EMPLOYMENT AGREEMENT
BETWEEN
NATIONAL WATERWORKS, INC.
AND
PHILIP KEIPP
MARCH 1, 2005
THIS EMPLOYMENT AGREEMENT dated as of March 1, 2005
between National Waterworks, Inc., a Delaware corporation, (the
“ Company ”), and Philip Keipp (the “
Executive ”).
The
Company will engage in the business (the “ Subject
Business ”) of the sale and distribution of waterworks
products for building and rehabilitating water and wastewater
infrastructure and any other related business in which the Company
may be engaged.
Prior
to the date hereof, Executive has been and will continue as an
officer of the Company and, as such, has substantial experience
that is valuable to the Subject Business and the
Company.
The
Company desires to employ the Executive, and the Executive desires
to accept such employment, on the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE , in consideration of the covenants contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Employment .
The
Company shall employ the Executive, and the Executive accepts
employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning on the Effective
Date and ending on the Termination Date determined pursuant to
Section 4(a) (the “ Employment Period
”).
Section 2. Position and Duties .
(a) During
the Employment Period, the Executive shall serve as the Chief
Financial Officer of the Company and shall have the usual and
customary duties, responsibilities and authority of a Chief
Financial Officer subject to the power of the Chief Executive
Officer and the Board (i) with the Executive’s consent,
to expand or limit such duties, responsibilities and authority and
(ii) to override the actions of the Executive. The Executive
acknowledges and agrees that he owes a fiduciary duty of loyalty to
the Company to discharge his duties and otherwise act in a manner
consistent with the best interests of the Company and its
Subsidiaries.
(b) During
the Employment Period, the Executive shall devote his best efforts
and all of his working time, attention and energies to the
performance of his duties and responsibilities under this Agreement
(except for vacations to which he is entitled pursuant to
Section 3(a) and except for illness or incapacity).
During the Employment Period, the Executive shall not engage in any
business activity which, in the reasonable judgment of the Board
(excluding the Executive if he should be a member of the Board at
the time of such determination), conflicts with the duties of the
Executive hereunder, whether or not such activity is pursued for
gain, profit or other pecuniary advantage.
Section 3. Base Salary and Benefits .
(a)
Base Salary . During the Employment Period, the
Executive’s base salary shall be $188,513.62 per annum, or
such higher rate as the Compensation Committee of the Board
(excluding the Executive if he should be a member of the Board or
the Compensation Committee at the time of such determination) may
designate from time to time (the “ Base Salary
”), which salary shall be payable in such installments as is
customary for other senior executives of the Company. In addition,
during the Employment Period, the Executive shall be entitled to
participate in all employee benefit programs for which other senior
executives of the Company are generally eligible and the Executive
shall be eligible to participate in all insurance plans available
generally to other senior executives of the Company. The Executive
shall be entitled to take four (4) weeks of paid vacation
annually. The Board shall conduct a review of the Executive’s
Base Salary on an annual basis.
(b)
Bonus . Executive shall be entitled to receive, in addition
to the Base Salary, an annual bonus (the “ Bonus
”) for services rendered during such year determined as
follows:
(i) For
each calendar year commencing on or after January 1, 2005,
there shall be no Bonus unless the Company exceeds 90% of the
Target EBITDA (as defined below) in any calendar year. If the
Company exceeds 90% of Target EBITDA for any calendar year, the
Bonus shall be the percentage of Base Salary between 10% and 50%,
calculated on a straight line basis, as corresponds to the relative
achievement of Target EBITDA, with 10% corresponding to 90% of
Target EBITDA and 50% corresponding to 100% of Target EBITDA. The
Bonus shall be 50% of the Base Salary if the Target EBITDA (as
defined below) is achieved for any calendar year and shall be 100%
of the Base Salary if 110% of the Target EBITDA is achieved or
exceeded in any calendar year. If EBITDA (as defined below) for any
calendar year exceeds 100% of the Target EBITDA but does not exceed
110% of the Target EBITDA, the Bonus shall be a percentage of the
Base Salary between 50% and 100%, calculated on a straight-line
basis, as corresponds to the relative achievement of Target EBITDA,
with 50% corresponding to 100% Target EBITDA and 100% corresponding
to 110% of Target EBITDA.
(ii) “
EBITDA ” shall mean the Company’s earnings
before reduction for interest, income tax, depreciation and
amortization for any period calculated in the same manner as the
monthly reporting package presented to the Board. “ Target
EBITDA ” shall be the targeted EBITDA for the Company for
any calendar year established annually, and subject to adjustments
for acquisitions by the Company, by the Board in consultation with
the Company’s Chief Executive Officer.
(iii) Each
Bonus, if any, shall be paid within thirty (30) days following
the completion of the Company’s audited financial statements
for the relevant calendar year subject to Executive’s
continued employment with the Company as of the last date of such
calendar year, except as specifically provided in
Section 5(a)(ii) hereof.
(c)
Option Agreement . Concurrent with the date hereof, National
Waterworks Holdings, Inc. (“ Parent ”), shall
issue 95,628 Options (as defined in the Option Agreement) to the
Executive pursuant to the Option Agreement.
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(d) The
Company shall reimburse the Executive for all reasonable expenses
incurred by him in the course of performing his duties under this
Agreement which are consistent with the Company’s policies in
effect from time to time with respect to travel, entertainment and
other business expenses, subject to the Company’s
requirements with respect to reporting and documentation of such
expenses.
(e) The
Company shall deduct from any payments to be made by it to the
Executive under this Agreement any amounts required to be withheld
in respect of any Federal, state or local income or other
taxes.
Section 4. Termination .
(a)
Termination Date . The Executive’s employment under
this Agreement shall terminate upon the earliest to occur (the date
of such occurrence being the “ Termination Date
”) of (i) the fourth anniversary of the Effective Date
(the “ Initial Term ”), as may be extended under
Section 4(c) below, (ii) the effective date of the
Executive’s resignation (a “ Resignation
”), (iii) the Executive’s death or Disability (an
“ Involuntary Termination ”), (iv) the
effective date of a termination of the Executive’s employment
for Cause by the Board (a “ Termination for Cause
”), (v) the effective date of Executive’s
resignation for Good Reason (a “ Termination for Good
Reason ”) and (vi) the effective date of a
termination of the Executive’s employment by the Board for
reasons that do not constitute Cause (a “ Termination
Without Cause ”). The effective date of a Resignation
shall be as determined under Section 4(b) ; the
effective date of an Involuntary Termination shall be the date of
death or, in the event of a Disability, the date specified in a
notice delivered to the Executive by the Company; the effective
date of a Termination for Good Reason shall be the date specified
in a notice delivered to the Company by the Executive of such
termination and the effective date of a Termination for Cause or a
Termination Without Cause shall be the date specified in a notice
delivered to the Executive by the Company of such
termination.
(b)
Resignation . The Executive shall give the Company and the
Board at least 30 days’ prior written notice of a
Resignation, with the effective date of such Resignation specified
therein. The Board may, in its discretion, accelerate the effective
date of the Resignation.
(c)
Renewal . This Agreement may be renewed for additional one
(1) year terms by mutual agreement of the Company and the
Executive within one year and 90 days (450 days) prior to
the expiration of the Initial Term. Nothing stated in this
Agreement or represented orally or in writing to either party shall
create an obligation to renew this Agreement.
Section 5. Effect of Termination; Severance
.
(a) In
the event of a Termination Without Cause, a Termination for Good
Reason or an Involuntary Termination, the Executive or his
beneficiaries or estate shall have the right to receive the
following:
(i)
the Base Salary provided by Section 3(a) hereof for a
period of twelve (12) months from the Termination Date, such amount
to be deemed liquidated damages and payable at the applicable
payroll periods; provided , however , that in
the
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event
of a breach by the Executive of Section 6 , 7 ,
8 , or 9 on or after the Termination Date, the
provisions of Section 11 shall apply;
(ii)
a pro rata amount of any Bonus which is earned by the Executive for
the calendar year in which such termination occurs determined after
the end of the calendar year in which such termination occurs and
equal to the amount which would have been payable to the Executive
if Executive’s employment had not been terminated during such
calendar year multiplied by a fraction, the numerator of which is
the number of whole months the Executive was employed by the
Company and the denominator of which is 12. The Bonus shall be paid
out as set forth in Section 3(b)(iii) ; and
(iii)
reimbursement for any expenses for which the Executive shall not
have been previously reimbursed, as provided in
Section 3(d) .
(b) In
the event of a Termination for Cause or Resignation, the Executive
or his beneficiaries or estate shall have the right to receive the
following:
(i)
the unpaid portion of the Base Salary, computed on a pro
rata basis to the Termination Date; and
(ii)
reimbursement for any expenses for which the Executive shall not
have been previously reimbursed, as provided in
Section 3(d) .
(c) Upon
any termination, neither the Executive nor his beneficiaries or
estate shall have any further rights under this Agreement or any
rights arising out of this Agreement other than as provided in
Sections 5(a) and (b) above. The rights of the
Executive set forth in this Section 5 are intended to
be the Executive’s exclusive remedy for termination and, to
the greatest extent permitted by applicable law, the Executive
waives all other remedies.
Section 6. Nondisclosure and Nonuse of Confidential
Information .
The
Executive will not disclose or use at any time, either during the
Employment Period or thereafter, any Confidential Information of
which the Executive is or becomes aware, whether or not such
information is developed by him, except to the extent that
(i) such disclosure or use is directly related to and required
by the Executive’s performance of duties assigned to the
Executive by the Company, (ii) to the extent that such
disclosure is required in connection with any action by the
Executive to enforce rights under this Agreement, or
(iii) such disclosure is required by a court of law,
governmental agency, or by any administrative or legislative entity
with jurisdiction to order the Executive to divulge or disclose
such Confidential Information; provided , that, the
Executive shall provide ten (10) days prior written notice, if
practicable, to the Company of such disclosure so that the Company
may seek a protective order or similar remedy; and, provided,
further, that, in each case set forth above, the Executive informs
the recipients that such information or communication is
confidential in nature.
Section 7. Inventions and Patents .
The
Executive agrees that all Work Product belongs to the Company. The
Executive will promptly disclose such Work Product to the Board and
perform all actions
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reasonably requested by the Board
(whether during or after the Employment Period) to establish and
confirm such ownership (including, without limitation, the
execution and delivery of assignments, consents, powers of attorney
and other instruments) and to provide reasonable assistance to the
Company in connection with the prosecution of any applications for
patents, trademarks, trade names, service marks or reissues thereof
or in the prosecution or defense of interferences relating to any
Work Product.
Section 8. Non-Compete, Non-Solicitation,
Non-Disparagement .
The
Executive acknowledges and agrees with the Company that during the
course of the Executive’s employment with the Company, the
Executive has had and will continue to have the opportunity to
develop relationships with existing employees, customers and other
business associates of the Company and its Subsidiaries which
relationships constitute goodwill of the Company, and the Company
would be irreparably damaged if the
