Exhibit 10.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of August 9,
1999, by and between ASAHI/AMERICA, INC., a Massachusetts corporation (the
"Company"), and XXXXXX X. XXXXX, an individual (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is presently Chairman, Chief Executive
Officer and President of the Company;
WHEREAS, pursuant to the Agreement and Plan of Merger among
Midnight Acquisition Holdings, Inc., Midnight Acquisition Corp. and Midnight
dated as of the date hereof (the "Merger Agreement"), Midnight Acquisition Corp.
will merge with and into the Company with the Company being the surviving entity
(the "Merger"). Pursuant to the Merger, each outstanding share of common stock,
no par value, of the Company (the "Company Common Stock") shall be converted
into the right to receive the Merger Consideration (as defined in the Merger
Agreement);
WHEREAS, the Company desires to retain the Executive as Chief
Executive Officer and President of the Company as of the Effective Time (as
defined in the Merger Agreement), on the terms and conditions set forth below in
this Agreement;
WHEREAS, the Executive is willing to provide his services as
an employee of the Company for the inducements and on the terms and conditions
set forth below in this Agreement; and
WHEREAS, the parties hereto desire to replace the existing
Employment Agreement dated as of January 1, 1996, as amended (the "Prior
Agreement"), among the parties to this Agreement, effective as of the Effective
Time.
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, with effect at the Effective Time,
the parties hereto agree as follows:
1. EMPLOYMENT. Upon the terms and subject to the conditions of
this Agreement, the Company employs the Executive and the Executive accepts
employment with the Company in the capacity hereinafter set forth.
(a) TERM OF EMPLOYMENT. The initial term of
Executive's employment by the Company under this Agreement shall
commence as of the Effective Time and shall continue until the third
anniversary of the Effective Time (the "Initial Termination Date"),
unless terminated earlier pursuant to Section 3. The term shall
automatically be extended for an additional one (1) year period
commencing on the Initial Termination Date and each anniversary thereof
until
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notice of non-extension is given by either party to the other at least
forty-five (45) days prior to the Initial Termination Date or
subsequent anniversary of the Initial Termination Date, as applicable.
The last day on which the Executive is employed under this Agreement
should either party terminate this Agreement as hereinafter provided or
should the employment term not be renewed is hereinafter called the
"Employment Termination Date." The term of employment of the Executive
under this Agreement, including any annual extensions, is referred to
in this Agreement as the "Employment Period."
(b) DUTIES. The Executive shall be employed as Chief
Executive Officer and President of the Company. In that capacity, he
shall be responsible, subject to the direction and control of the Board
of Directors of the Company or its designee (the "Board"), for the
supervision and control of the operation, finances, personnel and
management of the Company, including, without implication of
limitation, (i) the selection, hiring and firing of all personnel of
the Company, (ii) the operation, control and selection of the Company's
facilities, including the selection and purchase of equipment,
fixtures, inventory and parts, and the implementation of all
modifications, alterations and renovations of the Company's facilities
and equipment, and (iii) the selection of all products and services
offered for sale by the Company and the implementation of such sales,
including responsibility for advertising and marketing of products and
directing the Company's sales force. The Executive shall also promote
the business objectives of the Company and its subsidiaries and
affiliates ("Affiliates"), except that the Executive shall not promote
the business objectives of any Affiliate (with the exception of Quail
Piping Products, Inc. ("Quail")) where such objectives are inconsistent
with the business objectives of the Company or where such promotion
would violate the Executive's fiduciary duties to the Company.
At all times during the Employment Period, except for
illness and permitted vacation periods, during the Executive's
employment with the Company, the Executive shall: (i) devote his full
time and attention during normal business hours to the business and
best interests of the Company; and (ii) discharge such executive and
administrative duties as may be assigned to him by the Board as are
reasonably consistent with the Executive's title and office and report
to and obey the lawful directions of the Board, provided that such
instructions do not violate or cause a violation of law and do not
constitute a breach of the directors' fiduciary duties to the Company.
The foregoing shall not be construed to prohibit the Executive from:
(i) serving as a director of any corporation which is not a competitor
of the Company, provided that such service by the Executive does not
materially interfere with the performance by the Executive of his
duties hereunder and the Executive has obtained the prior consent of
the Company, which consent shall not be unreasonably withheld; or (ii)
engaging in civic, educational, religious, charitable or other
community or non-profit activities that do not impair the Executive's
ability to fulfill the Executive's duties and responsibilities under
this Agreement. It is agreed that, subject to Section 3(b), the
Executive serving as Chairman and Member of the Board of Directors of
Quail during the Employment Period will not be a violation of this
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Agreement provided that (i) he does not perform management functions
for Quail, (ii) he performs no duties other than chairing and attending
board meetings, and (iii) his title, position and/or responsibilities
as such Chairman and Member do not impair his ability to perform his
duties under this Agreement.
2. COMPENSATION. Until the termination of the Executive's
employment hereunder, in consideration for the services of the Executive
hereunder, the Company shall compensate the Executive as follows:
(a) BASE COMPENSATION. During the Employment Period,
the Company will pay to the Executive a base salary at the annual rate
of Three Hundred Thirty Thousand Dollars ($330,000), payable
semi-monthly or in such other manner as the Executive and the Company
may mutually agree (the "Base Salary"). The Base Salary may be
increased from time to time at the sole discretion of the Board. The
Board shall annually review the Executive's job performance and shall
annually consider increasing the Executive's Base Salary. Without
limiting the Board's discretion concerning increases to the Executive's
Base Salary, the Board shall consider the Company's past practice with
respect to executive salary increases in making salary increase
decisions. Nothing herein shall be construed as guaranteeing the
Executive the right to receive any such salary increases.
(b) BONUS. The Executive shall also be eligible to
receive a bonus payable on or prior to the 120th day following the end
of each calendar year during which this Agreement is in effect or,
notwithstanding the foregoing, with respect to any portion of the bonus
which may be in dispute and which has been challenged by institution of
the dispute mechanism set forth in paragraph 2(d) below, ten (10) days
after the rendering of a determination pursuant to paragraph 2(d)
below. The bonus which shall be payable to the Executive for the fiscal
year ended December 31, 1999 ("Fiscal 1999") shall be determined by
computing an amount equal to (i) 10% multiplied by (ii) the amount of
net valve sales of the Company in Fiscal 1999 in excess of $18,650,000.
For example, if the net valve sales for Fiscal 1999 is $19,650,000, the
bonus would be $100,000 (10% x 1,000,000), subject to adjustment in
accordance with the next paragraph.
In addition, the 1999 Bonus shall be adjusted
according to the selling, general and administrative costs ("SG&A")
incurred by the Company in 1999, as follows: (i) 1% of any increase of
SG&A over $10,800,000 (1998 actual) shall be deducted from the 1999
Bonus; or (ii) 1% of any decrease of SG&A under $10,800,000 shall be
added to the 1999 Bonus. For example, if there is an increase in SG&A
of $100,000 over $10,800,000, the bonus described in the above example
would be reduced by $1,000. It is agreed that the SG&A shall not
include any of the costs incurred by the Company in connection with the
transaction described In the recitals to this Agreement and in
connection with this Agreement, including without limitation, any and
all attorneys' fees incurred by the Company in connection therewith.
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The bonus payable for the two-year period remaining
in the initial term of this Employment Agreement shall be determined
through good faith negotiations between the Executive and the Company
at the end of Fiscal 1999. The bonus amount for any employment term
following the Initial Termination Date shall be negotiated in good
faith between the Executive and the Company at the time the employment
term is extended.
(c) OTHER BENEFITS. During the Executive's employment
with the Company, the Executive shall be entitled to the following
benefits at the cost of the Company, except as otherwise provided in
(ii) below:
(i) five (5) weeks vacation time per
calendar year, accruing on January 1 of each year during his
employment with the Company, with unused vacation, at the
election of the Executive, to be paid in cash or carried
forward to the next year;
(ii) participation in all employee life,
medical and dental insurance, retirement and profit sharing
plans and other benefit programs now or hereafter maintained
by the Company for senior executives of the Company according
to the terms of those plans as amended from time to time by
the Company; PROVIDED, HOWEVER, that the Executive will in no
event be entitled to benefits in amounts or of the type less
or worse than those which he was entitled to receive from the
Company as of December 1, 1992;
(iii) use of an automobile, the lease or
finance costs of which shall not exceed $1,000 per month;
(iv) payment for or reimbursement for all
reasonable and properly documented expenses incurred or paid
by him in connection with the performance of his duties
hereunder;
(v) payment for or reimbursement for all
reasonable and properly documented expenses incurred or paid
by him for financial planning, income tax preparation and
estate planning services; PROVIDED, HOWEVER, such amount under
this clause shall in no event annually exceed $10,000; and
(vi) participation in a term life insurance
program with a face amount of at least ten (10) times the
Executive's then current Base Salary, provided that the
Executive shall be entitled to name the beneficiary of that
policy.
(d) All determinations of the bonus amount under
Section 2(b) and elsewhere in this Agreement shall be made in good
faith by the Board, subject to the provisions herein, in accordance
with generally accepted accounting principles consistently applied and
subject to normal year-end adjustments within ninety (90) days of the
end of the Company's fiscal year.
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(e) (i) The Company shall maintain the existing key
man insurance, Variable Universal Life Policy with Jefferson
Pilot Financial formerly Chubb Life Insurance Company of
America, Policy No. 6700345 (the "Policy"), on the life of
Executive in the amount of $5,000,000, with the cash surrender
value thereof to be payable to the Company, for the period
ending on December 31, 2005. If the Executive is employed with
the Company as of January 1, 2006 (whether or not he remains
employed after that date) (a) any cash surrender value of such
policies in excess of the aggregate of the premiums paid for
the period through December 31, 2005 (the "Excess Value") will
be used by the Company to fund a retirement plan for the
Executive, and (b) the beneficiary of the Policy shall be
changed to the beneficiary or beneficiaries designated by the
Executive. Failing such designation, the proceeds shall be
payable to the estate of the Executive. In such event, the
Policy shall not be terminated and the Company shall pay any
further premiums due (if any) to insure the Policy remains in
effect.
(ii) The Company shall be prohibited from
terminating, canceling or amending the existing Policy, making
loans against the Policy or making any withdrawal of the cash
surrender values at any time.
(iii) If the Executive leaves the employ of
the Company at any time with Good Reason (as said term is
defined in Article 3(c) herein) or due to a Change of Control
(as said term is defined in Article 3(e)(i) herein), the
Company shall continue to pay the premiums under the Policy
for the remainder of the ten (10) year premium period. During
such period, the beneficiary designation shall be changed so
that the company receives the benefits to the extent of
premiums paid and the Executive shall designate the
beneficiaries for the balance of the insurance proceeds.
Failing such designation the proceeds shall be payable to the
estate of the Executive. At the end of the ten (10) year
premium period, the Policy shall not be terminated and the
Executive, at his option, may pay any further premiums due (if
any) to insure the Policy remains in effect.
(iv) In the event that before January 1,
2006, the Executive voluntarily resigns his position with the
Company (except for events which constitute resignation for
Good Reason or Change of Control) or is no longer employed due
to the expiration of the Agreement, the Executive shall have
the option, but not the obligation, to continue to pay any
further premiums due (if any) to insure the Policy remains in
effect. In such instance, the Policy shall not be terminated
and (a) any cash surrender value of such policies in excess of
the aggregate of the premiums paid for the period through the
date of resignation or employment expiration (the "Excess
Value") will be used by the Company to fund a retirement plan
for the Executive, and (b) the beneficiary of the Policy shall
be changed to the beneficiary or beneficiaries designated by
the Executive. Failing such designation, the proceeds shall be
payable to the estate of the Executive.
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(v) The Company agrees to cooperate with the
Executive in replacing the Policy with another insurance
and/or another unfunded deferred compensation arrangement
which is mutually agreeable to the Company and the Executive
which is tax advantageous to the Executive, provided that the
amount of such new policy, if any, shall not exceed
$5,000,000. Under no circumstances shall the Company be
required to establish a funded retirement plan.
3. TERMINATION. The Executive's employment hereunder shall
commence on the Effective Time and continue until the expiration of the
Employment Period, except that the employment of the Executive hereunder shall
terminate earlier:
(a) DEATH OR DISABILITY. Upon the death of the
Executive during the Employment Period or, at the option of the
Company, in the event of the Executive's disability, upon thirty (30)
days' written notice from the Company. The Executive shall be deemed
disabled if an independent medical doctor (selected by mutual agreement
of the Executive and the Company) after consultation with the
Executive's physician and examination of the Executive certifies that
the Executive has for 180 consecutive days or for a non-consecutive
period of 180 days during any twelve (12) month period been mentally or
physically disabled in a manner which renders him unable to perform his
responsibilities under this Agreement.
(b) FOR CAUSE. For "Cause" immediately upon written
notice by the Board to the Executive, specifying in detail the basis
for such Cause. For purposes of this Agreement, "Cause" shall mean:
(i) a breach of any material provision of
this Agreement, including without implication of limitation
any breach of Sections 1(b) and/or 4(a) through (d) hereof
which breach, if curable, is not cured within thirty (30) days
after written notice thereof, specifying the particulars of
such breach, is given to the Executive by the Board; provided,
however, with regard to any alleged breach under Section 1(b),
the determination by the Board shall be made in its sole
discretion exercised in good faith;
(ii) one or more acts of dishonesty or fraud
by the Executive during the Employment Period in the
performance of his duties on behalf of the Company;
(iii) any plea of NOLO CONTENDERE, guilty
plea or any conviction of the Executive of any felony or any
other crime which conviction has, or is reasonably likely to
have, a material adverse effect on the Company or its business
or reputation;
(iv) any material act or omission by the
Executive during the Employment Period involving willful
malfeasance or gross negligence in the performance of his
duties hereunder which breach, if curable, is not cured
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within thirty (30) days after written notice thereof,
specifying the particulars of such breach, is given to the
Executive by the Board;
(v) the repeated failure of the Executive to
follow the reasonable instructions of the Board, which
instructions shall have been on at least one occasion set
forth in a resolution or a written communication of the Board
delivered to the Executive; PROVIDED, HOWEVER, that compliance
with such instructions would not violate or cause a violation
of law, would not constitute a breach of fiduciary duty to the
Company and would not otherwise be inconsistent with this
Agreement; or
(vi) the inability of the Executive as a
result of continued alcohol or drug use to carry out the
responsibilities of his office.
(c) RESIGNATION; TERMINATION WITHOUT CAUSE. Upon
ninety (90) days' written notice by either the Company or the Executive
to the other party hereto, except that the Executive may terminate his
employment with Good Reason upon thirty (30) days' written notice to
the Company. For purposes of this Agreement, the term "Good Reason"
shall mean the occurrence of any of the events or conditions described
in subparagraphs (i) through (iv) hereof without the Executive's
express written consent:
(i) a material adverse change in the
Executive's status, title, position, scope of authority or
responsibilities (including reporting responsibilities); the
assignment to the Executive of any duties or responsibilities
which are materially inconsistent with such status, title,
position, authorities or responsibilities; or any removal of
the Executive from or failure to reappoint or reelect him to
any of such positions, except in connection with the
termination of his employment for Cause, as a result of his
death or disability or by the Executive other than for Good
Reason;
(ii) the relocation of the Company's
principal executive offices to a location outside a 30-mile
radius of 000 Xxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxxxxx, or
the Company's requiring Executive to be based at any place
other than the Company's principal executive offices, except
for reasonably required travel on the Company's business which
is not substantially greater than such travel requirements
prior to the date hereof; or
(iii) any material breach by the Company of
any provision of this Agreement, including without implication
of limitation a reduction by the Company in the Executive's
compensation or a material adverse change in the level of
benefits as set forth in Section 2 hereof.
The Executive shall provide the Company with reasonable notice and an
opportunity to cure any of the events listed in Section 3(c) which would
constitute Good Reason for his resignation and shall not be entitled to
compensation pursuant to this Section 3(c) unless the
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Company fails to cure within a reasonable period, but in no event shall such
period exceed thirty (30) days following the occurrence of the event(s) at
issue.
(d) RIGHTS AND REMEDIES ON TERMINATION.
(i) If the Executive's employment hereunder
is terminated pursuant to Section 3(a) as a result of the
Executive's death or disability, on or prior to the Initial
Termination Date, then the Executive (or his estate) shall be
entitled to receive Death or Disability Pay consisting of the
continuation of the Executive's Base Salary in effect at the
time of such termination for a period (the "Severance Period")
beginning on the date the Executive terminates employment and
ending on the latest of (1) the last day of the 24th month
following such termination date or (2) the Initial Termination
Date less any payments received by the Executive under any
applicable disability policy maintained by the Company, and a
lump sum amount equal to the bonus payable to the Executive
for the last year prior to the termination, which bonus shall
be paid no later than thirty (30) days after the date such
amount has been determined.
(ii) If the Executive's employment hereunder
is terminated on or prior to the Initial Termination Date: (1)
by the Company pursuant to Section 3(c) or (2) by the
Executive for Good Reason pursuant to Section 3(c), then the
Executive shall be entitled to receive Severance Pay
consisting of the continuation of the Executive's Base Salary
for the Severance Period defined in (i) above and a lump sum
amount equal to the bonus payable to the Executive for the
last year prior to the termination, which bonus shall be paid
no later than thirty (30) days after the date such amount has
been determined. In addition, the Company shall provide the
Executive with a reasonable office and secretarial services
throughout the Severance Period.
(iii) In addition to the amounts due to
Executive pursuant to paragraph 3(d)(ii) of this Agreement, if
the Executive's employment is terminated (A) by the Company
pursuant to Section 3(c) effective on or after the second
anniversary of the Effective Time and before the Initial
Termination Date, (B) on or after the Initial Termination Date
by either party for any reason other than by the Company for
Cause, or (C) upon expiration of the initial term without
renewal, then the Company shall pay the Executive $1,000,000
(the "Non-Compete Consideration"). If the Executive's
employment is terminated in the circumstances provided in
Section 3(d)(iii)(A) or (C), then the Non-Compete
Consideration shall be paid to the Executive within seven
calendar days of such termination. On or before the 45th day
prior to the Initial Termination Date, the Executive and the
Company shall discuss and agree, if at all possible, on the
manner of payment and any investment of the Non-Compete
Consideration in the event that the Non-Compete Consideration
is not paid to the Executive prior to the Initial Termination
Date. The Company agrees to cooperate with the Executive in
structuring the timing and/or manner of payment of the
Non-Compete
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Consideration in a way which is tax advantageous to the
Executive, provided there is no additional cost to the
Company. If required to do so, the Company shall withhold any
taxes from the disbursement of the Non-Compete Consideration.
In no event will the Non-Compete Consideration be payable in
the event the Executive's employment is terminated by the
Company for Cause.
(iv) In the event of a termination of the
Executive's employment entitling the Executive to rights
pursuant to Section 3(d)(i), (ii) or (iii) above, the
Executive and/or any members of his family insured through the
Company (the "Insured Parties") shall have the option to
continue their medical and dental insurance coverage pursuant
to the law known as "COBRA", PROVIDED, HOWEVER, that the
Company shall continue to pay on the Insured Parties' behalf
the same portion of their medical and dental insurance
premiums that it paid during the Employment Period if they
elect to continue coverage pursuant to COBRA during the period
that such COBRA otherwise applies. Any share of premium
payments to be paid by the Insured Parties shall be deducted
from the Death or Disability Pay, the Severance Pay or the
Non-Compete Consideration as if the Executive remained
actively employed. Notwithstanding the foregoing, in the event
that the Executive receives any equivalent medical and/or
dental coverage from any other source, then the Company shall
no longer be obligated to provide such coverage.
(v) Except as otherwise set forth in this
Section 3(d) or 3(e) below, the Executive shall not be
entitled to any severance or other compensation after the
termination of his employment with the Company other than
payment of his Base Salary through the date of termination,
payment for then accrued but unused vacation pay as calculated
pursuant to Section 2(c)(i), provision of other benefits
pursuant to Section 2(c)(ii) and (iii) through the date of
termination, any expense reimbursements under Section 2(c)(iv)
and (v) for expenses incurred prior to termination, and the
option to continue the life insurance coverage provided
pursuant to Section 2(c)(vi) at his own expense after the
termination of his employment with the Company.
(e) TERMINATION PURSUANT TO A CHANGE OF CONTROL. If
there is a Change of Control, as defined in Section 3(e)(i) below,
during the Executive's employment with the Company, the provisions of
this Section 3(e) shall apply and shall continue to apply throughout
the remainder of the Employment Period. If, within one (1) year
following a Change of Control, the Executive's employment is terminated
by the Company without Cause (pursuant to Section 3(c) above), or if
the Executive resigns his employment for Good Reason following the
occurrence of any of the events listed in Section 3(c) above, in lieu
of any payments under Section 3(d) above, the Company shall pay to the
Executive (or the Executive's estate, if applicable) a lump sum amount
equal to 2.99 times the Executive's "base amount"
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within the meaning of Section 280G(b)(3) of the Internal Revenue Code
of 1986, as amended (the "Code").
(i) "Change of Control" shall mean the
occurrence of one or more of the following events:
(1) any "person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")) other than Asahi Organic Chemicals Industry
Co., Ltd. (formerly known as Asahi Yukizai Kogyo Co.,
Ltd.) ("AOC") becomes a "beneficial owner" (as such
term is defined in Rule 13d-3 promulgated under the
Exchange Act) (other than the Company, any trustee or
other fiduciary holding securities under an employee
benefit plan of the Company), directly or indirectly,
of securities of the Company, or any successor to the
Company through merger, consolidation, amalgamation
or the sale of substantially all of the assets of the
Company, representing fifty percent (50%) or more of
the combined voting power of the Company's or any
such successor to the Company's then outstanding
securities; or
(2) 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 (other than to a company beneficially owned
more than 50% by AOC) is consummated.
(ii) It is the intention of the Executive
and of the Company that no payments by the Company to or for
the benefit of the Executive under this Agreement shall be
nondeductible to the Company by reason of the operation of
Section 280G of the Code relating to parachute payments or any
like statutory or regulatory provision. Accordingly, and
notwithstanding any other provision of this Agreement or any
such agreement or plan, if by reason of the operation of said
Section 280G or any like statutory or regulatory provision,
any such payments exceed the amount which can be deducted by
the Company, such payments shall be reduced to the maximum
amount which can be deducted by the Company. To the extent
that payments exceeding such maximum deductible amount have
been made to or for the benefit of the Executive, such excess
payments shall be refunded to the Company with interest
thereon at the applicable Federal rate determined under
Section 1274(d) of the Code, compounded annually, or at such
other rate as may be required in order that no such payments
shall be nondeductible to the Company by reason of the
operation of said Section 280G or any like statutory or
regulatory provision. To the extent that there is more than
one method of reducing the payments to bring them within the
limitations of said Section 280G or any like statutory or
regulatory provision, the Executive shall determine which
method shall be followed, provided that if the Executive fails
to make such determination within forty-five (45) days after
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the Company has given notice of the need for such reduction,
the Company may determine the method of such reduction in its
sole discretion.
4. COVENANTS OF THE EXECUTIVE.
(a) NON-SOLICITATION OF CUSTOMERS OR EMPLOYEES OF THE
COMPANY. During the Employment Period and at all times thereafter,
except in connection with a dispute arising under this Agreement or the
terms and conditions of the Executive's employment, the Executive will
not disparage the Company or any of its Affiliates. During the
Non-Solicitation Period (as defined below), the Executive shall not,
and shall use his best efforts to cause each other business or entity
with which he is or shall become associated in any capacity not,
directly or indirectly to employ any person (other than the Executive's
son, Xxxxxx Xxxxx, and his secretary, Xxxxxxxx Xxxxxxxxxx) who at any
time during the Executive's final two years of employment with the
Company was employed in any capacity by the Company or any of its
Affiliates. During the Non-Solicitation Period, the Executive shall
not, and shall use his best efforts to cause each other business or
entity with which he is or shall become associated in any capacity not,
(i) directly or indirectly to solicit for employment any person (other
than the Executive's son, Xxxxxx Xxxxx, and his secretary, Xxxxxxxx
Xxxxxxxxxx) who at any time during the Executive's final two years of
employment with the Company was employed in any capacity by the Company
or any of its Affiliates (with the exception of Quail); (ii) to
directly or indirectly solicit any person or entity who at any time
during the Executive's final two years of employment with the Company
was a customer of the Company or its Affiliates (with the exception of
Quail) in respect of the products or services supplied by the Company
or its Affiliates (with the exception of Quail); or (iii) directly or
intentionally indirectly interfere or seek to interfere with the
continuance of supplies to the Company or its Affiliates (or with the
terms relating to such supplies) from any persons or entities who have
been supplying materials or services to the Company during the
Executive's final two years of employment with the Company.
For purposes of this Agreement, the term
"Non-Solicitation Period" shall mean the period of time during which
the Executive is actively employed by the Company and (i) with respect
to termination of the Executive's employment hereunder for "Cause"
pursuant to Section 3(b) or by the Executive pursuant to Section 3(c)
other than for Good Reason, a period beginning on the date of the
termination and ending six (6) months following the expiration of the
Employment Period in effect at the time of the termination; or (ii)
with respect to termination on or prior to the Initial Termination
Date, as a result of the Executive's disability pursuant to Section
3(a), by the Company without Cause pursuant to Section 3(c) or by the
Executive for Good Reason pursuant to Section 3(c), the period during
which the Executive receives Disability Pay or Severance Pay pursuant
to Section 3(d) hereof.
(b) CONFIDENTIALITY. Without the specific prior
written consent of the Company, the Executive shall not, directly or
indirectly, at any time after the date hereof, use or divulge to any
person, any confidential information concerning the
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business, affairs, customers or clients of the Company or any of its
Affiliates, including, without limitation, customer lists, names and
addresses, sales targets and statistics, market share statistics,
surveys and reports, insofar as the same have come to the Executive's
knowledge during his employment with the Company, all of which
information is confidential and proprietary to the Company and shall
remain the sole and exclusive property of the Company. Notwithstanding
the foregoing, the Executive shall have the right to use the generic
knowledge and expertise acquired by him during his employment with the
Company so as to enable him to be otherwise gainfully employed within
the Company's industry, subject to the non-competition agreement set
forth in (d) below. The Company also expressly agrees that the
Executive may disclose information as may be required by law or to
comply with legal process.
(c) INTELLECTUAL PROPERTY. The Executive shall as
soon as practicable disclose to the Company all ideas, inventions and
business plans developed by the Executive during his employment with
the Company which relate directly or indirectly to the business or then
currently anticipated business of the Company or its Affiliates,
including, without limitation, any process, operation, product or
improvement ("Intellectual Property"). The Executive agrees that such
Intellectual Property will be the property of the Company and that the
Executive shall, without further payment to the Executive at the
Company's request and cost, do whatever is reasonably necessary for the
Company to secure the rights thereto by patent, copyright or otherwise
for the Company.
(d) NON-COMPETE. The Executive acknowledges and
recognizes the highly competitive nature of the Company's business and,
in consideration of the payment by the Company to the Executive of
amounts that may hereafter be paid to the Executive pursuant to
Sections 3(d)(ii) or (iii) hereof, the Executive agrees that (1) during
any period in which Disability Pay or Severance Pay is paid and (2) if
the Executive receives the Non-Compete Consideration pursuant to
Section 3(d) of this Agreement, for a period of five years, the
Executive will not engage, directly or indirectly, in the "Covered
Business" (as hereinafter defined) in any state of the United States of
America in which the Company is conducting business or proposes to
conduct business as of the date on which the Executive's employment
with the Company is terminated and any states contiguous therewith
(these areas are hereinafter collectively referred to as the "Covered
Area"). For purposes of this Agreement, (i) "Covered Business" shall
mean the provision of the products and services supplied by the Company
or any of its Affiliates (excluding any products or services provided
by Quail as of the Effective Time); and (ii) the phrase "engage,
directly or indirectly" shall mean engaging directly or having an
interest, directly or indirectly, as owner, partner, shareholder,
independent contractor, capital investor, lender, person who renders
consultation services or advice or otherwise (other than as the holder
of less than 5% of the outstanding stock of a publicly-traded
corporation), either alone or in association with others, in the
operation of any aspect of any type of business or enterprise engaged
in any aspect of the Covered Business. The Executive shall be deemed
engaged in business in the Covered Area if his place
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of business is located in the Covered Area or if he or his business
solicits customers located anywhere in, or delivers products anywhere
in, the Covered Area.
5. REPRESENTATION AND WARRANTIES.
(a) THE COMPANY. The Company hereby represents
and warrants to the Executive as follows:
(i) the Company is duly organized, validly
existing and in good standing under the laws of the
Commonwealth of Massachusetts;
(ii) this Agreement has been duly
authorized, executed and delivered by the Company; and
(iii) the execution and delivery of this
Agreement by the Company, the performance by the Company of
its obligations hereunder and the consummation by the Company
of the transactions contemplated hereby will not violate any
agreement to which the Company is a party or any provision of
its Articles of Organization or By-Laws.
(b) THE EXECUTIVE. The Executive hereby
represents and warrants to the Company as follows:
(i) the Executive has full legal capacity
to enter into this Agreement;
(ii) this Agreement has been duly executed
and delivered by the Executive;
(iii) the execution and delivery of this
Agreement by the Executive, the performance by the Executive
of his obligations hereunder and the consummation by the
Executive of the transactions contemplated hereby will not
violate any agreement to which he is a party; and
(iv) the Executive has made such
investigations of the business and properties of the Company
as he deems necessary or appropriate before entering into this
Agreement.
6. SUCCESSORS: ASSIGNMENT.
(a) THE COMPANY. Except as herein provided, the
Company may not assign any of its rights or obligations under this
Agreement without the written consent of the Executive; PROVIDED,
HOWEVER, that the Company may assign this Agreement without such
consent if assigned to the acquiring party as part of a transfer by the
Company of all or substantially all of its assets and the acquiring
party consents in writing to be bound by this Agreement. A change in
control of the Company or merger of the Company with and into any other
corporation (whether or not the Company shall be the surviving entity)
shall not be deemed an assignment of this Agreement.
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(b) THE EXECUTIVE. Neither this Agreement, nor
any right, obligation or interest hereunder, may be assigned by the
Executive, his beneficiaries, or his legal representatives.
7. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given when
delivered by hand, or three business days after being mailed by first-class
certified mail, postage prepaid and return receipt requested, addressed as
follows:
If to the Company:
Asahi/America, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
with copies to:
Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
and
Xxxxx, Xxxxxxx & Xxxxxxxxx LLP
Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: F. Xxxxxx Xxxxxx, Esq.
If to the Executive:
Xxxxxx X. Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxxxxx 00000
with a copy to:
Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
8. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the Commonwealth of
Massachusetts without giving effect to the conflicts of law principles thereof.
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9. EXPENSES. All costs and expenses (including
attorneys' fees) incurred by the Company and the Executive in connection with
the negotiation and preparation of this Agreement shall be paid by the Company.
10. ENTIRE AGREEMENT. This Agreement contains the entire
agreement of the parties and their affiliates relating to the subject matter
hereof and supersedes all prior agreements, representations, warranties and
understandings, written or oral with respect thereto including, without
limitation, the Prior Agreement. The Executive acknowledges that (i) he has no
right to payments that may arise on account of the transactions contemplated by
the Merger Agreement other than on account of his stock in the Company and has
no other rights pursuant to the Prior Agreement, (ii) "Good Reason" does not
exist based upon the transactions contemplated in the Merger Agreement and (iii)
any accrued but unpaid salaries, accrued vacation days and unreimbursed expenses
(as described in Section 2(c)) shall carry over from the Prior Agreement.
11. SEVERABILITY.
(a) GENERALLY. If any term or provision of this
Agreement or the application thereof to any person, property or
circumstances shall to any extent be invalid or unenforceable, the
remainder of this Agreement, or the application of such term or
provision to persons, property or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
(b) DURATION AND SCOPE OF CERTAIN COVENANTS. Without
limiting Section 11(a) hereof, if any court or arbitrator determines
that any of the covenants contained in Section 4 hereof, or any part of
such covenants, are unenforceable because of the duration or geographic
scope of such provision, such court or arbitrator shall have the power
to and is hereby requested to modify the duration or scope of such
provisions as the case may be to the extent necessary to make such
provision enforceable, and in its modified form, such provision shall
then be enforceable.
12. ARBITRATION. In the event of any dispute arising out
of or relating to this Agreement or in the case of breach hereof, the parties
shall try in the first instance to arrive at an amicable settlement, within
sixty (60) days after notice thereof has been given in writing by the
complaining party. Should this fail, the dispute or breach shall be referred to
and finally settled by arbitration which shall be held in Boston, Massachusetts
and conducted in the English language in accordance with the commercial
arbitration rules of the American Arbitration Association ("AAA"); PROVIDED,
HOWEVER, that disputes with regard to the determination of any bonus amount
hereunder shall be resolved in accordance with the procedures set forth in
Section 2(d) hereof. The AAA shall select three arbitrators (or in the event of
a monetary dispute involving less than $25,000, one arbitrator) to arbitrate the
disputed matter. The arbitration decision shall be binding and final and
judgment on any award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. Each side shall bear the cost of its respective
attorneys' fees associated with the foregoing procedures.
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13. REMEDIES: EQUITABLE RELIEF. The Executive
acknowledges and agrees that the covenants and obligations of the Executive
contained in Section 4 hereof relate to special, unique and extraordinary
matters and are reasonable and necessary to protect the legitimate interests of
the Company and its Affiliates and that a breach of any of the terms of such
covenants and obligations will cause the Company irreparable injury for which
adequate remedies at law are not available. The Executive therefore consents to
injunctive relief, a restraining order, an order of specific performance or any
other equitable relief (together, "Equitable Relief") with respect to any of its
obligations under Section 4. As to such obligations, any order for Equitable
Relief shall be in lieu of damages except for damages accrued up to the date of
compliance with the order. The Executive hereby waives any claim or defense
therein that the Company has an adequate remedy at law or that money damages
would provide an adequate remedy. It shall, however, be the election of the
Company as to whether or not to seek Equitable Relief. An order for Equitable
Relief shall be among the remedies which can be granted pursuant to an
arbitration instituted under Section 12 hereof and enforced by any court of
competent jurisdiction. Additionally, solely for the purpose of provisional
relief pending a determination on the merits pursuant to the arbitration process
provided for in Section 12 hereof, the Company may seek from an appropriate
court Equitable Relief.
14. AMENDMENTS, MISCELLANEOUS, ETC. Neither this
Agreement, nor any term hereof, may be amended, modified, waived, discharged or
terminated except by an instrument in writing signed by the party against which
such change, waiver, discharge or termination is sought to be enforced. The
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. All references to Sections shall be to Sections of this Agreement.
15. EFFECTIVENESS. This Agreement shall be effective
only as of the Effective Time, and prior to such time, this Agreement shall have
no force or effect.
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement under seal as of the date first written above.
ASAHI/AMERICA, INC.
By: /s/ Xxxx Xxxxxx
----------------------------------
Name: Xxxx Xxxxxx
Title: VP, CFO, Treasurer
/s/ Xxxxxx X. Xxxxx
--------------------------------------
XXXXXX X. XXXXX
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