EXHIBIT 10.17
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT (this "Agreement"), dated as of February 1, 1997,
by and between CULLIGAN WATER TECHNOLOGIES, INC. (the "Company"), a Delaware
corporation, and Douglas Pertz (the "Executive").
W I T N E S S E T H:
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WHEREAS, Culligan International Company and the Executive have entered
into the Employment Agreement, dated as of December 15, 1994, which was assigned
by Culligan International Company to the Company.
WHEREAS, the Employment Agreement referred to in the preceding
paragraph was amended as of January 31, 1997 (the "Original Employment
Agreement").
WHEREAS, the Company desires to continue to employ the Executive as
President and Chief Executive Officer of the Company and the Executive desires
to continue to serve the Company in such capacity beyond the term of the
Original Employment Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
The Company agrees to continue to employ the Executive and the
Executive agrees to continue to serve the Company beyond the term of the
Original Employment Agreement on the terms and conditions set forth herein.
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2. TERM
Subject to the provisions of Section 11 hereof, the term of the
Executive's employment (the "Term") shall commence at 12:00 midnight on January
31, 1998 (the "Commencement Date") and shall end on January 31, 2000.
3. POSITION AND DUTIES
(a) During the Term, the Executive shall serve as President and Chief
Executive Officer of the Company and, subject to the direction of the Board of
Directors of the Company (the "Board"), shall perform such duties and exercise
such supervision and powers over and with regard to the business of the Company
as are customarily associated with the position of President and Chief
Executive Officer, as well as such additional duties consistent with such
position as may be prescribed from time to time by the Board. The Executive
shall report only to the Board and committees thereof. The Executive shall
perform such duties to the best of his ability and in a diligent and proper
manner.
(b) The Company shall nominate the Executive to serve as a director
on the Board and use its best efforts to cause the Executive to be re-elected to
such position during the Term, and the Executive shall perform the duties of a
Board member to the best of his ability and in a diligent and proper manner.
(c) Nothing in this Agreement shall affect the Executive's duty of
loyalty and duty of care to the Company as provided under applicable laws.
(d) Except for vacation and periods of illness, the Executive shall,
during his employment hereunder, devote substantially all his time and attention
during normal business hours to the performance of services for the Company, and
as determined by the Company.
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(e) The Company shall furnish the Executive with office space,
secretarial assistance and such other facilities and services as shall be
suitable to the Executive's position and adequate for the performance of his
duties hereunder.
4. COMPENSATION AND RELATED MATTERS
(a) Base Salary. During the Term, the Company shall pay to the
Executive a base salary (the "Salary") at a rate of $400,000 per annum
($33,333.33 per month), in equal installments in accordance with the normal
payroll practices of the Company, but not less frequently than monthly. The
Salary may be increased from time to time by amendment to this Agreement and, if
so increased, shall not thereafter be decreased during the Term.
(b) Incentive Bonus. In addition to the Salary, the Company shall
pay to the Executive an annual incentive bonus (the "Incentive Bonus") of up to
$400,000 in respect of each of the Company's fiscal years ending January 31,
1999 and January 31, 2000. Each annual Incentive Bonus shall be subject to the
satisfaction of the performance criteria referred to below and shall be payable
promptly following a determination by the Compensation Committee (as defined
below) that the applicable performance criteria have been satisfied, but in no
event later than thirty (30) days after the Company's receipt of the report
prepared by its regular independent certified public accountants with respect
to the Company's financial statements for such fiscal year. Such performance
criteria shall be developed jointly by the Executive and the Compensation
Committee and shall be consistent with the strategic plan for the Company as of
the date hereof, as the same may be modified or amended from time to time with
the approval of the Board. It is contemplated that the performance criteria
will be formulated annually following completion of the Company's budgeting
process for the fiscal years ending January 31, 1999 and January 31, 2000 and
approval of such annual budgets by the Board, and will generally be structured
in accordance with the practices established under the Original Employment
Agreement. Notwithstanding the foregoing, it is agreed
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that one-half or more of the maximum Incentive Bonus shall be based upon the
satisfaction of certain targets relating to the earnings of the Company and its
consolidated subsidiaries, such as earnings before interest, taxes, depreciation
and amortization (all determined in accordance with generally accepted
accounting principles consistently applied) and the balance may be payable with
respect to the attainment of specified financial and/or non-financial
objectives. The Company and the Executive agree to negotiate in good faith to
establish the performance criteria and the amounts of each annual Incentive
Bonus subject thereto. As used herein, "Compensation Committee" means the
Compensation Committee of the Board or, if no such committee exists, the Board.
(c) Stock Option Agreement. As an inducement to the Executive to
enter into this Agreement and solely in connection with the performance of
services by the Executive for the Company, the Executive shall receive a grant
of stock options (the "Options") to purchase 300,000 shares of the common stock,
par value $.01 per share ("Common Stock"), of the Company pursuant to and
subject to the terms and conditions of the Stock Option Agreement, dated as of
the date hereof, by and between the Company and the Executive (the "Stock Option
Agreement"). The Stock Option Agreement shall be executed concurrently with
this Agreement.
(d) Business Expenses. During the Term, the Executive shall be
entitled to receive prompt reimbursement from the Company of all reasonable
expenses incurred by the Executive in performing services hereunder, including
all expenses of travel and living expenses while away from home on business in
the service of the Company, provided that such expenses are incurred and
accounted for in accordance with the policies and procedures established by the
Company from time to time.
(e) Vacation, Holidays and Sick Leave. During the Term, the
Executive shall be entitled to four weeks of paid vacation and paid holidays and
sick leave in accordance with the Company's standard policies for its senior
executive officers.
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(f) Other Benefits. During the Term, the Executive shall (i) be included
in all health, disability and life insurance programs maintained by the Company
now or in the future for senior executive officers of the Company, (ii) be
provided with the use of a foreign or domestic automobile (including insurance,
maintenance, repair and gasoline costs) in accordance with customary Company
policy, (iii) be included in any directors and officers liability insurance
policies or arrangements to the extent maintained by the Company now or in the
future for senior executive officers of the Company and (iv) be entitled to
participate in the Company's pension plans, welfare benefit plans, tax-deferred
savings plans or other benefit arrangements (including any insurance or trust
arrangements maintained generally for the benefit of the Company's senior
executive officers) to the extent such plans are made generally available to the
Company's senior executive officers (such programs and plans are collectively
hereinafter referred to as the "Company Compensation Plans"). Attached hereto as
Annex A is a list of Company Compensation Plans currently in effect. The Company
and the Executive agree that nothing in this Agreement shall preclude the
Company from amending or terminating any of the Company Compensation Plans,
whether now or hereinafter in effect.
The Company will reimburse the Executive annually for the reasonable costs
of personal financial and tax planning services incurred by him during the Term.
(g) Failure to Renew. If the Company declines to offer to renew this
Agreement for not less than an additional two years following the expiration of
the Term on substantially the same or more favorable terms to the Executive
(including the grant of additional stock options to purchase shares of Common
Stock at the rate of not less than 150,000 shares for each additional year of
employment), the Executive will be entitled to a payment in the amount of
$400,000 payable within 30 days follow ing such expiration. The payment referred
to in the foregoing sentence shall not be payable if the Executive's employment
has been terminated prior to the expiration of the Term.
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5. TERMINATION
The Executive's employment hereunder may be terminated without any breach
of this Agreement only under the circumstances set forth in subsection (a), (b),
(c) or (d) below.
(a) Death. The Executive's employment hereunder shall terminate upon his
death.
(b) Disability. The Board may terminate the Executive's employment
hereunder if it determines in good faith that the Executive has become
physically or mentally disabled or incapacitated to the extent that he is
unable to perform his duties hereunder, and such disability or incapacity shall
continue for a period of ninety (90) consecutive days; provided, that in
reaching its determination under this subsection 5(b), the Board shall consider
medical evaluations by a physician selected by the Executive and a physician
selected by the Company. If the Executive fails or refuses to submit to a
medical examination, within thirty (30) days after the Company so requests, by a
physician selected by the Company, then the conditions set forth in this
subsection 5(b) permitting termination of this Agreement shall be deemed to
have been satisfied upon the expiration of such thirty (30) day period.
(c) Cause. The Company may terminate the Executive's employment hereunder
at any time for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon (i) the engaging
by the Executive in willful misconduct injurious to the Company, (ii) the
embezzlement or misappropriation of funds or property of the Company by the
Executive or the conviction of the Executive of a felony or the entrance of a
plea of guilty by the Executive to a felony, other than such conduct, conviction
or plea which does not (A) reasonably call into question the Executive's loyalty
to the Company, (B) materially affect the Executive's ability to discharge his
duties hereunder or (C) reflect adversely in a material way on the reputation of
the Company, or (iii) the failure (due to other than death or
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disability as defined in subsection 5(b) hereof) or refusal by the Executive,
other than in isolated instances, to substantially perform his duties hereunder
or to devote substantially all of his time during normal business hours to the
performance of his duties and responsibilities hereunder or to comply with any
other material provisions of this Agreement, which failure or refusal has not
been cured to the reasonable satisfaction of the Board within the Notice Period
(as defined below). For purposes of clause (i) of this paragraph, no act, or
failure to act, on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interest of the Company. The
Executive shall not be deemed to have been terminated for Cause unless the
Company shall give the Executive a notice (the "Preliminary Notice") setting
forth in reasonable detail the facts and circumstances, if any, claimed to
provide a basis for termination for Cause. With respect to a termination for
Cause arising out of conduct described in either clause (i) or (iii) above, the
Executive shall not be deemed to have been terminated for Cause, unless (i) the
Executive, together with his counsel, shall have been given a reasonable
opportunity to be heard before the Board (the "Board Hearing") and (ii) if the
Executive has been afforded such opportunity in accordance with the procedure
set forth below, the Company shall have given the Executive a Notice of
Termination stating that, in the good faith opinion of not less than a majority
of the entire membership of the Board (excluding the Executive), the Executive
was guilty of the conduct asserted as the basis for such termination. The
Executive shall have fifteen (15) days after the Preliminary Notice is given to
request a Board Hearing, and, if so requested, the Executive shall have thirty
(30) days (the "Notice Period") after the Preliminary Notice is given to appear
before the Board or take such other action as he may deem appropriate, and the
Notice Period is hereby agreed to as a reasonable opportunity for the Executive
to be heard. In addition, at the request of the Board, the Executive will take a
paid leave of absence during the Notice Period. Notwithstanding anything to the
contrary contained herein, under no circumstances shall the Board's failure to
meet with the Executive result in an extension of the Date of Termination beyond
the expiration of the Notice Period.
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(d) Good Reason. The Executive may voluntarily terminate his employment
hereunder for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean, so long as the Executive has not been guilty of the conduct set forth in
clause (i), (ii), or (iii) of Section 5(c) hereof, (i) the failure or refusal by
the Company to comply with any material provision of this Agreement which has
not been cured, to the reasonable satisfaction of the Executive, within thirty
(30) days after notice of such failure or refusal has been given by the
Executive to the Company, (ii) the assignment to the Executive by the Board of
additional duties and services of a kind not customarily performed by a
President and Chief Executive Officer of a company similar to the Company, which
assignment has not been rescinded by the Board within thirty (30) days after
notice thereof has been given by the Executive to the Company, (iii) a
relocation by the Company of the Executive's office to a location outside a
thirty (30) mile radius of Northbrook, Illinois unless such relocation is part
of a relocation of the Company's executive offices, or (iv) the removal of the
Executive from the Board (including, without limitation, any failure to re-elect
the Executive to the Board) or (v) a Change in Control (as defined below) has
occurred; provided, that such Change in Control shall not constitute Good Reason
unless the Executive continues to be employed hereunder during the period
commencing on the date of such Change in Control and ending 180 days thereafter
(the "Transition Period") and further provided that the Executive terminates his
employment hereunder within ninety (90) days after the end of the Transition
Period. The Executive's election to terminate under this subsection 5(d) shall
be made within thirty (30) days from the date that the Company fails to cure
(after due notice and expiration of the time to cure) under clause (i) above, or
the date that the Company fails to rescind an assignment of duties (after due
notice and expiration of the time to cure) under clause (ii) above, and shall be
made within sixty (60) days from the date the Executive is advised of the
proposed relocation under (iii) above, or the date that the Executive ceases to
be a member of the Board under clause (iv) above.
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(e) Definition of Change in Control. For purposes of this Agreement, a
"Change in Control" of the Company shall mean the occurrence of any one of the
following events:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (or "group" within the meaning of Rule 13d-1 under the Exchange Act)
other than a Permitted Holder (as defined below), becomes the "beneficial
owner" (as defined in rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the then outstanding securities of the Company, as
the case may be;
(ii) sale or disposition by the Company of all or substantially
all of the Company's assets, other than to a Permitted Holder; or
(iii) more than 50% of the members of the Board of Directors of
the Company have been nominated or otherwise designated by a Person other
than a Permitted Holder.
A transaction or series of transactions which give rise to more than one of
the events described in clauses (i), (ii) and (iii) of this subsection 5(e)
shall be deemed to constitute only one Change in Control which shall be deemed
to occur upon the occurrence of the first such event to occur. As used herein
"Permitted Holder" means and includes (i) Apollo E Partners, L.P. ("Apollo"),
any of its affiliates (as such term is defined in Rule 1-02 of Regulation S-X
under the Securities Act of 1933, as amended (the "Securities Act")), and, so
long as Apollo or an affiliate of Apollo controls the right to vote the
securities in question, any partner, shareholder or trustee of any of them and
(ii) any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company.
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The Company will give the Executive written notice of the occurrence of a
Change in Control promptly following obtaining knowledge thereof.
(f) Notice of Termination. Any termination of the Executive's employment
by the Company or by the Executive (other than termination pursuant to
subsection 5(a) here of) shall be communicated by written notice ("Notice of
Termination") to the other party, which notice (including all of the notices
referred to above in this Section 5) shall indicate the specific termination
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.
(g) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death, and
(ii) if the Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination, which date shall in no event be earlier
than the date on which such notice is given or, in the case of subsection 5(c)
hereof or clause (ii) of subsection 5(d) hereof, the thirtieth (30th) day after
the Preliminary Notice or the Notice of Termination, respectively, is given.
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6. COMPENSATION UPON TERMINATION
(a) If the Executive's employment is terminated (i) by the Company for
Cause, (ii) by the Executive other than for Good Reason, or (iii) by reason of
the Executive's death or disability (pursuant to Section 5(b) hereof), then the
Company shall pay the Executive (A) his Salary through the Date of Termination
at the rate in effect immediately prior to the Date of Termination and (B) his
Incentive Bonus if and to the extent that such Incentive Bonus is payable
pursuant to the provisions of subsection 4(c) hereof on or before the Date of
Termination; provided that if the Date of Termination occurs after the end of
the fiscal year for which such Incentive Bonus is payable but before the
Compensation Committee has determined whether the applicable performance
criteria have been satisfied, such Incentive Bonus shall nonetheless be payable
to the extent that the Compensation Committee thereafter determines that such
performance criteria have been satisfied, and (C) if (1) the Executive's
employment is terminated by reason of the Executive's death or disability
(pursuant to subsection 5(b) hereof) on or after July 31 of any year and (2) the
Executive would have been entitled to an Incentive Bonus (the "Assumed Full Year
Bonus") in respect of such year had he been employed by the Company on the last
day of such fiscal year, because the applicable performance criteria were
satisfied, then the Company shall pay to the Executive an Incentive Bonus in
respect of such fiscal year in an amount equal to the Assumed Full Year Bonus
multiplied by a fraction, the numerator of which shall equal the number of days
in such fiscal year the Executive was employed by the Company and the
denominator of which shall equal 365. In addition, the Executive shall continue
to participate in, and shall receive all accrued benefits to which the Executive
is entitled under all of the Company Compensation Plans, through the Date of
Termination.
(b) If the Executive's employment is terminated (i) by the Company without
Cause (other than for disability pursuant to Section 5(b) hereof), or (ii) by
the Executive for Good Reason, then the Company shall pay to the Executive, (A)
his Incentive Bonus to the extent that such Incentive Bonus is payable pursuant
to the provi-
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sions of subsection 4(c) hereof on or before the Date of Termination; provided
that if the Date of Termination occurs after the end of the fiscal year for
which such Incentive Bonus is payable but before the Compensation Committee has
determined whether the applicable performance criteria have been satisfied, such
Incentive Bonus shall nevertheless be payable to the extent that the
Compensation Committee thereafter determines that such performance criteria have
been satisfied, and (B) as a severance payment (the "Severance Payment"), an
amount equal to the greater of (A) $600,000 or (B) $50,000 multiplied by the
number of full calendar months remaining in the Term as of the Date of
Termination. The Severance Payment shall be made in a lump sum, which shall not
be discounted to take into account present value, not later than the thirtieth
(30th) day following the Date of Termination. Following the Date of Termination,
the Company will continue to provide the Executive with benefits under the
Company Compensation Plans in which he is a participant as of the Date of
Termination, to the extent reasonably practicable, and, to the extent not
reasonably practicable, the Company will pay the Executive an amount equal to
its out-of-pocket cost for such benefit(s), in each case for the shorter of (i)
the remainder of the Term (but not less than one year) and (ii) the period
ending on the date on which the Executive is subsequently employed on a full
time basis.
(c) The Executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment or otherwise.
(d) The Executive's rights with respect to Options in case of a
termination of employment shall be set forth in the Stock Option Agreement.
7. TAXES
(a) The Company may deduct from all amounts payable under this Agreement
all federal, state, local and other taxes required by law to be withheld from
such payments.
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(b) If any payments or benefits (other than the payments required to be
made pursuant to this subsection 7(b)) received by the Executive pursuant to
this Agreement or the Stock Option Agreement in connection with the termination
of the Executive's employment (the "Payments") become subject to the tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") (the "Excise Tax"), the Company shall pay to the Executive an amount
(the "Additional Payment") equal to the amount of the Excise Tax imposed on the
Payments, but without any additional payment or reimbursement arising by reason
of the Additional Payment; provided, however, that the Additional Payment shall
be made only if the Executive's employment is terminated by the Company other
than for Cause or by the Executive for Good Reason (it being understood that any
such termination by the Executive which takes place within ninety (90) days
following the end of a Transition Period shall not constitute Good Reason for
purposes of this subsection 7(b)). The Additional Payment shall be paid to the
Executive not later than three days before the due date of the federal income
tax return for the calendar year in which the Payments become subject to the
Excise Tax; provided, however, that if the amount of the Additional Payment
cannot be finally determined on or before the third day before such due date,
the Company shall pay to the Executive not later than such third day an
estimated payment, as determined in good faith by the Company, equal to the
minimum amount of such payment and shall pay the remainder of the Additional
Payment, if any, (plus any interest payable with respect to such remainder at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as practicable
after such amount can be determined. In the event that the aggregate amount of
Excise Tax with respect to the Payments is subsequently determined to be less
than the Additional Payment, the Executive shall repay to the Company the amount
of such difference (plus any interest on the amount of such difference as
determined above) promptly following the time such amount is determined. In the
event that the aggregate amount of Excise Tax with respect to the Payments
(excluding any Excise Tax imposed by reason of the Company's payment to the
Executive of the Additional Payment) is determined to exceed the Additional
Payment (including any payment the existence or amount of which cannot be
determined at the time of
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the initial payment of the Additional Payment), the Company shall pay to the
Executive an additional amount equal to the amount of such excess (plus any
interest on the amount of such excess as determined above) promptly following
the time that the amount of such excess is determined.
8. LEGAL FEES; INDEMNIFICATION
(a) The Company shall pay or reimburse the Executive for all reasonable
legal fees incurred by the Executive in respect of the negotiation and
preparation of this Agreement and the Stock Option Agreement. The Company shall
promptly reimburse the Executive for the amount of any and all reasonable legal
fees and reasonable expenses incurred by the Executive in connection with
obtaining or enforcing in good faith any right or benefit provided to the
Executive by the Company pursuant to or in accordance with this Agreement;
provided, that the Company shall have no obligation to reimburse the Executive
for any such fees and expenses unless the resolution of any action taken by the
Executive to enforce such right or benefit is substantially in favor of the
Executive, whether by adjudication, settlement or otherwise. The Company agrees
that the amount of any such legal fees and expenses reimbursed to the Executive
in connection with obtaining or enforcing any such right or benefit will not be
taken into account by the Company in determining the aggregate compensation paid
or payable to the Executive under this Agreement.
(b) The Company shall indemnify the Executive to the extent set forth in
Article VIII of the Amended and Restated By-laws of the Company as in effect on
the date hereof, whether or not such section shall be modified, amended or
rescinded after the date hereof, unless (i) any such modification or amendment
shall be more favorable to a director or officer of the Company or (ii) any
other indemnification agreement with any other director or officer of the
Company as such shall be more favorable to such other director or officer, in
which case the Company shall indemnify the Executive to the extent set
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forth in such section as so modified or amended or such other agreement, as
applicable.
9. CONFIDENTIALITY AND NON-COMPETITION
(a) Confidentiality. Unless otherwise required by law or judicial
process, the Executive shall retain in confidence all confidential information
known to the Executive concerning the Company and its business unless and until
such information is publicly disclosed by the Company or otherwise becomes
publicly disclosed other than through the Executive's actions.
(b) Non-Competition. The Executive agrees that during his employment
with the Company and for a period of one (1) year thereafter, he will not,
directly or indirectly, as a principal, officer, director, employee or in any
other capacity whatsoever, without the prior written consent of the Company,
engage in, or be or become interested or acquire any ownership of any kind in,
or become associated with, or make loans or advance property to, any person
engaged in or about to engage in any business activity which is competitive with
any of the businesses engaged in by the Company (which constitute in excess of
five percent (5.0%) of the Company's total business) at such time (or, at the
time of termination of the Executive's employment, if compliance with this
subsection 9(b) is being determined with reference to actions subsequent to the
Date of Termination) in any of the geographic areas in which such businesses
have been conducted during the period of his employment hereunder. Nothing in
this subsection 9(b) shall prevent the Executive from making or holding any
investment in any amount in securities traded on any national securities
exchange or traded in the over-the-counter market, provided said investments do
not exceed one percent (1.0%) of the issued and outstanding stock of any one
such corporation.
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The Executive agrees that during his employment with the Company and
for a period of two (2) years thereafter, he will not, directly or indirectly,
(i) persuade or attempt to persuade any supplier or customer of the Company or a
Culligan Dealer (as defined below) to cease doing business with the Company or
such Culligan Dealer, or to reduce the amount of business it does with the
Company or such Culligan Dealer; (ii) persuade or attempt to persuade any
Culligan Dealer to terminate its franchise or other agreement(s) with the
Company or to reduce the amount of business that it does with the Company; (iii)
persuade or attempt to persuade any potential customer to which the Company or a
Culligan Dealer has made a presentation, or with which the Company or a Culligan
Dealer has been having discussions, not to hire the Company or such Culligan
Dealer, or to hire a competitor; (iv) persuade or attempt to persuade any
potential Culligan Dealer to which the Company has made a presentation, or with
which the Company has been having discussions, not to become a Culligan Dealer;
or (v) persuade or attempt to persuade any employee or representative of the
Company (other than an employee who, as of the Date of Termination assisted the
Executive in a secretarial capacity) or a Culligan Dealer to leave the employ of
the Company or such Culligan Dealer or to become employed by any person, firm,
corporation, partnership, association or entity other than the Company or such
Culligan Dealer. For purposes of this paragraph, "Culligan Dealer" shall mean
and include any person, firm, corporation, partnership, association or entity
which is a franchisee or licensee of the Company or is otherwise considered to
be a member of the Company's "dealer network."
10. NOTICE
For the purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when (a) hand delivered or (b) (unless otherwise
specified) 5 days following mailing by United States certified mail, return
receipt requested, postage prepaid, or (c) when transmitted by facsimile (with
electronic or written confirmation of receipt), in each case addressed as
follows:
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If to the Executive:
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Douglas A. Pertz
581 Crabtree Lane
Lake Forest, Illinois 60045
Fax: (847) 615-8181
with a copy to:
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James F. Streicher, Esq.
Calfee, Halter & Griswold LLP
800 Superior Avenue, Suite 1400
Cleveland, Ohio 44114
Fax: (216) 241-0816
If to the Company:
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Culligan Water Technologies, Inc.
One Culligan Parkway
Northbrook, Illinois 60062
Attention: General Counsel
Fax: (847) 205-6050
and a copy to:
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Gregory A. Fernicola, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Fax: (212) 735-2000
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
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11. EFFECTIVENESS OF AGREEMENT
This Agreement shall become effective as of the date first above written;
provided that the Executive is employed by the Company on January 31, 1998
pursuant to the Original Employment Agreement. In the event that the Executive's
employment with the Company is terminated on or before January 31, 1998, this
Agreement shall be of no further force or effect and the Company shall have no
liability whatsoever to the Executive under this Agreement.
12. MISCELLANEOUS
(a) Entire Agreement. The parties hereto agree that this Agreement and its
attachments contain the entire understanding and agreement between them, and
supersedes all prior understandings and agreements between the parties
respecting the employment by the Company of the Executive for all periods after
January 31, 1998 (other than the Stock Option Agreement), and that the
provisions of this Agreement may not be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in a writing signed by the
parties hereto; provided, however, that nothing in this Agreement shall modify
the rights and obligations of the Company or the Executive under the Stock
Option Agreement.
(b) Waiver. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(c) Prior Agreements. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
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(d) Successors; Binding Agreement. This Agreement shall be binding upon
and inure to the benefit of the Company and the Executive and any successor of
the Company.
(e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
(f) Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision or provisions of this Agreement, which shall remain in full
force and effect.
(g) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but both of which together will
constitute one and the same instrument.
(h) Survivorship. The respective rights and obligations of the parties
hereunder, including, without limitation, the rights and obligations set forth
in Sections 4, 6 and 9 of this Agreement, shall survive any termination of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.
(i) Remedies. The parties agree that, in addition to any other relief
afforded under the terms of this Agreement or by law, each party shall have the
right to enforce this Agreement by injunction issued against the other party, it
being understood that both damages and injunction shall be proper modes of
relief and are not to be considered as alternative remedies. In particular, and
without limiting the generality of the foregoing, the Executive acknowledges
that irreparable injury would be sustained by the Company if the Executive
violates any of the provisions of Section 9, and by reason thereof, the
Executive consents and agrees that if he violates said provisions, the Company
shall be entitled to immediate injunctive relief, in addition to all other
remedies available to the Company hereunder or otherwise at law or in equity.
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(j) Post-Mortem Payments; Designation of Beneficiary. In the event that,
following the termination of the Executive's employment with the Company, the
Executive is entitled to receive any payments pursuant to this Agreement and
the Executive dies, such payments shall be made to the Executive's beneficiary
designated hereunder; provided that nothing contained in this paragraph is
intended to increase any compensation or benefits provided to the Executive
under this Agreement. At any time after the execution of this Agreement, the
Executive may prepare, execute, and file with the Secretary of the Company a
designation of beneficiary form substantially in the form attached to this
Agreement as Annex B. The Executive shall thereafter be free to change
beneficiary by filing a new designation of beneficiary form with the Secretary
of the Company. In the event the Executive fails to designate a beneficiary,
following the death of the Executive all payments of the amounts specified by
this Agreement which would have been paid to the Executive's designated
beneficiary pursuant to this Agreement shall instead be paid to the Executive's
spouse, if any, if she survives the Executive or, if there is no spouse or she
does not survive the Executive, to the Executive's estate.
(k) Affiliates. Any services the Executive performs for an Affiliate (as
defined below) shall be deemed performed for the Company hereunder. Any transfer
of the Executive's employment from the Company to an Affiliate, or from an
Affiliate to the Company, or from an Affiliate to another Affiliate shall be
deemed not to constitute a termination of the Executive's employment with the
Company and shall not terminate this Agreement. For purposes of this Agreement,
the term "Affiliate" shall mean a corporation or unincorporated trade or
business that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with the Company.
(l) Time Periods. Any action required to be taken under this Agreement
within a certain number of days shall be taken within that number of calendar
days; provided, however, that if the last day for taking such action falls on a
weekend or a holiday, the period during
21
which such action may be taken shall be automatically extended to the next
business day.
(m) Incorporation by Reference. The incorporation herein of any terms by
reference to another document shall not be affected by the termination of any
agreement set forth in such other document or the invalidity of any provision
thereof.
(n) Representations and Warranties. The Company represents and warrants
that (a) it is fully authorized and empowered to enter into this Agreement and
that the Board has approved the terms of this Agreement, (b) the execution of
this Agreement and the performance of its obligations under this Agreement will
not violate or result in a breach of the terms of any material agreement to
which the Company is a party or by which it is bound, (c) no approval by any
governmental authority or body is required for it to enter into this Agreement,
and (d) the Agreement is valid, binding and enforceable against the Company,
except to the extent affected or limited by applicable bankruptcy laws or other
statutes governing the rights of creditors generally and any regulations or
interpretations thereof, and except that any indemnification agreements herein
contained may be limited by applicable securities laws or public policy
underlying such laws. The Executive represents and warrants that his execution
of this Agreement and his performance of his duties and responsibilities under
this Agreement will not violate or result in a breach of the terms of any
material agreement to which he is a party or by which he is bound.
22
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CULLIGAN WATER TECHNOLOGIES, INC.
By:________________________________
Name:
Title:
___________________________________
DOUGLAS PERTZ
23
ANNEX A
-------
Culligan International Company Employees Pension Plan
Culligan International Company Employee Profit Sharing Plan
Culligan International Company Employees Savings Plan
Culligan International Company Long Term Disability Plan
Culligan International Company Life Insurance and Accidental Death and
Dismemberment Plan
Culligan International Company Medical and Dental Benefit Plan for Executive
Employees
Culligan International Company Short Term Disability
ANNEX B
-------
DESIGNATION OF BENEFICIARY
--------------------------
On March __, 1997, I, the undersigned, entered into an Employment
Agreement with Culligan Water Technologies, Inc. Pursuant to the terms of said
Agreement, I have the right to designate a beneficiary to receive, in the event
of my death, certain payments pursuant to said Agreement. I, therefore, exercise
this right and designate _________________ to receive any such payments. Any and
all previous designations of beneficiary made by me are hereby revoked, and I
hereby reserve the right to revoke this designation of beneficiary.
________________________________
DOUGLAS A. PERTZ
Date: March , 1997
_________________________
Receipt of this Designation of Beneficiary form is acknowledged by the
undersigned Secretary of Culligan Water Technologies, Inc.
CULLIGAN WATER TECHNOLOGIES, INC.
By:_____________________________
Secretary
Date: ________________________