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Exhibit 10.37
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of this
21st day of May, 1998, by and between Waterlink, Inc., a Delaware corporation
(the "Company"), and T. Xxxxx Xxxx ("Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ Executive as of the date hereof
and, effective June 8, 1998, as its President and Chief Executive Officer and
Executive desires to be so employed;
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 employ Executive and Executive
hereby agrees 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, unless otherwise terminated in accordance with
the provisions hereof, 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.
3. POSITION, DUTIES AND RESPONSIBILITIES.
3.1 POSITION, DUTIES AND RESPONSIBILITIES. During
the Term, as of June 8, 1998, 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
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, 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
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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 (which Executive acknowledges is not required in connection
with his entering into this Agreement), 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 (and retain any
director's fees received therefrom), 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 three hundred thousand dollars ($300,000) until
the first anniversary of the date hereof. For each succeeding 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 program 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, the Company will grant to the Executive
options to purchase Four Hundred Thousand (400,000) shares of the Company's
Common stock (the "Stock Option") at the fair market value of such shares on the
date of grant under and in accordance with the Company's 1997 Omnibus Incentive
Plan (the Plan"). Such grant will be made upon approval of the stockholders of
the Company of an amendment to the Plan adopted by the Board on May 20, 1998 to
increase the number of shares reserved under the Plan. Stockholder approval will
be sought as soon as practicable at a special meeting of stockholders called
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for such purpose. 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.
4.4 SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFITS. During the Term,
Executive shall be eligible to participate in any supplemental executive
retirement plan(s), if any, made available to senior executive officers of the
Company.
4.5 BONUS UPON EXECUTION. Upon execution of this Agreement, the
Company shall pay to Executive a one-time signing bonus of Fifty Thousand
Dollars ($50,000).
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.
5.2 AUTOMOBILE. During the Term, the Company will provide Executive
with a monthly automobile allowance in an amount not to exceed One Thousand
Dollars ($1000), and the Company shall be responsible for costs associated with
repairing, maintaining and insuring such automobile.
5.3 INSURANCE. As soon as practicable after the date hereof, the
Company, at its sole expense, shall purchase and maintain during the Term (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, if available, equal to 66 2/3% of
Base Salary per month or such lesser amount as is maintained generally for the
senior executive of the Company, from time to time.
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 of the Company for its senior Executives and do not materially
interfere with the operations of the Company.
5.5 KEY MAN 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
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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.
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,
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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 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 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 Section 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
Executive attains age 65, (iii) if Executive's employment is terminated date
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 Section 7.3, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written agreement of
the parties, by a binding and final arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (the time for appeal having
expired and no appeal having been perfected); provided, further, that if the
Company prevails in its determination to terminate Executive for Cause in such
arbitration or litigation, the Date of Termination shall be the date specified
in the Notice of Termination.
8. COMPENSATION UPON TERMINATION.
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8.1 COMPENSATION UPON TERMINATION UPON DEATH. In the event of the
death of Executive during the Term, Executive's designated beneficiary, or, in
the absence of such designation, the estate or other legal representative of
Executive (collectively, the "Estate"), shall be paid an amount equal to the sum
of (x) Executive's unpaid Base Salary through the month in which Executive's
death occurred (which shall be paid within thirty (30) days of Executive's
death), plus (y) an amount equal to the product of (1) the "Bonus Payment" (as
defined in Section 8.2), if any, with respect to the fiscal year in which
Executive's employment is terminated pursuant to Section 7.1, 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 so terminated and the denominator of which is
365; such amounts related to the Bonus Payment to be payable to Executive in
twelve (12) equal semi-monthly 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, other than any Bonus Payment that is
not then determined, which shall be paid when such Bonus Payment under Section
4.2 would otherwise have been due. 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 Payment" (as defined below), if
any, with respect to the fiscal year in which Executive's employment is
terminated pursuant to Section 7.2, 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 semi-monthly 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, other than any Bonus
Payment that is not then determined, which shall be paid when such Bonus Payment
under Section 4.2 would otherwise have been due. 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. The "Bonus Payment" shall mean
(a) if a termination of employment occurs within the first four (4) months of a
fiscal year the bonus, if any, paid to Executive with respect to the immediately
preceding fiscal year pursuant to Section 4.2 hereof (which for a termination in
fiscal 1998 or during the first four (4) months of fiscal 1999 shall be deemed
to be $300,000) or (b) if a termination of employment occurs after the first
four months of a fiscal year), the bonus to be paid to Executive pursuant to
Section 4.2 hereof calculated after the end of the fiscal year in which such
termination occurs with respect to such year.
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
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shall have no further obligations to Executive under this Agreement, except as
may be specifically provided herein.
8.4 IMPROPER TERMINATION; GOOD REASON.
(a) Subject to the provisions of Section 8.4(b) hereof, if
(x) in breach of this Agreement, the Company shall terminate
Executive's employment other than pursuant to Section 7.3 (it being
understood that a purported termination Pursuant to Section 7.3 which
is disputed and finally determined not to have been proper shall be a
termination by the Company in breach of this Agreement) or (y)
Executive shall terminate his employment for Good Reason, then
(i) The Company shall pay Executive his full Base
Salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given, as well as all
accrued bonus compensation through the Date of Termination;
plus
(ii) In lieu of all other 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 Bonus Payment, and (B) one
and one half (1 1/2), such amounts to be payable to Executive
in thirty-six (36) equal semi-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 other than any Bonus Payment that
is not then determined, which shall be paid in equal
installments over the balance of such thirty-six (36)
installments commencing no later than ninety (90) days after
the end of the fiscal year in which Executive's employment is
terminated. 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 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;
plus
(ii) In lieu of all other salary and incentive
compensation payments which Executive would have earned under
this Agreement but for his termination, the
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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 Bonus Payment, and (B) one and
one-half (1 1/2) (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 other than any Bonus Payment that is not then
determined, which shall be paid within five (5) days after
calculated and in no event later than ninety (90) days after
the end of the fiscal year in which Executive's employment is
terminated. 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)(l)
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
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respect of which payments have been made under this Section
8.4(b)), and (z) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross- Up Payment,
Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the
calendar year in which the Gross-Up Payment is to be made, and
state and local income taxes at the highest marginal rates of
taxation in the state and locality of Executive's 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 Executive terminates his employment under this
Agreement for Good Reason, 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
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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, profit sharing and other
deferred compensation plans had his employment continued for such Term
at the rate of compensation specified herein), and including all legal
fees and expenses incurred by him as a result of such termination and
in enforcing his rights.
8.5 CONTINUED MAINTENANCE OF BENEFIT PLANS. Unless Executive is
terminated for Cause, death, Mandatory Retirement or by Executive for other than
Good Reason, the Company shall maintain in full force and effect, for the
continued benefit of Executive for one and one-half (1 1/2) 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 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 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
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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 Date of
Termination and concluding upon the earlier to occur of (a) eighteen (18) months
after such Date of Termination and (b) the date subsequent to such Date of
Termination upon which the Company is in material breach of any material
provision of this Agreement (provided that Executive notifies the Company in
writing of such breach and the Company does not cure such breach within ten (10)
days of the receipt of such notice from Executive), Executive shall not own
operate, control or participate in the ownership, management, manage operation
or control, or be employed by or connected in any manner in the "Territory" (as
defined below) with, any business, firm or corporation which is engaged in or
competes with the business of the Company, its subsidiaries, affiliates or
division as such business is constituted on the Date of Termination. The
Territory shall mean any country in the world in which the Company or any of its
subsidiaries maintains offices or manufacturing facilities or has employees at
the Date of
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Termination, it being acknowledged that the Company's business is and is
intended to continue to be international in nature.
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
With copies to: Xxx X. Xxxxxx, Esq.
Benesch, Friedlander,
Xxxxxx & Aronoff LLP
0000 XX Xxxxxxx Xxxx.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
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Telephone: (000) 000-0000
Telecopy: (000) 000-0000
To Executive: T. Xxxxx Xxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
With a copy to: Xxxxxx X. Xxxx
Xxxxx & Berne LLP
0000 Xxxx 0xx Xxxxxx, Xxxxx 000
Xxxxxxxxx, 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.
15. BINDING EFFECT; THIRD PARTY BENEFICIARIES. Except as otherwise
provided herein, this Agreement shall be binding upon and inure to the benefit
of the Company and its successors and assigns and upon Executive. "Successors
and assigns" shall mean, in the case of the Company, any successor pursuant to a
merger, consolidation, or sale, or other transfer of all or substantially all of
the assets of the Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
Executive to compensation from the Company in the same amount and on the same
terms as if Executive terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As 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
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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
[Remainder of page intentionally left blank]
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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 binding arbitration in accordance with the rules of the
American Arbitration Association, and judgment upon such award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The
arbitration shall be held in Canton, Ohio or such other place as may be agreed
upon at the time by the parties to the arbitration. Subject to Section 18
hereof, the expense of such arbitration shall be borne by the Company.
20. TITLES. Titles to the Sections and subsections in this Agreement
are intended solely for convenience and no provision of this Agreement is to be
construed by reference to the title of any Section.
21. COUNTERPARTS. This Agreement may be executed in one or more
counter parts, which together shall constitute one agreement. It shall not be
necessary for each party to sign each counterpart so long as Each party has
signed at least one counterpart.
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/T. Xxxxx Xxxx
-----------------------------------
T. Xxxxx Xxxx
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