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Exhibit 10.3
EMPLOYMENT AGREEMENT
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THIS AGREEMENT (the "Agreement") is made and entered into as
of this 23rd day of May, 1997, by and between Waterlink, Inc., a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx ("Executive").
W I T N E S S E T H :
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WHEREAS, Executive has been employed by and is currently the
Chief Financial Officer of the Company;
WHEREAS, the Company desires to assure itself of Executive's
continued employment in an executive capacity and to compensate him for such
employment;
WHEREAS, Executive is willing to continue to be employed by
the Company upon the terms and subject to the conditions contained in this
Agreement;
NOW THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. The Company agrees to continue to employ
Executive and Executive hereby agrees to continue to serve the Company for the
Term (as defined in Section 2 below) of this Agreement, in the position and with
the duties and responsibilities set forth in Section 3 below, and upon the other
terms and subject to the conditions hereinafter stated.
2. TERM. The initial term (the "Initial Term") of this
Agreement shall commence on the date hereof and shall continue until the third
anniversary of the date hereof (the "Initial Expiration Date"); provided,
however, that this Agreement at all times shall be subject to earlier
termination in accordance with the provisions hereof. On the Initial Expiration
Date and each anniversary of the Initial Expiration Date, the term of this
Agreement automatically shall be extended for an additional one year term (the
"Extended Term"); unless either party hereto shall have provided written notice
to the other party hereto of its, or his, intent not to extend this Agreement
not less one (1) year prior to the end of the Initial Term or the Extended Term,
as the case may be. For purposes of this Agreement, "Term" means the Initial
Term and, if so extended, the Extended Term.
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3. POSITION, DUTIES AND RESPONSIBILITIES.
3.1 POSITION, DUTIES AND RESPONSIBILITIES. During the Term,
Executive shall serve as the Chief Financial Officer of the Company, and shall
be responsible for the duties attendant to such office, which duties will be
generally consistent with his position as an executive officer of the Company
and which will generally utilize his experience with the Company prior to the
date hereof, and such other managerial duties and responsibilities with the
Company, its affiliates, subsidiaries or divisions as may be assigned by the
President and Chief Executive Officer of the Company 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 President and Chief Executive Officer of the Company, as well as to the
Board. There will be no employee of the Company who shall have greater
authority, responsibilities or duties than Executive with respect to matters
customarily within the scope of the authority, responsibilities or duties of a
chief financial officer. Executive shall also serve as an officer and/or member
of the Board of Directors of any subsidiary or affiliate of the Company, if the
Board should so request; provided, that the duties, authority and
responsibilities of Executive with such subsidiaries or affiliates shall be
commensurate, and in all events not less than, Executive's duties, authority and
responsibilities with the Company as set forth in this Agreement. Executive's
duties shall be performed principally at the Company's executive offices which
are located in the Canton, Ohio Metropolitan Area (as defined below), and
Executive shall not be required to perform duties which would necessitate
changing his present residence, unless Executive otherwise agrees in writing.
For purposes of this Agreement, the term "Canton, Ohio Metropolitan Area" shall
encompass the City of Canton and the territory within fifteen (15) miles from
that city in any direction. The Company will promptly pay (or reimburse
Executive for) all reasonable moving expenses incurred by Executive relating to
a change of Executive's residences in connection with any such relocation to
which Executive has consented. In connection with any such change of residences,
the Company shall, at the request of Executive, purchase from Executive the
residence which he is required to vacate; provided, however, that such request
must be made within six months of his commencement of full-time employment at
the Company's relocated executive offices. The purchase price of such residence
shall be the average of the appraisals rendered by two appraisers retained by
the Company, one of whom shall be selected by Executive. Executive acknowledges
and agrees that, in connection with his employment hereunder, he may be required
to travel on behalf of the Company. To the extent that any Executive relocation
benefit program maintained by the Company, and in which Executive is entitled to
participate, is more favorable to Executive than the provisions of this
Agreement with respect to relocation, Executive shall be entitled to such
additional relocation benefits. In furtherance and not in limitation of the
foregoing, the Company acknowledges that Executive has not yet relocated his
personal residence to be more proximate to the Company's principal executive
offices. The Company agrees that should Executive determine to relocate to
within the Canton, Ohio Metropolitan Area, he shall be entitled to the
relocation benefits provided in this paragraph.
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
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and divisions and use his best efforts in the performance of his duties to
promote its and their best interests; provided, however, that nothing herein
shall preclude Executive from (i) serving on the boards of directors of a
reasonable number of other corporations, trade associations or charitable
organizations, (ii) engaging in charitable activities and community affairs or
(iii) managing his personal investments and affairs; provided, however, that
such activities do not materially interfere with the performance of Executive's
duties under the Agreement.
4. SALARY.
4.1 BASE SALARY. During the Term, Executive shall be paid a
base salary (the "Base Salary"), payable in equal installments at such intervals
as the other executive officers of the Company are paid but not less often than
bi-weekly, at an annual rate of one hundred fifty thousand dollars ($150,000)
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 programs as may be maintained
by the Company for the benefit of its executives. The Company shall establish an
annual incentive bonus plan pursuant to which Executive may earn, in each year
during the Term, commencing with fiscal 1998, an amount ranging from 0% to 150%
of his Base Salary, subject to the achievement of certain performance goals
established by the Board, such performance goals to be derived from the
Company's annual operating plan.
4.3 EQUITY OPPORTUNITY. During the Term, Executive shall be
eligible for stock option grants and similar awards under existing plans of the
Company, and under any future plans in which Executive officers of the Company
are entitled to participate.
In addition, upon the execution of this Agreement,
Executive shall be granted a non-qualified option (the "Stock Option")
exercisable to purchase 100,000 shares of the common stock, $.001 par value per
share (the "Common Stock"), of the Company, at an initial exercise price of
$12.00 per share. The Stock Option will be exercisable in cumulative annual
increments of 25% of the shares subject thereto, commencing on the first
anniversary of the date hereof, provided, however, that the Stock Option shall
become exercisable in full, without regard to the vesting criteria otherwise
contained herein or therein, upon the occurrence of a Change of Control (as
hereinafter defined) or the termination of Executive's employment hereunder (x)
by the Company, other than for Cause, death or disability or (y) by the
Executive for Good Reason. If the Company consummates a public offering of its
capital stock within six months of the date hereof, and the initial public
offering price per share is less than or greater than the then current exercise
price of the Stock Option, such exercise price will be adjusted to equal the
initial public offering price per share.
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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. In furtherance of and not in limitation of
Section 5.1 hereof, the Company will pay to Executive, on the first business day
of each month during the Term, a monthly automobile allowance of $500.00 for the
expenses associated with Executive's costs of repairing, maintaining and
insuring an automobile in connection with the Company's business.
5.3 INSURANCE. During the Term, the Company, at its sole
expense, shall purchase and maintain 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.
5.4 VACATION; PERSONAL DAYS. During the Term, Executive shall
be entitled to four (4) weeks annual vacation with pay during each year of his
employment hereunder provided that the vacation days taken do not materially
interfere with the operations of the Company. Such vacation may be taken, in
Executive's discretion, at such time or times as are not inconsistent with the
reasonable business needs of the Company.
5.5 INSURANCE. Executive agrees that the Company may at any
time and for the Company's own benefit, apply for and take out life, health,
accident, and/or other insurance covering Executive either independently or
together with others in any amount which the Company deems to be in its best
interests and the Company may maintain any existing insurance policies on the
life of Executive owned by the Company. The Company shall own all rights in any
such insurance policies and in the cash values and proceeds thereof and, except
as otherwise provided, Executive shall not have any right, title or interest
therein. Executive agrees to assist the Company at the Company's expense in
obtaining any such insurance by, among other things, submitting to the customary
examinations and correctly preparing, signing and delivering such applications
and other documents as may be required by insurers.
6. EXPENSES. The Company shall reimburse Executive upon
presentation of appropriate vouchers or receipts and in accordance with the
Company's expense reimbursement policies, for all reasonable expenses incurred
by Executive in connection with the performance of his duties under this
Agreement.
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7. TERMINATION. Executive's employment under this Agreement
may be terminated without any breach of this Agreement only under the following
circumstances:
7.1 DEATH. Executive's employment shall terminate upon his
death.
7.2 DISABILITY. In the event Executive shall be unable to
render the services or perform his duties hereunder by reason of illness, injury
or incapacity (whether physical, mental, emotional or psychological) for a
period of either (i) one hundred eighty (180) consecutive days or (ii) two
hundred seventy (270) days in any consecutive three hundred sixty-five (365) day
period (either of such events shall constitute a "Disability" for purposes of
this Agreement), the Company shall have the right to terminate this Agreement.
7.3 TERMINATION OF EMPLOYMENT OF EXECUTIVE BY THE COMPANY FOR
CAUSE. The Company may terminate the employment of Executive for Cause (as
hereinafter defined). The term "Cause," as used herein, shall mean (a)
Executive's willful misconduct or gross neglect in the performance of his duties
hereunder which in either case has resulted, or is likely to result, in material
economic damage to the Company, (b) the material breach of this Agreement by
Executive which has resulted, or is likely to result, in material economic
damage to the Company or (c) the final, non-appealable conviction of Executive
of a felony which constitutes a crime of moral turpitude. For purposes of
Section 7.3(a), no act, or failure to act, on Executive's part, will be
considered "willful" unless done or omitted to be done by him not in good faith
and without a reasonable belief that his action or omission was in furtherance
of the Company's business.
Executive shall not be deemed to have been terminated
for Cause unless and until, after reasonable notice to Executive and an
opportunity for him to be heard before the Board. The Board has determined that
Executive was guilty of the conduct described in clause (a) or (b) of the
preceding paragraph, and delivered to Executive a Notice of Termination
(as defined below) stating such determination and specifying the particulars
thereof in detail.
7.4 TERMINATION OF EMPLOYMENT BY EXECUTIVE. Executive may
terminate his employment hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean (A) any assignment to Executive of any
duties inconsistent in any material respect with his present duties as Chief
Financial Officer of the Company or a change in his position, duties, authority
or responsibilities without his express written consent or any other action by
the Company which results in a material diminution of the position, duties,
authority, or responsibility of Executive, (B) any removal of Executive without
his consent from, or any failure to re-elect Executive to, the office of Chief
Financial 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) a reduction in Executive's Base Salary as in
effect on the date of this Agreement or as the same may be increased from time
to time, or a reduction in Executive's other benefits unless, with respect to a
reduction of benefits, all members of senior management of the Company are
similarly affected, (D) the Company shall materially breach any provision of
this
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Agreement, which breach shall continue unremedied for ten (10) days after the
Company shall have been given notice of such breach, or (E) failure of the
Company to obtain from any successor the assumption of or the agreement to
perform this Agreement (as contemplated in Section 15 hereof), or (F) any
purported termination of the Executive's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section 7.5.
In addition, Executive may terminate his employment hereunder other than for
Good Reason.
7.5 NOTICE OF TERMINATION. Any termination of
Executive's employment by the Company or by Executive (other than a termination
pursuant to Sections 7.1 above) shall be communicated by written Notice of
Termination to the other party. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Any purported termination not
satisfying the requirements of this Section 7.5 shall not be effected.
7.6 DATE OF TERMINATION. "Date of Termination"
shall mean (i) if Executive's employment is terminated by his death, the date
of his death, (ii) if the Executive's employment is terminated pursuant to
Section 7.5 above, the date specified in the Notice of Termination, and (iii)
if Executive's employment is terminated for any other reason, the date on which
a Notice of Termination is given; provided that if within thirty (30) days
after the Notice of Termination is given pursuant to Sections 7.3, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written agreement of
the parties, by a binding and final arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
having expired and no appeal having been perfected); provided, further that if
the Company prevails in its determination to terminate Executive for Cause in
such arbitration or litigation, the Date of Termination shall be the date
specified in the Notice of Termination.
8. COMPENSATION UPON TERMINATION.
8.1 COMPENSATION UPON TERMINATION UPON DEATH. In
the event of the death of Executive during the Term, Executive's designated
beneficiary, or, in the absence of such designation, the estate or other legal
representative of Executive (collectively, the "Estate"), shall be paid within
thirty (30) days of Executive's death, an amount equal to the sum of Executive's
unpaid Base Salary through the month in which Executive's death occurred, as
well as all accrued bonus compensation through the date of death. Executive, or
the Estate, shall be entitled to other 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
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sum of (x) any unpaid Base Salary for the month in which the termination
occurred and for a period of six months thereafter and (y) an amount equal to
the product of (1) the annual bonus, if any, paid to Executive pursuant to
Section 4.2 hereof with respect to the fiscal year in which Executive's
employment is terminated pursuant to Section 7.2 (including any bonus deemed to
have been paid as set forth below), provided that such annual bonus is
calculable as of the Date of Termination, and if such annual bonus is not then
calculable, then the bonus, if any, paid to Executive with respect to the fiscal
year immediately preceding the year in which Executive's employment is
terminated (which, for fiscal 1996 and fiscal 1997 shall be deemed to be
$150,000) and (2) a fraction, the numerator of which is the number of days
during which Executive rendered services and performed his duties hereunder
during the fiscal year in which his employment hereunder is terminated and the
denominator of which is 365; such amounts to be payable to Executive in twelve
(12) equal bimonthly installments on the fifteenth and last day of each month
commencing on the fifteenth day of the month following the month in which
Executive's employment is terminated. The amount provided for above shall be
reduced by any disability benefits received by Executive under plans maintained
by the Company. Executive shall be entitled to other disability compensation and
benefits in accordance with the Company's benefit programs and plans and the
other provisions of this Agreement.
8.3 COMPENSATION UPON TERMINATION BY THE COMPANY FOR
CAUSE OR BY EXECUTIVE FOR OTHER THAN GOOD REASON. If Executive's employment is
terminated by the Company for Cause or by Executive for other than Good Reason,
the Company shall pay Executive his Base Salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, as well as all
accrued bonus compensation through the Date of Termination, and the Company
shall have no further obligations to Executive under this Agreement, except as
may be specifically provided herein.
8.4 IMPROPER TERMINATION; GOOD REASON. (a) Subject
to the provisions of Section 8.4(b) hereof, if (x) in breach of this Agreement,
the Company shall terminate Executive's employment other than pursuant to
Section 7.3 (it being understood that a purported termination pursuant to
Section 7.3 which is disputed and finally determined not to have been proper
shall be a termination by the Company in breach of this Agreement) or (B)
Executive shall terminate his employment for Good Reason, then
(i) The Company shall pay Executive his
full Base Salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, as well as all accrued bonus compensation
through the Date of Termination.
(ii) In lieu of all salary and incentive
compensation payments which Executive would have earned under this Agreement but
for his termination, the Company shall pay to Executive, as liquidated damages,
an amount equal to the product of (A) the sum of (1) the Base Salary in effect
as of the Date of Termination and (2) the annual bonus, if any, paid to
Executive pursuant to Section 4.2 hereof with respect to the fiscal year in
which Executive's employment is terminated (including any bonus deemed to have
been paid as set forth below),
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provided that such annual bonus is calculable as of the Date of Termination, and
if such annual bonus is not then calculable, then the bonus, if any, paid to
Executive with respect to the fiscal year immediately preceding the year in
which Executive's employment is terminated (which, for fiscal 1996 and fiscal
1997 shall be deemed to be $150,000) and (B) one (1.0), such amounts to be
payable to Executive in twelve (12) equal bi-monthly installments on the
fifteenth and last day of each month, commencing on the fifteenth day of the
month following the month in which the Date of Termination occurs. If the
Company fails to make, within five (5) days of the dates specified above, any
payments required to be made pursuant to this Section 8.4(a)(i) or (ii), the
Company shall pay to Executive, within ten (10) days of the date of such second
failure, in a lump sum, an amount equal to the sum of the remaining payments
(including any payments that the Company failed to make) to which Executive
would have been entitled pursuant to Section 8.4(a)(i) and (ii) if such failures
had not occurred.
(b) If, within one (1) year after the occurrence of
a Change of Control, (x) in breach of this Agreement, the Company shall
terminate Executive's employment other than pursuant to Section 7.3 (it being
understood that a purported termination pursuant to Section 7.3 which is
disputed and finally determined not to have been proper shall be a termination
by the Company in breach of this Agreement) or (y) Executive shall terminate his
employment for Good Reason, then
(i) The Company shall pay Executive his
full Base Salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, as well as all accrued bonus compensation
through the Date of Termination.
(ii) In lieu of all salary and incentive
compensation payments which Executive would have earned under this Agreement but
for his termination, the Company shall pay to Executive as liquidated damages a
lump sum amount equal to the present value, based on the Applicable Federal Rate
(as defined in Section 1274(d) of the Internal Revenue Code of 1986, as amended
(the "Code")), of the product of (A) the sum of (1) the Base Salary in effect as
of the Date of Termination and (2) the annual bonus, if any, paid to Executive
pursuant to Section 4.2 hereof with respect to the fiscal year in which
Executive's employment is terminated (including any bonus deemed to have been
paid as set forth below), provided that such annual bonus is calculable as of
the Date of Termination, and if such annual bonus is not then calculable, then
the bonus, if any, paid to Executive with respect to the fiscal year immediately
preceding the year in which Executive's employment is terminated (which, for
fiscal 1996 and fiscal 1997 shall be deemed to be $150,000) and (B) one (1.0)
(such payment being referred to as the "Termination Payment"). All payments
under this Section 8.4(b) shall be made on or before the fifth day following the
Date of Termination. In addition, if the receipt of the lump sum pursuant to the
foregoing sentence would cause Executive to pay federal income tax for the year
of receipt at a higher marginal rate than Executive would have paid for such
year had Executive's employment not been terminated (the "Original Marginal
Amount"), Executive shall receive an additional amount such that the amount
retained by executive after the payment of federal income taxes on such lump sum
shall be the same as if such lump sum had been taxed at the Original Marginal
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Rate. Executive shall not be required to mitigate the amount of compensation
payable to Executive hereunder, by securing other employment or otherwise, nor
will such compensation be reduced by reason of Executive securing other
employment or for any other reason.
(iii) In the event that executive becomes
entitled to the Termination Payment provided for in Section 8.4(b)(ii), if any
of the Termination Payment will be subject to the tax (the "Excise Tax") imposed
by Section 4999 of the Code, the Company shall pay to Executive at the time
specified below, an additional amount (the "Gross-Up Payment") such that the net
amount retained by Executive, after deduction of any Excise Tax on the
Termination Payment and any federal, state and local income tax and Excise Tax
upon the payment provided for by this paragraph, shall be equal to the
Termination Payment. For purposes of determining whether any of the Termination
Payment will be subject to the Excise Tax and the amount of such Excise Tax, (x)
any other payments or benefits received or to be received by Executive in
connection with a change in control of the Company or the termination of
Executive's employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any person whose actions
result in a change in control or any person having such a relationship with the
Company or such person as to require attribution of stock ownership between the
parties under section 318(a) of the Code) shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to Executive such other payments
or benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code, (y) the amount of the Termination Payment which shall be
treated as subject to the Excise Tax shall be equal to the lesser of (A) the
total amount of the Termination Payment or (B) the amount of excess parachute
payments within the meaning of Sections 280G(b)(1) and (4) (after applying
clause (x), above, and after deducting any excess parachute payments in respect
of which payments have been made under this Section 8.4(y)), and (z) the value
of any non-cash benefits or any deferred payment or benefit shall be determined
by the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount
of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rates of taxation in the state and locality of your residence
upon the Date of Termination, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes. In
the event that the Excise Tax is subsequently determined to be less 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
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by reason of any payment the existence or amount of which cannot be determined
at the time of the Gross-Up Payment), the Company shall make an additional
gross-up payment in respect of such excess (plus any interest payable with
respect to such excess) at the time that the amount of such excess is finally
determined.
For purposes of this Agreement, a "Change in
Control" of the Company shall mean (i) the acquisition of beneficial ownership
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), directly or indirectly, by any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or
Executive or an entity directly or indirectly controlled by Executive, of
securities of the Company representing a majority or more of the combined voting
power of the Company's then outstanding securities, (ii) the failure, for any
reason, of the individuals who presently constitute the Board of Directors (the
"Incumbent Board") to constitute at least a majority thereof, provided that any
director whose election has been approved in advance by directors representing
at least two-thirds (2/3) of the directors comprising the Incumbent Board or by
Executive shall be considered, for these purposes, as though such director were
a member of the Incumbent Board, (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least a majority of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation and such merger or consolidation occurs; or (iv)
the stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(c) If termination of Executive's employment arises
out of a breach by the Company of this Agreement, the Company shall pay all
other damages for any and all loss of benefits which Executive would have
received under the Company's employee benefit plans if the Company had not
breached this Agreement and had Executive's employment continued for the full
Term as then in effect (including without limitation benefits Executive would
have been entitled to receive pursuant to any of the Company's pension plans had
his employment continued for such Term at the rate of compensation specified
herein), and including all legal fees and expenses incurred by him as a result
of such termination and in enforcing his rights.
8.5 CONTINUED MAINTENANCE OF BENEFIT PLANS. Unless
Executive is terminated for Cause, death or by Executive other than for Good
Reason, the Company shall maintain in full force and effect, for the continued
benefit of Executive for twelve (12) months, 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 benefit, plan or program is barred, the Company shall
arrange to provide Executive with benefits
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substantially similar to those which Executive would otherwise have been
entitled to receive under such benefits, plans and programs.
9. INDEMNIFICATION.
9.1 The Company agrees to indemnify Executive to the fullest
extent permitted by applicable law consistent with the Company's Certificate of
Incorporation and By-Laws as in effect on the date hereof with respect to any
acts or non-acts he may have committed while he was an officer, director, and/or
employee (i) of the Company or any subsidiary thereof, or (ii) at the request of
the Company, of any other entity.
9.2 The Company agrees to maintain for Executive, during the
Term and for a period of five (5) years thereafter, a directors' and officers'
liability insurance policy not less favorable than any policy that the Company
maintains for its directors and executive officers in general.
10. CONFIDENTIAL INFORMATION.
10.1 Executive hereby acknowledges that, in the course of his
employment by the Company, he has had and will have access to secret and
confidential information which relates to or affects all aspects of the business
and affairs of the Company, its subsidiaries, affiliates or divisions, and which
are not available to the general public ("Confidential Information"). Without
limiting the generality of the foregoing, Confidential Information shall include
information relating to inventions, developments, specifications, technical and
engineering data, information concerning the filing or pendency of patent
applications, business ideas, trade secrets, products under development,
production methods and processes, sources of supply, marketing plans, and the
names of any customers or prospective customers or of any persons who have or
shall have traded or dealt with the Company. Accordingly, Executive agrees that,
except as required by the performance of his duties hereunder, he will not, at
any time during the Term and for a period commencing on the Date of the
Termination and concluding upon the earlier to occur of (a) two (2) years after
such Date of Termination and (b) the date subsequent to such Date of Termination
upon which the Company is in material breach of any material provision of this
Agreement (provided that Executive notifies the Company in writing of such
breach and the Company does not cure such breach within ten (10) days of the
receipt of such notice from Executive), disclose or furnish any Confidential
Information to any person, firm, corporation or other entity without the express
prior written consent of the Company. Notwithstanding the foregoing, the term
Confidential Information shall not include information or data which (i) is now
or hereafter in the public domain, other than as a result of the breach of this
Section 10 by Executive, (ii) prior to the 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
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12
under the terms of a subpoena or order issued by a court of competent
jurisdiction or otherwise, Executive agrees to (x) promptly notify the Company
of the existence, terms and circumstances surrounding such a request so that the
Company may seek a protective order or other appropriate relief or remedy and
(y) if disclosure of such information is required, disclose such information
and, subject to reimbursement by the Company of Executive's expenses, cooperate
with the Company in its efforts to obtain an order or other reliable assurance
that confidential treatment will be accorded to such portion of the disclosed
information which the Company so designates.
10.2 Executive hereby acknowledges and agrees that any and all
models, prototypes, notes, memoranda, notebooks, drawings, records, plans,
documents or other material in physical form which contain or embody
Confidential Information, whether created or prepared by Executive or by others
("Confidential Materials"), which are in Executive's possession or under his
control, are the sole property of the Company. Accordingly, Executive hereby
agrees that, upon the termination of his employment with the Company, whether
pursuant to this Agreement or otherwise, or at the Company's earlier request,
Executive shall return to the Company all Confidential Materials and all copies
thereof in his possession or under his control and shall not retain any copies
of Confidential Materials.
11. NON-COMPETITION.
11.1 Executive agrees that he shall not, so long as he shall
be employed by the Company in any capacity (whether pursuant to this Agreement
or otherwise) own, manage, operate, control or participate in the ownership,
management, operation or control or be employed by or connected in any manner
with, any business, firm or corporation which is or may be in competition with
the business of the Company, its subsidiaries, affiliates or divisions without
the express written consent of the Company.
11.2 Executive agrees that for a period commencing on the
effective Date of the Termination and concluding upon the earlier to occur of
(a) twelve (12) months after such Date of Termination and (b) the date
subsequent to such Date of Termination upon which the Company is in material
breach of any material provision of this Agreement (provided that Executive
notifies the Company in writing of such breach and the Company does not cure
such breach within ten (10) days of the receipt of such notice from Executive),
Executive shall not own, manage, operate, control or participate in the
ownership, management, operation or control, or be employed by or connected in
any manner with, any business, firm or corporation which is engaged in or
competes with the business of the Company its subsidiaries, affiliates or
divisions as such business is constituted on the Date of Termination.
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
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upon the exercise of any such options, warrants or rights or upon the conversion
of any other security convertible into or exchangeable or exercisable for such
securities) three percent (3%) or less of the outstanding shares of any such
class of equity securities of any issuer whose securities are traded on a
national securities exchange or listed by NASDAQ, the National Quotation Bureau
Incorporated or any similar organization; provided, however, that Executive
shall not be otherwise connected with or active in the business of the issuers
described in this Section 11.3 or (z) of any entity which is then employing
Executive.
12. REMEDY FOR BREACH. Executive hereby acknowledges that in
the event of any breach or threatened breach by him of any of the provisions of
Sections 10 or 11 of this Agreement, the Company would have no adequate remedy
at law and could suffer substantial and irreparable damage. Accordingly,
Executive hereby agrees that, in such event, the Company shall be entitled, and
notwithstanding any election by the Company to claim damages, to obtain a
temporary and/or permanent injunction to restrain any such breach or threatened
breach or to obtain specific performance of any such provisions, all without
prejudice to any and all other remedies which the Company may have at law or in
equity.
13. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered
personally or sent by registered or certified mail (return receipt requested),
postage prepaid, or by telecopy (immediately followed by telephone confirmation
of delivery of such telecopy with the intended recipient of such notice and by
notice in writing sent promptly by registered or certified mail as provided
above) to the parties to this Agreement at the following addresses or at such
other address for a party as shall be specified by like notice:
To the Company: Waterlink, Inc.
0000 Xxxxxxx Xxxxxx, X.X.
Xxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: President and Chief Executive
Officer
With copies to: Xxx X. Xxxxxx, Esq.
Benesch, Friedlander, Xxxxxx &
Aronoff, LLP
0000 XX Xxxxxxx Xxxx.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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14
To Executive: Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Xxxxx X. Xxxxxxxxx, Esq.
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
All such notices and communications shall be deemed to have
been received on the date of personal delivery, on the date that the telecopy is
confirmed as having been received or on the third business day after the mailing
thereof, as the case may be.
14. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto with respect to the employment matters
contemplated herein and supersedes all prior agreements or understandings among
the parties related to such employment matters, including, without limitation,
the Employment Agreement, dated November 21, 1996, between the Company and
Executive.
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.
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15
16. NO ASSIGNMENT. Except as contemplated by Section 15
above, this Agreement shall not be assignable or otherwise transferable by
either party.
17. AMENDMENT OR MODIFICATION; WAIVER. No provision of this
Agreement may be amended or waived unless such amendment or waiver is authorized
by the Chairman of the Board or the Board and is agreed to in writing, signed by
Executive and by an officer of the Company thereunto duly authorized. Except as
otherwise specifically provided in this Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provision or condition at the same or at any prior or
subsequent time.
18. FEES AND EXPENSES. The Company will reimburse Executive
for the reasonable attorney's fees incurred by him in connection with the
negotiation and preparation of this Agreement. If either party institutes any
action or proceedings to enforce any rights the party has under this Agreement,
or for damages by reason of any alleged breach of any provision of this
Agreement, or for a declaration of each party's rights or obligations hereunder
or to set aside any provision hereof, or for any other arbitral or judicial
remedy, each party shall be responsible for its own costs and expenses incurred
thereby, including but not limited to, attorneys' fees and disbursements;
provided, however, that if the employment of Executive is purported to be
terminated for Cause subsequent to the occurrence of a Change of Control, the
Company shall promptly pay and be solely responsible for all fees and expenses
incurred by Executive in contesting such purported termination or the grounds
therefor, including, without limitation, attorneys' fees and disbursements.
19. GOVERNING LAW; ARBITRATION. The validity, interpretation,
construction, performance and enforcement of this Agreement shall be governed by
the internal laws of the State of Ohio, without regard to its conflicts of law
rules. Any controversy or claim arising out of or relating to this Agreement,
shall be settled by arbitration in accordance with the rules of the American
Arbitration Association, and judgment upon such award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
arbitration shall be held in Canton, Ohio or such other place as may be agreed
upon at the time by the parties to the arbitration. Subject to Section 18
hereof, the expense of such arbitration shall be borne by the Company.
20. TITLES. Titles to the Sections and subsections in this
Agreement are intended solely for convenience and no provision of this Agreement
is to be construed by reference to the title of any Section.
21. COUNTERPARTS. This Agreement may be executed in one or
more counter parts, which together shall constitute one agreement. It shall not
be necessary for each party to sign each counterpart so long as each party has
signed at least one counterpart.
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
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16
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.
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17
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first set forth above.
WATERLINK, INC.
By: /s/ Xxxx X. Xxxx
---------------------------------
Name: Xxxx X. Xxxx
Title: President and Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxx
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