchase price for the number of shares for which this option
is to be so exercised in accordance with Section 8. No adjustment shall be made
for dividends or similar rights for which the record date is prior to such date
of exercise.
14. Adjustments Upon Changes in Capitalization and Other Events. Upon
the occurrence of any of the following events, an Employee's rights with respect
to this option shall be adjusted as hereinafter provided:
(a) Stock Dividends and Stock Splits. If the shares of Common
Stock shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock dividend on
its outstanding Common Stock, the number of shares of Common Stock deliverable
upon the exercise of this option shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
Page -17-
(b) Recapitalization Adjustments. Immediately upon the
consummation of an Acquisition (as defined below), this option shall immediately
become fully exercisable and shall remain the obligation of the Company or be
assumed by the surviving or acquiring entity, and there shall automatically be
substituted for the shares of Common Stock subject to this option, the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition. In the event of a reorganization,
recapitalization, merger, consolidation, or any other change in the corporate
structure or shares of the Company, adjustments in the number and kind of shares
covered by, and in the exercise price of, this option necessary to maintain the
proportionate interest of the Employee and preserve, without exceeding, the
value of this option, shall be made. For purposes of this Section 14, an
"Acquisition" shall mean: (x) any merger, consolidation or purchase of
outstanding capital stock of the Company, or other form of business combination
in which the Company is the target of such combination or after which the voting
securities of the Company outstanding immediately prior thereto represent
(either by remaining outstanding or by being converted into voting securities of
the surviving or acquiring entity) less than 50% of the combined voting power of
the voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such event (other than as a result of a financing
transaction); or (y) any sale of all or substantially all of the capital stock
or assets of the Company in a business combination (other than in a spin-off or
similar transaction); or (z) any other acquisition of the business of the
Company, as determined by the Committee.
(c) Issuance of Securities. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares subject to this option. No adjustments shall be made for dividends
paid in cash or in property other than securities of the Company.
(d) Adjustments. Upon the happening of any of the foregoing
events, the class and aggregate number of shares that are subject to this option
shall be appropriately adjusted to reflect such events. The Committee shall
determine the specific adjustments to be made under this Section 14 and its
determination shall be conclusive.
15. Withholding Taxes. If the Company or any Related Corporation in its
discretion determines that it is obligated to withhold any tax in connection
with the exercise of this option, or in connection with the transfer of, or the
lapse of restrictions on, any Common Stock or other property acquired pursuant
to this option, the Employee hereby agrees that the Company or any Related
Corporation may withhold from the Employee's wages or other remuneration the
appropriate amount of tax. At the discretion of the Company or Related
Corporation, the amount required to be withheld may be withheld in cash from
such wages or other remuneration or in kind from the Common Stock or another
property otherwise deliverable to the Employee on exercise of this option. The
Employee further agrees that, if the Company or Related Corporation does not
withhold an amount from the Employee's wages or other remuneration sufficient to
satisfy the withholding obligation of the Company or Related Corporation, the
Employee will make reimbursement on demand, in cash, for the amount withheld.
Page -18-
16. Employee Not to Compete. The Employee acknowledges that he is
subject to certain non-competition obligations set forth at Section 4(b) of
the Employment Agreement.
17. Provision of Documentation to Employee. By signing this Agreement
the Employee acknowledges receipt of a copy of this Agreement.
18. Miscellaneous.
(a) Notices. All notices hereunder shall be in writing and
shall be deemed given when sent by certified or registered mail, postage
prepaid, return receipt requested, to the address et forth below. The addresses
for such notices may be changed from time to time by written notice given in the
manner provided for herein.
(b) Entire Agreement; Modification. This Agreement constitutes
the entire agreement between the parties relative to the subject matter hereof,
and supersedes all proposals, written or oral, and all other communications
between the parties relating to the subject matter of this Agreement. This
Agreement may be modified, amended or rescinded only by a written agreement
executed by both parties.
(c) Severability. The invalidity, illegality or
unenforceability of any provision of this Agreement shall in no way affect the
validity, legality or enforceability or of any other provisions.
(d) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, subject to the limitations set forth in Section 10
hereof.
(e) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the principles of the conflicts of laws thereof. The
preceding choice of law provisions shall apply to all claims, under any theory
whatsoever, arising out of the relationship of the parties contemplated herein.
IN WITNESS WHEREOF, the Company and the Employee have caused this
instrument to be executed as of the date first above written.
IONICS, INCORPORATED
-------------------------------- By: ---------------------------------------
Employee Xxxxxxx X. Xxxxx
Chief Executive Officer
--------------------------------
Print Name of Employee
Address:
Page -19-
EXHIBIT A
Ionics, Incorporated
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Assistant Treasurer
Gentlemen:
Please take notice that the undersigned hereby elects to exercise the stock
option granted to Xxxx X. Xxxxxx on August 28, 2003 by and to the extent of
purchasing __________ shares of the Common Stock of Ionics, Incorporated (the
"Company") for the option price of $22.00 per share, subject to the terms and
conditions of the Inducement Non-Qualified Stock Option Agreement dated as of
August 28, 2003 by and between the Company and Xxxx X. Xxxxxx (the "Agreement").
The undersigned hereby agrees to make payment, in cash or in such other property
as permitted under the Agreement, of the purchase price for said shares for
delivery to the undersigned of the stock certificate of the Company representing
the shares purchased, pursuant to Section 7 of the Agreement. If the undersigned
is making payment of any part of the purchase price by delivery of shares of
Common Stock of the Company, the undersigned hereby confirms that he has
investigated and considered the possible income tax consequences to the
undersigned of making such payments in said form, and also confirms that he has
owned such Common Stock free of any substantial risk of forfeiture for at least
six months.
The undersigned hereby specifically confirms to the Company that, unless the
Company has effected the registration with the U.S. Securities and Exchange
Commission of the shares of Common Stock to be issued pursuant to this exercise,
the undersigned is acquiring said shares for investment and not with a view to
sale or distribution thereof. The undersigned further confirms that said shares
shall be held subject to all of the terms and conditions and the Agreement.
Very truly yours,
-------------------------------
Signed by ______________________
(party duly exercising option)
Page -20-
Exhibit B
AGREEMENT WITH EMPLOYEE
THIS AGREEMENT is made as of the 28th day of August, 2003 between Xxxx X. Xxxxxx
(hereinafter called the "Employee") and IONICS, INCORPORATED, a Massachusetts
corporation (hereinafter called the "Company").
WHEREAS, the Company and its subsidiaries are engaged throughout the world in
the manufacture of products in accordance with secret processes and formulas,
and their employees have or may become acquainted with such processes and
formulas and the research and developments carried on and may contribute new
inventions or improvements on those already existing, or both; and
WHEREAS, Employee has become employed by the Company pursuant to an Employment
Agreement of even date herewith (the "Employment Agreement").
NOW, THEREFORE, it is agreed as follows:
1. INTELLECTUAL PROPERTY. (a) Employee will promptly disclose in writing to
the Clerk of the Company, or his nominee, all information, observations,
data and records arising out of or obtained in the course of his work with
the Company, and all those discoveries, inventions, devices, machines,
processes, designs, composition of matter and improvements thereon, and any
new use of the same, whether patentable or not, as well as patents and
patent applications (hereinafter collectively called "inventions") made,
conceived, developed or acquired by him, or under which Employee acquired
the right to grant licenses or become licensed, whether alone or jointly
with others, during his employment by the Company and within a period of
one year after termination, for whatever reason, of his employment
hereunder, which (i) has arisen or may arise out of or in the course of his
employment with the Company, or (ii) relate to any matters pertaining to or
useful in connection with any present or contemplated activity or interest
of the Company or of any of the affiliated or subsidiary companies of the
Company, or (iii) relate to work done by the Company for a client, with
which matters Employee has been or may be in any way connected or about
which Employee has obtained knowledge during his employment by the Company.
All Employee's title and interest in, to and under all such inventions,
licenses and rights to grant licenses shall be the sole and exclusive
property of the Company, and Employee hereby assigns and agrees to assign
the same to the Company.
(b) It is the policy of the Company (which, however, assumes no obligation
by this paragraph) to transfer or quitclaim to Employee any invention or
improvement made or conceived by Employee which the Company deems not then
of active interest to it or likely to become so.
(c) Employee will at any time, whether or not then in the employ of the
Company, upon the request of the Company and without further remuneration
(except as provided in Section 4 hereof) (a) execute, acknowledge and
deliver to the Company any document which the Company shall deem necessary
to effect valid assignments to it of all Employee's right, title and
interest in, to and under such inventions, licenses and rights to grant
license, (b) execute any document which the Company shall deem necessary to
enable it to file and prosecute applications for letters patent of the
United States and any foreign country on such inventions, and (c) do all
other things (including the giving of evidence in suits, interferences,
oppositions, revocations and other proceedings) which the Company shall
deem necessary or convenient for patenting or prosecuting or asserting
patents for any and all such inventions, for the prosecution of
applications for the reissue, renewal and extension of such patents, and
for the establishing of any fact becoming known to Employee as an incident
to his employment.
2. CONFIDENTIAL INFORMATION. Employee acknowledges his obligations concerning
trade secrets and confidential information set forth at Section 4(a) of the
Employment Agreement.
Page -21-
3. GOVERNMENTAL MATTERS. Employee will do all things necessary for the Company
to comply with U.S. Government regulations and with provisions of contracts
between the U.S. Government and the Company which relate either to patent
rights or to the safeguarding of information pertaining to the defense of
the United States.
4. EXPENSES. All expenses incident to any action required by the Company or
taken in its behalf pursuant to the terms of this agreement shall be borne
by the Company, including a reasonable payment for Employee's time and
expenses involved in case Employee is not then in the Company's employ,
which payment for Employee's time shall not in any event be less than his
salary for a comparable period of time as of the termination of his
employment.
5. CONFIDENTIAL INFORMATION OF OTHERS. Employee shall not be requested or
required to violate, and Employee agrees to respect, any valid obligations
employee now has to prior employers or others relating to proprietary or
confidential information and to Employee's inventions and discoveries.
Employee has supplied or promptly shall supply to the Company a copy of all
written agreements containing any such obligations.
This Agreement of two pages is executed in duplicate as a sealed instrument as
of the date first set forth above.
IONICS, INCORPORATED
By: --------------------------------
WITNESS: EMPLOYEE:
--------------------------- --------------------------------------------
