SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-22630
Seiler Pollution Control Systems, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2448906
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
555 Metro Place North, Suite 100, Dublin, Ohio 43017
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 614/791-3272
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.
Indicate by check x/ whether the registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days Yes /x/ No
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
As of August 1, 1996, the Registrant had outstanding 19,204,224 shares
of its Common Stock, par value $.0001 per share.
<PAGE>
Seiler Pollution Control Systems, Inc.
Form 10-Q
TABLE OF CONTENTS
Item No. Page
- -------- ----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements........................................... 1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................... 7
Item 2. Changes in Securities...................................... 7
Item 3. Defaults upon Senior Securities............................ 7
Item 4. Submission of Matters to a Vote of Security-Holders........ 7
Item 5. Other Information.......................................... 7
Item 6. Exhibits and Reports on Form 8-K........................... 7
Signatures.......................................................... Signature
Page
Financial Data Schedule............................................. Last Page
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, 1996
(Unaudited) March 31, 1996
------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 99,706 $ 200,351
Prepaid expenses and sundry receivables 146,854 109,152
----------- -----------
Total Current Assets 246,560 309,503
HIGH TEMPERATURE VITRIFICATION SYSTEMS 9,918,068 9,720,132
OTHER ASSETS
Licensing agreements, less accumulated amortization of
$940,046 and $860,712 at June 30, 1996 and
March 31, 1996, respectively 3,819,954 3,899,288
Advances to related party 594,014 624,902
Vetrotherm option 167,920 167,920
Deposits 40,915 36,103
----------- -----------
4,622,803 4,728,213
PROPERTY AND EQUIPMENT -- AT COST (net of
accumulated depreciation of $8,655 and $8,403 at
June 30, 1996 and March 31, 1996, respectively) 281,856 287,778
----------- -----------
$15,069,287 $15,045,626
=========== ===========
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 405,246 $ 316,450
Accrued expenses 151,318 107,935
----------- -----------
Total Current Liabilities 556,564 424,385
LONG-TERM DEBT
Licensing agreements payable 1,977,250 1,977,250
Loans payable -- stockholders 1,463,133 1,238,134
----------- -----------
3,440,383 3,215,384
STOCKHOLDERS' EQUITY
COMMON STOCK
Common stock, $.0001 par value; authorized
25,000,000 shares, issued and outstanding
18,725,569 and 18,525,569
shares at June 30, 1996 and
March 31, 1996, respectively 1,873 1,853
ADDITIONAL PAID IN CAPITAL 18,562,374 17,897,081
ACCUMULATED DEFICIT (7,872,931) (7,349,683)
FOREIGN CURRENCY TRANSLATION ADJUSTMENT 381,024 856,606
----------- -----------
11,072,340 11,405,857
----------- -----------
$15,069,287 $15,045,626
=========== ===========
</TABLE>
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<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----- ----
<S> <C> <C>
REVENUE $ 57,873 $ 7,500
OPERATING EXPENSES
Professional and other consulting fees 163,907 130,824
General and administrative 130,857 136,994
Salaries, wages and related fringe benefits 126,680 84,381
Research and development 80,077 56,362
Depreciation and amortization 79,586 79,659
------------ ------------
581,107 488,220
------------ ------------
LOSS FROM OPERATIONS (523,234) (480,720)
Interest expense 14 17,147
------------ ------------
LOSS BEFORE MINORITY INTEREST (523,248) (497,867)
Minority interest -- 3,850
------------ ------------
NET LOSS $ (523,248) $ (494,017)
============ ============
LOSS PER COMMON SHARE $ (0.03) $ (0.03)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 18,717,236 15,908,902
============ ============
</TABLE>
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<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
Foreign
Common Stock Additional Currency
--------------------- Paid-in Accumulated Translation
Shares Amount Capital Deficit Adjustment Total
---------- -------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1995 14,250,569 $ 1,425 $ 12,733,909 $ (5,552,956) $ 1,136,375 $ 8,318,753
Issuance of common shares
under stock option plan
for cash 175,000 17 223,108 -- -- 223,125
Issuance of common stock for cash 2,000,000 200 2,199,800 -- -- 2,200,000
Foreign currency translation adjustment -- -- -- -- (81,803) (81,803)
Net loss -- -- -- (494,017) -- (494,017)
---------- ------- ------------ ------------ ------------ ------------
BALANCE, JUNE 30, 1995 (Unaudited) 16,425,569 $ 1,642 $ 15,156,817 $ (6,046,973) $ 1,054,572 $ 10,166,058
========== ======= ============ ============ ============ ============
BALANCE, MARCH 31, 1996 18,525,569 $ 1,853 $ 17,897,081 $ (7,349,683) $ 856,606 $ 11,405,857
Exercise of stock options under the 1993
Non-Statutory Stock Option Plan 50,000 5 180,620 -- -- 180,625
Issuance of common stock for cash 150,000 15 484,673 -- -- 484,688
Foreign currency translation adjustment -- -- -- -- (475,582) (475,582)
Net loss -- -- -- (523,248) -- (523,248)
---------- ------- ------------ ------------ ------------ ------------
BALANCE, JUNE 30, 1996 (Unaudited) 18,725,569 $ 1,873 $ 18,562,374 $ (7,872,931) $ 381,024 $ 11,072,340
========== ======= ============ ============ ============ ============
</TABLE>
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<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (523,248) $ (494,017)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 79,586 79,659
Foreign currency translation (459,359) (81,413)
Minority interest -- (3,850)
Changes in assets and liabilities:
Prepaid expenses and sundry receivables (37,702) 13,849
Deposits 2,113 (38,833)
Accounts payable 88,796 (24,929)
Accrued expenses 43,383 7,622
----------- ---------
Net Cash Used In Operating Activities (806,431) (541,912)
CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of property and equipment (1,255) (171,203)
Advances for High Temperature Vitrification Systems (197,936) (1,665,143)
----------- ---------
Net Cash Used In Investing Activities (199,191) (1,836,346)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 665,313 2,423,125
Proceeds on loans payable -- stockholder 224,999 (7,038)
Advances to related party 30,888 --
----------- ---------
Net Cash Provided by Financing Activities 921,200 2,416,087
EFFECT OF EXCHANGE RATE CHANGES ON CASH (16,223) (390)
----------- ---------
Net (Decrease) Increase In Cash (100,645) 37,439
CASH -- BEGINNING OF PERIOD 200,351 89,220
----------- ---------
CASH -- END OF PERIOD $ 99,706 $ 126,659
=========== ===========
</TABLE>
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<PAGE>
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the year
ending March 31, 1997. The unaudited consolidated financial statements should be
read in conjunction with the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
March 31, 1996.
NOTE 2 -- SUBSEQUENT EVENTS
In July 1996, the Company issued 500,000 shares of its common stock through the
exercise of stock options under the 1996 Non-Statutory Stock Option Plan. The
exercise price was $1.70 per share.
NOTE 3 -- RESTATEMENT
The financial statements for the three month period ended June 30, 1995 have
been restated to expense research and development costs of $56,362 that were
previously capitalized and to reclassify the foreign currency translation of
$33,256 as a reduction of stockholders' equity rather than as an addition to the
net loss for the period.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations -- June 30, 1996 vs. June 30, 1995
The Company's net loss for the three months ended June 30, 1996 was
$523,248 as compared to $494,017 for the three months ended June 30, 1995. The
change in the net loss is the result of increases in compensation and related
expenses and research and development expenditures relating to the High
Temperature Vitrification (HTV) Systems, as well as increases in professional
and other consulting fees, offset by additional consulting revenue.
The Company has made payments aggregating $197,936 for the completion
of its HTV Systems during the three months ended June 30, 1996. The Company
funded these capital expenditures and operating losses through the issuance of
additional equity securities and loans from stockholders aggregating $665,313
and $224,999, respectively.
The Company expects to incur substantial expenditures to complete the
HTV systems, including operational start-up costs, and to develop and market
additional systems. Management's' plans to generate additional resources include
consideration of the sale of additional equity securities, alliances or joint
venture agreements with entities interested in the Company's HTV systems,
project financing agreements or other business transactions which would generate
sufficient resources to assure continuation of the Company's operations.
In June 1996, the Company successfully demonstrated the operation of
its first commercial vitrification system to more than 200 representatives of
the financial, industrial, and environmental communities at its fabricating
facility in Dottingen, Switzerland. This system will undergo a testing protocol
for approximately 90 days, after which, the system will be disassembled and
shipped to Freiberg, Germany. The operating capacities for this vitrification
system have been fully contracted.
Earlier in June, the Company also successfully completed a pilot test
on five different water streams for two United States Air Force Bases (Tinker &
McClellan). Final negotiations for building and operating two vitrification
systems for the Air Force are scheduled to begin in August/September 1996. This
time frame is on target with Seiler's Air Force project plan. The cost of these
vitrification systems are anticipated to be $2.5 - $3 million U.S. dollars for
each system.
A formal Phase 2 project presentation was presented by the Company
before the Edison Materials Technology Center's (EMTEC) technical steering
committee on July 11, 1996. The purpose of this project was to develop
commercially acceptable glass ceramic products from Ohio industrial waste
streams. Phase I of this project was extremely successful, and it was
recommended that this project continue to be funded for the next two years.
The Company plans to contract fifteen vitrification systems within the
next two years.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are filed herewith:
10.1. Employment agreement dated June 29, 1996 between
Registrant and Werner Heim.
10.2. Employment agreement dated June 29, 1996 between
Registrant and Alan B. Sarko.
10.3. Employment agreement dated June 29, 1996 between
Registrant and Niklaus Seiler.
10.4. Employment agreement dated June 29, 1996 between
Registrant and Dr. Gerold Weser.
27 Financial Data Schedule. Submitted herewith.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter which ended June 30, 1996.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date August 7, 1996 Seiler Pollution Control Systems, Inc.
----------------- --------------------------------------
(Registrant)
By: /s/ Alan B. Sarko
-------------------------------------------
Vice President and Chief Financial Officer
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is effective January 1, 1996,
between Seiler Pollution Control Systems, Inc. ("Employer" or the "Corporation")
with its principal office located at 555 Metro Place North, Suite 100, Dublin,
Ohio 43017, and Werner Heim ("Employee"), an individual who resides at
_____________________________.
WITNESSETH:
WHEREAS, Employer wishes to employ Employee as the President &
Chief Executive Officer of the Corporation on the terms and conditions stated in
this Agreement, and Employee wishes to accept such employment;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Employment. Employer offers Employee, and Employee accepts,
employment in the position of President & Chief Executive Officer ("the
Employment") under the terms and conditions of this Agreement. The Employment,
which began prior to the effective date of this Agreement, shall continue for
the term of this Agreement. Employee will be compensated for the Employment at
an annual base salary of One Hundred Fifty Thousand Dollars (U.S.$150,000.00),
to be paid monthly. Salary payments shall be subject to withholding and other
applicable taxes. Employee shall receive perquisites equivalent to those of
Employer's other executive officers of similar title. These perquisites shall
include, but not be limited to participation in all life and health insurance
plans, pension plans, company stock option plans, disability plans, bonus plans
as well as reimbursement for club memberships and automobile expenses. In no
event shall the benefits provided to employee be less, in the aggregate, than
those provided as of the initial date of execution of this agreement.
<PAGE>
2. Responsibilities. Employee's responsibilities in the Employment
shall be the normal responsibilities for a person in the position of President &
Chief Executive Officer in a company such as Employer and shall be specified in
detail as the Parties agree from time-to-time hereafter during the term of this
Agreement. Employee shall use a high degree of skill, experience and care in
performing the duties and responsibilities.
3. Extent of Services. Employee shall devote his entire working time
and attention of Employer's business and shall not engage in any other business
activity, without the consent of Employer.
4. Term. Subject to the early termination provisions provided in this
agreement, the term of this agreement shall be five (5) years commencing on
January 1, 1996 and ending on January 1, 2001.
5. Escalation. Employee's base salary will automatically increase each
year on January 1st, by an amount to be determined by the parties, but in no
event less than the greater of 5% annually or the annual inflation percentage
based on the consumer price index.
6. Bonus. (a) Employee shall receive, as additional compensation, a
bonus calculated on Employer's operating profit, as defined below, as follows:
Operating Profit (U.S. Dollars) Percent Payable
------------------------------- ---------------
0-3 million 0%
3-5 million 1%
5-20 million .75%
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20-50 million .50%
Excess of 50 million .25%
(b) The term "operating profit" shall mean the combined gross income
from the operations of Employer and its subsidiaries, other than capital gains,
minus Employer's and subsidiaries' combined expenses, deductions, and credits
attributable to such operations. The operating profit shall be determined on a
consolidated basis by the annual audit prepared in accordance with generally
accepted accounting principles by Employer's independent auditors, and their
determination shall be binding and conclusive on the parties hereto. In
computing the operating profit, no deduction shall be taken or allowance made
for federal, state or foreign income taxes or for the payments required by this
or other bonus or incentive plans.
(c) Bonuses payable under this section shall be due and owing to
Employee on April 1st of each year, for the preceding year, commencing on April
1, 1997, provided, however, that Employer's Board of Directors, in its sole
discretion, may direct that payment of some or all of the bonus be deferred for
a period of up to nine (9) months in order to protect Employer's cash flow.
7. Termination.
(a) Death or Disability. This Agreement shall terminate on Employee's
death or Disability (as defined below) prior to the end of the Term, or any
extensions thereof. In this event, Employer shall be obligated to pay Employee
(in the event of disability), or Employee's designated beneficiary or estate (in
the event of death), Employee's entire salary, perquisites,
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<PAGE>
bonuses, all accrued and unused annual leave, and any other amounts due and
owing to Employee as of the date of his death or disability, for a period of one
(1) year or to the end of the contract term whichever is less. Employer shall
have no further obligation to Employee under this Agreement.
(b) Termination with cause. The Board of Directors of the Corporation
may elect to terminate Employee's employment for cause, as defined below, at any
time during the term hereof or any extension thereof. In this event, Employee
shall be paid only for all accrued unused annual leave, and other amounts due
and owing to Employee as of the date of his termination, including, if
applicable, all amounts payable under paragraph 8 hereof. Employer shall have no
further obligations to Employee under this Agreement.
(c) Termination without cause. The Board of Directors of the
Corporation may elect to terminate Employee's employment without cause at any
time during the term hereof or any extension thereof. In this event, Employee
shall only be paid his full base salary, bonus, and perquisites for the
remaining term of this Agreement, plus all accrued unused annual leave and any
other amounts due and owing to Employee, including if applicable, all amounts
payable under paragraph 8 hereof. The Corporation shall have no further
obligations to Employee under this Agreement.
(d) Termination by Employee. Employee shall have the right to terminate
this Agreement at any time upon ninety (90) days written notice to the
Corporation. In the event that Employee terminates this Agreement pursuant to
this section, the Corporation shall pay Employee's full base salary plus all
accrued unused annual leave through the Date of
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<PAGE>
Termination. The Corporation shall have no further obligations to Employee
under this Agreement.
8. Change in Control.
(a) Severance Payment and Benefits If Termination Occurs Following
Change in Control, or With Good Reason.
If at any time during the term of this Agreement, any event
constituting a change in control (as defined below) of the Corporation occurs
and results in Employee's employment with the Corporation to terminate either
(i) by the Corporation without cause, or (ii) by Employee with Good Reason (as
defined below), Employee shall be entitled to a severance payment and other
benefits as follows:
(b) Termination Without Cause or With Good Reason.
If Employee's employment with Employer is terminated without cause by
Employer or with Good Reason by Employee, then Employer shall pay Employee, upon
demand, the following amounts (net of applicable payroll taxes):
(i) Employee's full base salary and bonus for the remaining term of
this Agreement (calculated for each remaining year in accordance with paragraph
6 of this Agreement as if he continued to be employed by Employer through the
remaining term of this Agreement) plus all accrued unused annual leave through
the Date of Termination at the rate in effect on the date the change in control
occurs.
(ii) As severance pay, an amount equal to the product of Employee's
"Base Amount" multiplied by the number 3.00. As used in the previous sentence,
Employee's "Base Amount" is Employee's annual compensation includible in his
gross income for federal income tax purposes as of the date of termination or as
of the date immediately preceding the change
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in control whichever is higher. This shall include base salary; non-deferred
amounts under annual incentive (e.g. bonus); long-term performance benefits;
profit-sharing plan benefits; retirement plan benefits (e.g. SEP or IRA); stock
option plan benefits including ordinary income realized by the exercising of
stock options during the term of the agreement; the ordinary income value, based
on public market price, of any unexercised stock options (with any negative
valued stock options valuated at zero); value of all perquisites; and the value
of distributions for all previously deferred amounts for Employee under any
benefit plan during the term of the agreement.
(c) Related Benefits.
Unless Employee's employment is terminated by Employer for cause, or by
Employee other than for Good Reason, Employer shall maintain in full force and
effect, for Employee's continued benefit for one year after the Date of
Termination, all noncash employee benefit plans, programs, or arrangements
(including, without limitation, pension and retirement plans and arrangements,
stock option plans, life insurance and health and accident plans and
arrangements, medical insurance plans, disability plans, and vacation plans) in
which Employee was entitled to participate immediately prior to the Date of
Termination provided that Employee's continued participation is permissible
after Termination under the general terms and provisions of such plans,
programs, and arrangements; provided, however, that if Employee becomes eligible
to participate in a benefit plan, program, or arrangement of another employer
which confers substantially similar benefits upon Employee, Employee shall cease
to receive benefits under this subsection in respect of such plan, program, or
arrangement. In the event that Employee's participation in any such plan,
program, or arrangement is not permitted, Employer shall arrange
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<PAGE>
to provide Employee with benefits substantially similar to those which Employee
is entitled to receive under such plans, programs and arrangements.
9. Excess Parachute Payment. In the event and to the extent that any
payments or benefits Employee becomes entitled to pursuant to paragraph 8 of
this Agreement would subject Employee to the excise tax imposed by section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), the amount of the
payment that shall be payable under this Agreement shall be the largest amount
that shall not trigger excise tax liability under section 4999 of the Code.
(a) Limitation on Payments - Basic Rule. Any provision of this
Agreement to the contrary notwithstanding, in the event that the independent
auditors retained by most recently prior to a Change in Control (the "Auditors")
determine that any payment or transfer by the Corporation to or for the benefit
of the Employee, whether paid or payable (or transferred or transferable)
pursuant to the terms of this Agreement or otherwise (a "Payment"), would be
nondeductible by the Corporation for federal income tax purposes because of
section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then
the aggregate present value of all Payments shall be reduced (but not below
zero) to the Reduced Amount. For purposes of this section, the "Reduced Amount"
shall be the amount, expressed as a present value, which maximizes the aggregate
present value of the Payments without causing any Payment to be nondeductible by
the Corporation because of section 280G of the Code.
(b) Limitation on Payments - Reduction of Payments. If the Auditors
determine that any Payment would be nondeductible by the Corporation because of
section 280G of the Code, then the Corporation, within five (5) business days
after being notified by the
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<PAGE>
Auditors, shall give the Employee notice to that effect and a copy of the
detailed calculation thereof and of the Reduced Amount. The Employee may then
elect, in the Employee's sole discretion, which and how much of the Payments
shall be eliminated or reduced (as long as after such election, the aggregate
present value of the Payments equals the Reduced Amount) and shall advise the
Corporation in writing of his or her election within thirty (30) days receipt of
notice. If no such elections are made by the Employee within such 30-day period,
then the Corporation may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equal the Reduced Amounts) and shall notify the Employee
promptly of such election. For purposes of this section 9, present value shall
be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this section 9 shall be binding upon
the Corporation and the Employee and shall be made within 60 days of the date of
the employment termination.
(c) Limitation on Payments - Overpayments and Underpayments. As a
result of uncertainty in the application of section 280G of the Code, at the
time of an initial determination by the Auditors hereunder, it is possible that
Payments will have been made by the Corporation which should not have been made
(an "Overpayment") or that additional Payments which will not have been made by
the Corporation could have been made (an "Underpayment"), consistent in each
case with the calculation of the Reduced Amount hereunder. In the event that the
Auditors, based upon the assertion of a deficiency by the Internal Revenue
Service against the Corporation or the Employee which the Auditors believe has a
high probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Employee which
the Employee
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<PAGE>
shall repay to the Corporation, together with interest at the applicable federal
rate provided for in section 7872(f)(2)(A) of the Code; provided, however, that
no amount shall be payable by the Employee to the Corporation if and to the
extent that such payment would not reduce the amount which is subject to
taxation under section 4999 of the Code. In the event that the Auditors
determine that an Underpayment has occurred, such Underpayment shall promptly be
paid or transferred by the Corporation to or for the benefit of the Employee,
together with interest at the applicable federal rate provided for in section
7872(f)(2)(A) of the Code.
10. Payment if Termination Occurs Following Change in Control for
Cause, or Without Good Reason.
If Employee's employment shall be terminated following a change in
control of the Corporation, by the Employer for cause, or by Employee other than
for Good Reason, Employee shall be paid only for all accrued unused annual
leave, and other amounts due and owing to the Employee as of the date of his
termination. Employer shall have no further obligations to Employee under this
Agreement.
11. No Mitigation. Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor, except as expressly set forth herein, shall the amount of any
payment provided for in this Agreement be reduced by any compensation earned by
Employee as the result of employment by another employer after the Date of
Termination, or otherwise.
12. Definitions of Certain Terms. For the purpose of this Agreement,
the terms defined in this Agreement shall have the meanings assigned to them
herein.
(a) Cause. Termination of Employee's employment by Employer for "Cause"
shall be mean termination because Employee was convicted of a felony or a crime
of moral
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turpitude, breached any fiduciary duty to Employer involving personal profit,
engaged in willful misconduct, committed an act of fraud, embezzlement, or
theft, or committed an act intentionally against the interest of the Corporation
which caused the Corporation material injury,
(b) Change in Control. A "Change in Control" of Employer shall mean:
(i) A change in control of a nature that would be required to be
reported in response to Item 1(a) of Form 8-K as in effect on the date hereof
pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"); provided
that, without limitation, such a change in control shall be deemed to have
occurred at such time as any Person hereafter becomes the "Beneficial Owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of thirty
(30) percent or more of the combined voting power of the Corporation's voting
securities; or
(ii) During the term of this agreement, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Corporation's shareholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were directors
at the beginning of the period; or
(iii) There shall be consummated (i) any consolidation or merger of
Employer in which Employer is not the continuing or surviving corporation or
pursuant to which voting securities would be converted into cash, securities, or
other property, other than a merger of Employer in which the holders of voting
securities immediately prior to the merger have the same proportionate ownership
of common stock of the surviving corporation immediately after
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<PAGE>
the merger, or (ii) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all of
the assets of Employer.
(c) Date of Termination. "Date of Termination" shall mean (i) if
Employee's employment is terminated by the Employer for Disability, thirty (30)
days after Notice of Termination is given (provided that Employee shall not have
returned to the performance of his duties on a full-time basis during such
30-day period), and (ii) if Employee's employment is terminated for any other
reason, the date on which Notice of Termination is given.
(d) Disability. Employee shall be deemed to have a disability for
purposes of this Agreement if he is absent from his duties with and is unable to
perform the essential duties of his office with reasonable accommodation on a
full-time basis for 180 consecutive days as a result in incapacity due to
physical or mental illness and a failure to return to the performance of his
duties on a full-time basis during the 30-day period after Notice of Termination
is given.
(e) Good Reason. Termination by Employee of his employment for "Good
Reason" shall mean termination based on any of the following:
(i) A change in Employee's status or position(s) with the Employer,
which in employee's reasonable judgment, does not represent a promotion from his
status or position(s), or any removal of him from, or any failure to re-appoint
or reelect him to, such position(s), except in connection with the termination
of his employment for Cause or Disability or as a result of his death or by him
other than for Good Reason.
(ii) A reduction by the Corporation in Employee's base salary as in
effect immediately prior to the Change in Control.
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<PAGE>
(iii) The failure by the Corporation to continue in effect any Plan (as
hereinafter defined) in which Employee was participating at the time of the
change in control of the Corporation (or Plans providing him with at least
substantially similar benefits) other than as a result of the normal expiration
of any such Plan in accordance with its terms as in effect at the time of the
Change in Control, or the taking of any action, or the failure to act, by the
Corporation which would adversely affect Employee's continued participation in
any of such Plans on at least as favorable a basis to Employee as is the case on
the date of the Change in Control or which would materially reduce Employee's
benefits in the future under any of such Plans or deprive Employee of any
material benefit enjoyed by him at the time of the Change in Control.
(iv) The failure by the Corporation to provide and credit Employee with
the number of paid vacation days to which he is then entitled in accordance with
the Corporation's normal vacation policy as in effect immediately prior to the
Change in Control.
(v) The Corporation's requiring Employee to be based anywhere other
than where Employee's office is located immediately prior to the Change in
Control except for required travel on the Corporation's business to an extent
substantially consistent with the business travel obligations which Employee
undertook on behalf of the Corporation prior to the Change in Control.
(vi) The failure by the Corporation to obtain from any successor the
assent to this Agreement.
(vii) Any refusal by the Corporation to continue to allow Employee to
attend to matters or engage in activities not directly related to the business
of the Corporation
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<PAGE>
which, prior to the Change in Control, Employee was permitted by the Board to
attend to or engage in.
For purposes of this subsection, "Plan" shall mean any compensation
plan such as an incentive or stock option plan or any employee benefit plan such
as a thrift, pension, profit sharing, medical, disability, accident, life
insurance plan, or a relocation plan or policy or any other plan, program, or
policy of the Corporation intended to benefit employees.
(f) Notice of Termination. A "Notice of Termination" of Employee's
employment given by the Corporation shall mean a written notice given to
Employee of the termination of his employment which 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 Employee's employment under the provision so indicated.
(g) Person. The term "Person" shall mean and include any individual,
corporation, partnership, group, association, or other "person," as such term is
used in Section 3(a)(9) of the Exchange Act, other than the Corporation or any
employee benefit plan(s) sponsored by the Corporation.
13. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Chief Executive Officer of the Corporation with a copy to the
Secretary of the Corporation, or
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to such other address as either 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.
14. Proprietary Information
(a) Confidentiality. In consideration of the Employment, Employee
promises to hold the Employer Information (defined below) confidential between
himself and the rest of the world. He further promises not to disclose the
existence or contents of the Employer Information or any part thereof to any
person or entity anywhere in the world and not to use the Employer Information
in any way, for a period beginning on the effective date of this Agreement and
ending three (3) years after the termination thereof. The foregoing prohibition
on disclosure by Employee is subject to the following exceptions:
(i) Employee may disclose the Employer Information to Employer and its
employees, agents, and independent contractors during the Employment, but only
to the extent that the persons to whom the Employer Information is disclosed
have a need to know.
(ii) Employee may disclose the Employer Information with Employer's
prior express written permission.
(iii) Employee may disclose any of the Employer Information (a) which
was in the public domain at the time of its disclosure to him, (b) which becomes
public through disclosure by Employer, (c) which he later receives from a third
party that had no access to the Employer Information or (d) which he is required
to disclose by affirmative governmental order. In the event of (d), Employee
shall give notice to Employer in sufficient time for Employer to object to such
disclosure.
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<PAGE>
(iv) Employee will not be subject to this section if wrongfully
discharged, and such wrongful discharge is not remedied timely.
(b) Employer Information. During the Employment, Employee will gain
access to proprietary information and trade secrets of Employer ("Employer
Information"). Employer Information may be in the form of verbal statements and
descriptions; or may be in tangible form and, more particularly, may consist of
hardware, software, or programming; of diagrams and other technical and
engineering information; of customer and marketing data, plans, or ideas; or of
financial projections, estimates, or other data; or of information concerning
Employer's operations and results. Employee acknowledges that the Employer
Information is a unique and valuable asset of Employer and is highly
confidential regardless of its status, or lack thereof, as a trade secret,
copyright, trademark, or patent. Employee further acknowledges that title to the
Employer Information remains totally and solely in Employer regardless of its
disclosure to him or others. Employer acknowledges that knowledge gained prior
to employment by Employment, even in the area of Employer Information, is not
Employer Information and is not subject to confidentiality.
(c) Return of Employer Information. At the end of the Employment,
Employee shall immediately return to the possession of Employer any Employer
Information in tangible form in his possession (i.e., not solely in his memory),
and shall not retain any copies, summaries, descriptions, or lists thereof of
any kind.
(d) Binding Agreement. Employee's obligations under this section shall
survive the termination of this Agreement for any reason.
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<PAGE>
(e) Covenant Not To Compete. Employee promises not to pursue, acquire,
or accept ownership (other than mere stock ownership not of a control basis),
manage, operate, control, or consult with respect to management or operations,
with any person or entity that competes with Employer, anywhere in the United
States, for a period beginning on the effective date of this Agreement and
ending two (2) years after its termination. Employee acknowledges that Employer
operates or plans to operate its business on a national business, and that the
geographic scope of this covenant is therefore reasonable. The parties hereby
agree to the reasonableness of these restrictions. This provision shall not
apply if Employee is terminated pursuant to paragraph 7(c) or paragraph 8(b).
15. Savings Clause. If any portion of this Agreement shall be declared
invalid, it is the intention of the parties that such invalidity shall cause
this Agreement to be reformed rather than declared void in toto, and that it be
reformed only to the minimum extent necessary to conform it to law.
16. No Assignment. Each party understands and acknowledges its unique
and personal value to the other party. Accordingly, the responsibilities under
this Agreement shall not be assigned or delegated.
17. Amendment and Waiver. This Agreement may be amended only by a
writing signed by both the parties. Any variation of its terms and conditions
shall apply only to the particular transaction with respect to which such
variation shall have been made, and shall not be generally construed as
modifying the Agreement with respect to any prior or subsequent transaction. A
party's failure to object to or take affirmative action with respect to any
conduct
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that is in violation of this Agreement shall not be construed as a waiver of the
violation, or of any prior or subsequent violation.
18. Choice of Law. This Agreement shall be governed by and interpreted
under the laws of the State of Ohio, notwithstanding principles of choice of
law.
19. Remedies. The Parties acknowledge that injunction and other
equitable remedies (as well as other remedies) are appropriate relief in any
controversy or claim arising out of or relating to this Agreement or its breach
(actual or threatened).
20. Integration. The foregoing constitutes the entire agreement and
understanding of the Parties and supersedes all prior negotiation,
correspondence, undertakings and agreements between them.
WHEREFORE, Employer and Employee have affixed their signatures hereto,
intending to be legally bound.
EMPLOYER
SEILER POLLUTION CONTROL SYSTEMS, INC.
June 29, 1996 By /s/ Werner Heim
- ------------- ---------------
Date
Its President
---------
EMPLOYEE
June 29, 1996 /s/ Werner Heim
- ------------- -----------
Date
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<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is effective January 1, 1996,
between Seiler Pollution Control Systems, Inc. ("Employer" or the "Corporation")
with its principal office located at 555 Metro Place North, Suite 100, Dublin,
Ohio 43017, and Alan B. Sarko ("Employee"), an individual who resides at 211
Blue Jay Drive, Worthington, Ohio 43235.
WITNESSETH:
WHEREAS, Employer wishes to employ Employee as the Vice
President of North American Operations of the Corporation on the terms and
conditions stated in this Agreement, and Employee wishes to accept such
employment;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Employment. Employer offers Employee, and Employee accepts,
employment in the position of Vice President of North American Operations ("the
Employment") under the terms and conditions of this Agreement. The Employment,
which began prior to the effective date of this Agreement, shall continue for
the term of this Agreement. Employee will be compensated for the Employment at
an annual base salary of One Hundred Fifty Thousand Dollars (U.S.$150,000.00),
to be paid monthly. Salary payments shall be subject to withholding and other
applicable taxes. Employee shall receive perquisites equivalent to those of
Employer's other executive officers of similar title. These perquisites shall
include, but not be limited to participation in all life and health insurance
plans, pension plans, company stock option plans, disability plans, bonus plans
as well as reimbursement for club memberships and automobile expenses. In no
event shall the benefits provided to employee be less, in the aggregate, than
those provided as of the initial date of execution of this agreement.
<PAGE>
2. Responsibilities. Employee's responsibilities in the Employment
shall be the normal responsibilities for a person in the position of Vice
President of North American Operations in a company such as Employer and shall
be specified in detail as the Parties agree from time-to-time hereafter during
the term of this Agreement. Employee shall use a high degree of skill,
experience and care in performing the duties and responsibilities.
3. Extent of Services. Employee shall devote his entire working time
and attention of Employer's business and shall not engage in any other business
activity, without the consent of Employer.
4. Term. Subject to the early termination provisions provided in this
agreement, the term of this agreement shall be five (5) years commencing on
January 1, 1996 and ending on January 1, 2001.
5. Escalation. Employee's base salary will automatically increase each
year on January 1st, by an amount to be determined by the parties, but in no
event less than the greater of 5% annually or the annual inflation percentage
based on the consumer price index.
6. Bonus. (a) Employee shall receive, as additional compensation, a
bonus calculated on Employer's operating profit, as defined below, as follows:
Operating Profit (U.S. Dollars) Percent Payable
------------------------------- ---------------
0-3 million 0%
3-5 million 1%
5-20 million .75%
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20-50 million .50%
Excess of 50 million .25%
(b) The term "operating profit" shall mean the combined gross income
from the operations of Employer and its subsidiaries, other than capital gains,
minus Employer's and subsidiaries' combined expenses, deductions, and credits
attributable to such operations. The operating profit shall be determined on a
consolidated basis by the annual audit prepared in accordance with generally
accepted accounting principles by Employer's independent auditors, and their
determination shall be binding and conclusive on the parties hereto. In
computing the operating profit, no deduction shall be taken or allowance made
for federal, state or foreign income taxes or for the payments required by this
or other bonus or incentive plans.
(c) Bonuses payable under this section shall be due and owing to
Employee on April 1st of each year, for the preceding year, commencing on April
1, 1997, provided, however, that Employer's Board of Directors, in its sole
discretion, may direct that payment of some or all of the bonus be deferred for
a period of up to nine (9) months in order to protect Employer's cash flow.
7. Termination.
(a) Death or Disability. This Agreement shall terminate on
Employee's death or Disability (as defined below) prior to the end of the Term,
or any extensions thereof. In this event, Employer shall be obligated to pay
Employee (in the event of disability), or Employee's designated beneficiary or
estate (in the event of death), Employee's entire salary, perquisites,
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bonuses, all accrued and unused annual leave, and any other amounts due and
owing to Employee as of the date of his death or disability, for a period of one
(1) year or to the end of the contract term whichever is less. Employer shall
have no further obligation to Employee under this Agreement.
(b) Termination with cause. The Board of Directors of the
Corporation may elect to terminate Employee's employment for cause, as defined
below, at any time during the term hereof or any extension thereof. In this
event, Employee shall be paid only for all accrued unused annual leave, and
other amounts due and owing to Employee as of the date of his termination,
including, if applicable, all amounts payable under paragraph 8 hereof. Employer
shall have no further obligations to Employee under this Agreement.
(c) Termination without cause. The Board of Directors of the
Corporation may elect to terminate Employee's employment without cause at any
time during the term hereof or any extension thereof. In this event, Employee
shall only be paid his full base salary, bonus, and perquisites for the
remaining term of this Agreement, plus all accrued unused annual leave and any
other amounts due and owing to Employee, including if applicable, all amounts
payable under paragraph 8 hereof. The Corporation shall have no further
obligations to Employee under this Agreement.
(d) Termination by Employee. Employee shall have the right to
terminate this Agreement at any time upon ninety (90) days written notice to the
Corporation. In the event that Employee terminates this Agreement pursuant to
this section, the Corporation shall pay Employee's full base salary plus all
accrued unused annual leave through the Date of Termination. The Corporation
shall have no further obligations to Employee under this Agreement.
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<PAGE>
8. Change in Control.
(a) Severance Payment and Benefits If Termination Occurs Following
Change in Control, or With Good Reason.
If at any time during the term of this Agreement, any event
constituting a change in control (as defined below) of the Corporation occurs
and results in Employee's employment with the Corporation to terminate either
(i) by the Corporation without cause, or (ii) by Employee with Good Reason (as
defined below), Employee shall be entitled to a severance payment and other
benefits as follows:
(b) Termination Without Cause or With Good Reason.
If Employee's employment with Employer is terminated without cause by
Employer or with Good Reason by Employee, then Employer shall pay Employee, upon
demand, the following amounts (net of applicable payroll taxes):
(i) Employee's full base salary and bonus for the remaining
term of this Agreement (calculated for each remaining year in accordance with
paragraph 6 of this Agreement as if he continued to be employed by Employer
through the remaining term of this Agreement) plus all accrued unused annual
leave through the Date of Termination at the rate in effect on the date the
change in control occurs.
(ii) As severance pay, an amount equal to the product of
Employee's "Base Amount" multiplied by the number 3.00. As used in the previous
sentence, Employee's "Base Amount" is Employee's annual compensation includible
in his gross income for federal income tax purposes as of the date of
termination or as of the date immediately preceding the change in control
whichever is higher. This shall include base salary; non-deferred amounts under
annual incentive (e.g. bonus); long-term performance benefits; profit-sharing
plan benefits;
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<PAGE>
retirement plan benefits (e.g. SEP or IRA); stock option plan benefits including
ordinary income realized by the exercising of stock options during the term of
the agreement; the ordinary income value, based on public market price, of any
unexercised stock options (with any negative valued stock options valuated at
zero); value of all perquisites; and the value of distributions for all
previously deferred amounts for Employee under any benefit plan during the term
of the agreement.
(c) Related Benefits.
Unless Employee's employment is terminated by Employer for cause, or by
Employee other than for Good Reason, Employer shall maintain in full force and
effect, for Employee's continued benefit for one year after the Date of
Termination, all noncash employee benefit plans, programs, or arrangements
(including, without limitation, pension and retirement plans and arrangements,
stock option plans, life insurance and health and accident plans and
arrangements, medical insurance plans, disability plans, and vacation plans) in
which Employee was entitled to participate immediately prior to the Date of
Termination provided that Employee's continued participation is permissible
after Termination under the general terms and provisions of such plans,
programs, and arrangements; provided, however, that if Employee becomes eligible
to participate in a benefit plan, program, or arrangement of another employer
which confers substantially similar benefits upon Employee, Employee shall cease
to receive benefits under this subsection in respect of such plan, program, or
arrangement. In the event that Employee's participation in any such plan,
program, or arrangement is not permitted, Employer shall arrange to provide
Employee with benefits substantially similar to those which Employee is entitled
to receive under such plans, programs and arrangements.
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<PAGE>
9. Excess Parachute Payment. In the event and to the extent that any
payments or benefits Employee becomes entitled to pursuant to paragraph 8 of
this Agreement would subject Employee to the excise tax imposed by section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), the amount of the
payment that shall be payable under this Agreement shall be the largest amount
that shall not trigger excise tax liability under section 4999 of the Code.
(a) Limitation on Payments - Basic Rule. Any provision of this
Agreement to the contrary notwithstanding, in the event that the independent
auditors retained by most recently prior to a Change in Control (the "Auditors")
determine that any payment or transfer by the Corporation to or for the benefit
of the Employee, whether paid or payable (or transferred or transferable)
pursuant to the terms of this Agreement or otherwise (a "Payment"), would be
nondeductible by the Corporation for federal income tax purposes because of
section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then
the aggregate present value of all Payments shall be reduced (but not below
zero) to the Reduced Amount. For purposes of this section, the "Reduced Amount"
shall be the amount, expressed as a present value, which maximizes the aggregate
present value of the Payments without causing any Payment to be nondeductible by
the Corporation because of section 280G of the Code.
(b) Limitation on Payments - Reduction of Payments. If the
Auditors determine that any Payment would be nondeductible by the Corporation
because of section 280G of the Code, then the Corporation, within five (5)
business days after being notified by the Auditors, shall give the Employee
notice to that effect and a copy of the detailed calculation thereof and of the
Reduced Amount. The Employee may then elect, in the Employee's sole
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<PAGE>
discretion, which and how much of the Payments shall be eliminated or reduced
(as long as after such election, the aggregate present value of the Payments
equals the Reduced Amount) and shall advise the Corporation in writing of his or
her election within thirty (30) days receipt of notice. If no such elections are
made by the Employee within such 30-day period, then the Corporation may elect
which and how much of the Payments shall be eliminated or reduced (as long as
after such election the aggregate present value of the Payments equal the
Reduced Amounts) and shall notify the Employee promptly of such election. For
purposes of this section 9, present value shall be determined in accordance with
section 280G(d)(4) of the Code. All determinations made by the Auditors under
this section 9 shall be binding upon the Corporation and the Employee and shall
be made within 60 days of the date of the employment termination.
(c) Limitation on Payments - Overpayments and Underpayments.
As a result of uncertainty in the application of section 280G of the Code, at
the time of an initial determination by the Auditors hereunder, it is possible
that Payments will have been made by the Corporation which should not have been
made (an "Overpayment") or that additional Payments which will not have been
made by the Corporation could have been made (an "Underpayment"), consistent in
each case with the calculation of the Reduced Amount hereunder. In the event
that the Auditors, based upon the assertion of a deficiency by the Internal
Revenue Service against the Corporation or the Employee which the Auditors
believe has a high probability of success, determine that an Overpayment has
been made, such Overpayment shall be treated for all purposes as a loan to the
Employee which the Employee shall repay to the Corporation, together with
interest at the applicable federal rate provided for in section 7872(f)(2)(A) of
the Code; provided, however, that no amount shall be payable by the
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<PAGE>
Employee to the Corporation if and to the extent that such payment would not
reduce the amount which is subject to taxation under section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has occurred, such
Underpayment shall promptly be paid or transferred by the Corporation to or for
the benefit of the Employee, together with interest at the applicable federal
rate provided for in section 7872(f)(2)(A) of the Code.
10. Payment if Termination Occurs Following Change in Control for
Cause, or Without Good Reason.
If Employee's employment shall be terminated following a change in
control of the Corporation, by the Employer for cause, or by Employee other than
for Good Reason, Employee shall be paid only for all accrued unused annual
leave, and other amounts due and owing to the Employee as of the date of his
termination. Employer shall have no further obligations to Employee under this
Agreement.
11. No Mitigation. Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor, except as expressly set forth herein, shall the amount of any
payment provided for in this Agreement be reduced by any compensation earned by
Employee as the result of employment by another employer after the Date of
Termination, or otherwise.
12. Definitions of Certain Terms. For the purpose of this Agreement,
the terms defined in this Agreement shall have the meanings assigned to them
herein.
(a) Cause. Termination of Employee's employment by Employer
for "Cause" shall be mean termination because Employee was convicted of a felony
or a crime of moral turpitude, breached any fiduciary duty to Employer involving
personal profit, engaged in willful
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<PAGE>
misconduct, committed an act of fraud, embezzlement, or theft, or committed an
act intentionally against the interest of the Corporation which caused the
Corporation material injury,
(b) Change in Control. A "Change in Control" of Employer
shall mean:
(i) A change in control of a nature that would be required
to be reported in response to Item 1(a) of Form 8-K as in effect on the date
hereof pursuant to the Securities Exchange Act of 1934 (the "Exchange Act");
provided that, without limitation, such a change in control shall be deemed to
have occurred at such time as any Person hereafter becomes the "Beneficial
Owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of thirty (30) percent or more of the combined voting power of the
Corporation's voting securities; or
(ii) During the term of this agreement, individuals who at
the beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof unless the election, or the nomination
for election by the Corporation's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period; or
(iii) There shall be consummated (i) any consolidation or
merger of Employer in which Employer is not the continuing or surviving
corporation or pursuant to which voting securities would be converted into cash,
securities, or other property, other than a merger of Employer in which the
holders of voting securities immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (ii) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all of
the assets of Employer.
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<PAGE>
(c) Date of Termination. "Date of Termination" shall mean (i)
if Employee's employment is terminated by the Employer for Disability, thirty
(30) days after Notice of Termination is given (provided that Employee shall not
have returned to the performance of his duties on a full-time basis during such
30-day period), and (ii) if Employee's employment is terminated for any other
reason, the date on which Notice of Termination is given.
(d) Disability. Employee shall be deemed to have a disability
for purposes of this Agreement if he is absent from his duties with and is
unable to perform the essential duties of his office with reasonable
accommodation on a full-time basis for 180 consecutive days as a result in
incapacity due to physical or mental illness and a failure to return to the
performance of his duties on a full-time basis during the 30-day period after
Notice of Termination is given.
(e) Good Reason. Termination by Employee of his employment for "Good
Reason" shall mean termination based on any of the following:
(i) A change in Employee's status or position(s) with the
Employer, which in employee's reasonable judgment, does not represent a
promotion from his status or position(s), or any removal of him from, or any
failure to re-appoint or reelect him to, such position(s), except in connection
with the termination of his employment for Cause or Disability or as a result of
his death or by him other than for Good Reason.
(ii) A reduction by the Corporation in Employee's base
salary as in effect immediately prior to the Change in Control.
(iii) The failure by the Corporation to continue in effect
any Plan (as hereinafter defined) in which Employee was participating at the
time of the change in control of the Corporation (or Plans providing him with at
least substantially similar benefits) other than
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<PAGE>
as a result of the normal expiration of any such Plan in accordance with its
terms as in effect at the time of the Change in Control, or the taking of any
action, or the failure to act, by the Corporation which would adversely affect
Employee's continued participation in any of such Plans on at least as favorable
a basis to Employee as is the case on the date of the Change in Control or which
would materially reduce Employee's benefits in the future under any of such
Plans or deprive Employee of any material benefit enjoyed by him at the time of
the Change in Control.
(iv) The failure by the Corporation to provide and credit
Employee with the number of paid vacation days to which he is then entitled in
accordance with the Corporation's normal vacation policy as in effect
immediately prior to the Change in Control.
(v) The Corporation's requiring Employee to be based anywhere
other than where Employee's office is located immediately prior to the Change in
Control except for required travel on the Corporation's business to an extent
substantially consistent with the business travel obligations which Employee
undertook on behalf of the Corporation prior to the Change in Control.
(vi) The failure by the Corporation to obtain from
any successor the assent to this Agreement.
(vii) Any refusal by the Corporation to continue to allow
Employee to attend to matters or engage in activities not directly related to
the business of the Corporation which, prior to the Change in Control, Employee
was permitted by the Board to attend to or engage in.
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<PAGE>
For purposes of this subsection, "Plan" shall mean any
compensation plan such as an incentive or stock option plan or any employee
benefit plan such as a thrift, pension, profit sharing, medical, disability,
accident, life insurance plan, or a relocation plan or policy or any other plan,
program, or policy of the Corporation intended to benefit employees.
(f) Notice of Termination. A "Notice of Termination" of
Employee's employment given by the Corporation shall mean a written notice given
to Employee of the termination of his employment which 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 Employee's employment under the provision so indicated.
(g) Person. The term "Person" shall mean and include any
individual, corporation, partnership, group, association, or other "person," as
such term is used in Section 3(a)(9) of the Exchange Act, other than the
Corporation or any employee benefit plan(s) sponsored by the Corporation.
13. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Chief Executive Officer of the Corporation with a copy to the
Secretary of the Corporation, or to such other address as either 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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<PAGE>
14. Proprietary Information
(a) Confidentiality. In consideration of the Employment,
Employee promises to hold the Employer Information (defined below) confidential
between himself and the rest of the world. He further promises not to disclose
the existence or contents of the Employer Information or any part thereof to any
person or entity anywhere in the world and not to use the Employer Information
in any way, for a period beginning on the effective date of this Agreement and
ending three (3) years after the termination thereof. The foregoing prohibition
on disclosure by Employee is subject to the following exceptions:
(i) Employee may disclose the Employer Information to Employer and its
employees, agents, and independent contractors during the Employment, but only
to the extent that the persons to whom the Employer Information is disclosed
have a need to know.
(ii) Employee may disclose the Employer Information with Employer's
prior express written permission.
(iii) Employee may disclose any of the Employer Information (a) which
was in the public domain at the time of its disclosure to him, (b) which becomes
public through disclosure by Employer, (c) which he later receives from a third
party that had no access to the Employer Information or (d) which he is required
to disclose by affirmative governmental order. In the event of (d), Employee
shall give notice to Employer in sufficient time for Employer to object to such
disclosure.
(iv) Employee will not be subject to this section if wrongfully
discharged, and such wrongful discharge is not remedied timely.
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<PAGE>
(b) Employer Information. During the Employment, Employee will
gain access to proprietary information and trade secrets of Employer ("Employer
Information"). Employer Information may be in the form of verbal statements and
descriptions; or may be in tangible form and, more particularly, may consist of
hardware, software, or programming; of diagrams and other technical and
engineering information; of customer and marketing data, plans, or ideas; or of
financial projections, estimates, or other data; or of information concerning
Employer's operations and results. Employee acknowledges that the Employer
Information is a unique and valuable asset of Employer and is highly
confidential regardless of its status, or lack thereof, as a trade secret,
copyright, trademark, or patent. Employee further acknowledges that title to the
Employer Information remains totally and solely in Employer regardless of its
disclosure to him or others. Employer acknowledges that knowledge gained prior
to employment by Employment, even in the area of Employer Information, is not
Employer Information and is not subject to confidentiality.
(c) Return of Employer Information. At the end of the
Employment, Employee shall immediately return to the possession of Employer any
Employer Information in tangible form in his possession (i.e., not solely in his
memory), and shall not retain any copies, summaries, descriptions, or lists
thereof of any kind.
(d) Binding Agreement. Employee's obligations under this
section shall survive the termination of this Agreement for any reason.
(e) Covenant Not To Compete. Employee promises not to pursue,
acquire, or accept ownership (other than mere stock ownership not of a control
basis), manage, operate, control, or consult with respect to management or
operations, with any person or entity that
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competes with Employer, anywhere in the United States, for a period beginning on
the effective date of this Agreement and ending two (2) years after its
termination. Employee acknowledges that Employer operates or plans to operate
its business on a national business, and that the geographic scope of this
covenant is therefore reasonable. The parties hereby agree to the reasonableness
of these restrictions. This provision shall not apply if Employee is terminated
pursuant to paragraph 7(c) or paragraph 8(b).
15. Savings Clause. If any portion of this Agreement shall be declared
invalid, it is the intention of the parties that such invalidity shall cause
this Agreement to be reformed rather than declared void in toto, and that it be
reformed only to the minimum extent necessary to conform it to law.
16. No Assignment. Each party understands and acknowledges its unique
and personal value to the other party. Accordingly, the responsibilities under
this Agreement shall not be assigned or delegated.
17. Amendment and Waiver. This Agreement may be amended only by a
writing signed by both the parties. Any variation of its terms and conditions
shall apply only to the particular transaction with respect to which such
variation shall have been made, and shall not be generally construed as
modifying the Agreement with respect to any prior or subsequent transaction. A
party's failure to object to or take affirmative action with respect to any
conduct that is in violation of this Agreement shall not be construed as a
waiver of the violation, or of any prior or subsequent violation.
18. Choice of Law. This Agreement shall be governed by and interpreted
under the laws of the State of Ohio, notwithstanding principles of choice of
law.
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19. Remedies. The Parties acknowledge that injunction and other
equitable remedies (as well as other remedies) are appropriate relief in any
controversy or claim arising out of or relating to this Agreement or its breach
(actual or threatened).
20. Integration. The foregoing constitutes the entire agreement and
understanding of the Parties and supersedes all prior negotiation,
correspondence, undertakings and agreements between them.
WHEREFORE, Employer and Employee have affixed their signatures hereto,
intending to be legally bound.
EMPLOYER
SEILER POLLUTION CONTROL SYSTEMS, INC.
June 29, 1996 By /s/ Werner Heim
- ------------- ---------------
Date
Its President
EMPLOYEE
June 29, 1996 /s/ Alan B. Sarko
- ------------- -----------------
Date
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<PAGE>
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is effective January 1, 1996,
between Seiler Pollution Control Systems, Inc. ("Employer" or the "Corporation")
with its principal office located at 555 Metro Place North, Suite 100, Dublin,
Ohio 43017, and Niklaus Seiler ("Employee"), an individual who resides at
_____________________________.
WITNESSETH:
WHEREAS, Employer wishes to employ Employee as the Vice
President of System Research Development of the Corporation on the terms and
conditions stated in this Agreement, and Employee wishes to accept such
employment;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Employment. Employer offers Employee, and Employee accepts,
employment in the position of Vice President of System Research Development
("the Employment") under the terms and conditions of this Agreement. The
Employment, which began prior to the effective date of this Agreement, shall
continue for the term of this Agreement. Employee will be compensated for the
Employment at an annual base salary of One Hundred Fifty Thousand Dollars
(U.S.$150,000.00), to be paid monthly. Salary payments shall be subject to
withholding and other applicable taxes. Employee shall receive perquisites
equivalent to those of Employer's other executive officers of similar title.
These perquisites shall include, but not be limited to participation in all life
and health insurance plans, pension plans, company stock option plans,
disability plans, bonus plans as well as reimbursement for club memberships and
automobile expenses. In no event shall the benefits provided to employee be
less, in the aggregate, than those provided as of the initial date of execution
of this agreement.
<PAGE>
2. Responsibilities. Employee's responsibilities in the Employment
shall be the normal responsibilities for a person in the position of Vice
President of System Research Development in a company such as Employer and shall
be specified in detail as the Parties agree from time-to-time hereafter during
the term of this Agreement. Employee shall use a high degree of skill,
experience and care in performing the duties and responsibilities.
3. Extent of Services. Employee shall devote his entire working time
and attention of Employer's business and shall not engage in any other business
activity, without the consent of Employer.
4. Term. Subject to the early termination provisions provided in this
agreement, the term of this agreement shall be five (5) years commencing on
January 1, 1996 and ending on January 1, 2001.
5. Escalation. Employee's base salary will automatically increase each
year on January 1st, by an amount to be determined by the parties, but in no
event less than the greater of 5% annually or the annual inflation percentage
based on the consumer price index.
6. Bonus. (a) Employee shall receive, as additional compensation, a
bonus calculated on Employer's operating profit, as defined below, as follows:
Operating Profit (U.S. Dollars) Percent Payable
------------------------------- ---------------
0-3 million 0%
3-5 million 1%
5-20 million .75%
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20-50 million .50%
Excess of 50 million .25%
(b) The term "operating profit" shall mean the combined gross income
from the operations of Employer and its subsidiaries, other than capital gains,
minus Employer's and subsidiaries' combined expenses, deductions, and credits
attributable to such operations. The operating profit shall be determined on a
consolidated basis by the annual audit prepared in accordance with generally
accepted accounting principles by Employer's independent auditors, and their
determination shall be binding and conclusive on the parties hereto. In
computing the operating profit, no deduction shall be taken or allowance made
for federal, state or foreign income taxes or for the payments required by this
or other bonus or incentive plans.
(c) Bonuses payable under this section shall be due and owing to
Employee on April 1st of each year, for the preceding year, commencing on April
1, 1997, provided, however, that Employer's Board of Directors, in its sole
discretion, may direct that payment of some or all of the bonus be deferred for
a period of up to nine (9) months in order to protect Employer's cash flow.
7. Termination.
(a) Death or Disability. This Agreement shall terminate on Employee's
death or Disability (as defined below) prior to the end of the Term, or any
extensions thereof. In this event, Employer shall be obligated to pay Employee
(in the event of disability), or Employee's designated beneficiary or estate (in
the event of death), Employee's entire salary, perquisites,
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<PAGE>
bonuses, all accrued and unused annual leave, and any other amounts due and
owing to Employee as of the date of his death or disability, for a period of one
(1) year or to the end of the contract term whichever is less. Employer shall
have no further obligation to Employee under this Agreement.
(b) Termination with cause. The Board of Directors of the Corporation
may elect to terminate Employee's employment for cause, as defined below, at any
time during the term hereof or any extension thereof. In this event, Employee
shall be paid only for all accrued unused annual leave, and other amounts due
and owing to Employee as of the date of his termination, including, if
applicable, all amounts payable under paragraph 8 hereof. Employer shall have no
further obligations to Employee under this Agreement.
(c) Termination without cause. The Board of Directors of the
Corporation may elect to terminate Employee's employment without cause at any
time during the term hereof or any extension thereof. In this event, Employee
shall only be paid his full base salary, bonus, and perquisites for the
remaining term of this Agreement, plus all accrued unused annual leave and any
other amounts due and owing to Employee, including if applicable, all amounts
payable under paragraph 8 hereof. The Corporation shall have no further
obligations to Employee under this Agreement.
(d) Termination by Employee. Employee shall have the right to terminate
this Agreement at any time upon ninety (90) days written notice to the
Corporation. In the event that Employee terminates this Agreement pursuant to
this section, the Corporation shall pay Employee's full base salary plus all
accrued unused annual leave through the Date of Termination. The Corporation
shall have no further obligations to Employee under this Agreement.
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<PAGE>
8. Change in Control.
(a) Severance Payment and Benefits If Termination Occurs Following
Change in Control, or With Good Reason.
If at any time during the term of this Agreement, any event
constituting a change in control (as defined below) of the Corporation occurs
and results in Employee's employment with the Corporation to terminate either
(i) by the Corporation without cause, or (ii) by Employee with Good Reason (as
defined below), Employee shall be entitled to a severance payment and other
benefits as follows:
(b) Termination Without Cause or With Good Reason.
If Employee's employment with Employer is terminated without cause by
Employer or with Good Reason by Employee, then Employer shall pay Employee, upon
demand, the following amounts (net of applicable payroll taxes):
(i) Employee's full base salary and bonus for the remaining
term of this Agreement (calculated for each remaining year in accordance with
paragraph 6 of this Agreement as if he continued to be employed by Employer
through the remaining term of this Agreement) plus all accrued unused annual
leave through the Date of Termination at the rate in effect on the date the
change in control occurs.
(ii) As severance pay, an amount equal to the product of
Employee's "Base Amount" multiplied by the number 3.00. As used in the previous
sentence, Employee's "Base Amount" is Employee's annual compensation includible
in his gross income for federal income tax purposes as of the date of
termination or as of the date immediately preceding the change in control
whichever is higher. This shall include base salary; non-deferred amounts under
annual incentive (e.g. bonus); long-term performance benefits; profit-sharing
plan benefits;
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<PAGE>
retirement plan benefits (e.g. SEP or IRA); stock option plan benefits including
ordinary income realized by the exercising of stock options during the term of
the agreement; the ordinary income value, based on public market price, of any
unexercised stock options (with any negative valued stock options valuated at
zero); value of all perquisites; and the value of distributions for all
previously deferred amounts for Employee under any benefit plan during the term
of the agreement.
(c) Related Benefits.
Unless Employee's employment is terminated by Employer for cause, or by
Employee other than for Good Reason, Employer shall maintain in full force and
effect, for Employee's continued benefit for one year after the Date of
Termination, all noncash employee benefit plans, programs, or arrangements
(including, without limitation, pension and retirement plans and arrangements,
stock option plans, life insurance and health and accident plans and
arrangements, medical insurance plans, disability plans, and vacation plans) in
which Employee was entitled to participate immediately prior to the Date of
Termination provided that Employee's continued participation is permissible
after Termination under the general terms and provisions of such plans,
programs, and arrangements; provided, however, that if Employee becomes eligible
to participate in a benefit plan, program, or arrangement of another employer
which confers substantially similar benefits upon Employee, Employee shall cease
to receive benefits under this subsection in respect of such plan, program, or
arrangement. In the event that Employee's participation in any such plan,
program, or arrangement is not permitted, Employer shall arrange to provide
Employee with benefits substantially similar to those which Employee is entitled
to receive under such plans, programs and arrangements.
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<PAGE>
9. Excess Parachute Payment. In the event and to the extent that any
payments or benefits Employee becomes entitled to pursuant to paragraph 8 of
this Agreement would subject Employee to the excise tax imposed by section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), the amount of the
payment that shall be payable under this Agreement shall be the largest amount
that shall not trigger excise tax liability under section 4999 of the Code.
(a) Limitation on Payments - Basic Rule. Any provision of this
Agreement to the contrary notwithstanding, in the event that the independent
auditors retained by most recently prior to a Change in Control (the "Auditors")
determine that any payment or transfer by the Corporation to or for the benefit
of the Employee, whether paid or payable (or transferred or transferable)
pursuant to the terms of this Agreement or otherwise (a "Payment"), would be
nondeductible by the Corporation for federal income tax purposes because of
section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then
the aggregate present value of all Payments shall be reduced (but not below
zero) to the Reduced Amount. For purposes of this section, the "Reduced Amount"
shall be the amount, expressed as a present value, which maximizes the aggregate
present value of the Payments without causing any Payment to be nondeductible by
the Corporation because of section 280G of the Code.
(b) Limitation on Payments - Reduction of Payments. If the
Auditors determine that any Payment would be nondeductible by the Corporation
because of section 280G of the Code, then the Corporation, within five (5)
business days after being notified by the Auditors, shall give the Employee
notice to that effect and a copy of the detailed calculation thereof and of the
Reduced Amount. The Employee may then elect, in the Employee's sole
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<PAGE>
discretion, which and how much of the Payments shall be eliminated or reduced
(as long as after such election, the aggregate present value of the Payments
equals the Reduced Amount) and shall advise the Corporation in writing of his or
her election within thirty (30) days receipt of notice. If no such elections are
made by the Employee within such 30-day period, then the Corporation may elect
which and how much of the Payments shall be eliminated or reduced (as long as
after such election the aggregate present value of the Payments equal the
Reduced Amounts) and shall notify the Employee promptly of such election. For
purposes of this section 9, present value shall be determined in accordance with
section 280G(d)(4) of the Code. All determinations made by the Auditors under
this section 9 shall be binding upon the Corporation and the Employee and shall
be made within 60 days of the date of the employment termination.
(c) Limitation on Payments - Overpayments and Underpayments.
As a result of uncertainty in the application of section 280G of the Code, at
the time of an initial determination by the Auditors hereunder, it is possible
that Payments will have been made by the Corporation which should not have been
made (an "Overpayment") or that additional Payments which will not have been
made by the Corporation could have been made (an "Underpayment"), consistent in
each case with the calculation of the Reduced Amount hereunder. In the event
that the Auditors, based upon the assertion of a deficiency by the Internal
Revenue Service against the Corporation or the Employee which the Auditors
believe has a high probability of success, determine that an Overpayment has
been made, such Overpayment shall be treated for all purposes as a loan to the
Employee which the Employee shall repay to the Corporation, together with
interest at the applicable federal rate provided for in section 7872(f)(2)(A) of
the Code; provided, however, that no amount shall be payable by the
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<PAGE>
Employee to the Corporation if and to the extent that such payment would not
reduce the amount which is subject to taxation under section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has occurred, such
Underpayment shall promptly be paid or transferred by the Corporation to or for
the benefit of the Employee, together with interest at the applicable federal
rate provided for in section 7872(f)(2)(A) of the Code.
10. Payment if Termination Occurs Following Change in Control for
Cause, or Without Good Reason.
If Employee's employment shall be terminated following a change in
control of the Corporation, by the Employer for cause, or by Employee other than
for Good Reason, Employee shall be paid only for all accrued unused annual
leave, and other amounts due and owing to the Employee as of the date of his
termination. Employer shall have no further obligations to Employee under this
Agreement.
11. No Mitigation. Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor, except as expressly set forth herein, shall the amount of any
payment provided for in this Agreement be reduced by any compensation earned by
Employee as the result of employment by another employer after the Date of
Termination, or otherwise.
12. Definitions of Certain Terms. For the purpose of this Agreement,
the terms defined in this Agreement shall have the meanings assigned to them
herein.
(a) Cause. Termination of Employee's employment by Employer for "Cause"
shall be mean termination because Employee was convicted of a felony or a crime
of moral turpitude, breached any fiduciary duty to Employer involving personal
profit, engaged in willful
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<PAGE>
misconduct, committed an act of fraud, embezzlement, or theft, or committed an
act intentionally against the interest of the Corporation which caused the
Corporation material injury,
(b) Change in Control. A "Change in Control" of Employer shall mean:
(i) A change in control of a nature that would be required to be
reported in response to Item 1(a) of Form 8-K as in effect on the date hereof
pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"); provided
that, without limitation, such a change in control shall be deemed to have
occurred at such time as any Person hereafter becomes the "Beneficial Owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of thirty
(30) percent or more of the combined voting power of the Corporation's voting
securities; or
(ii) During the term of this agreement, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Corporation's shareholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were directors
at the beginning of the period; or
(iii) There shall be consummated (i) any consolidation or merger of
Employer in which Employer is not the continuing or surviving corporation or
pursuant to which voting securities would be converted into cash, securities, or
other property, other than a merger of Employer in which the holders of voting
securities immediately prior to the merger have the same proportionate ownership
of common stock of the surviving corporation immediately after the merger, or
(ii) any sale, lease, exchange, or other transfer (in one transaction or a
series of related transactions) of all, or substantially all of the assets of
Employer.
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<PAGE>
(c) Date of Termination. "Date of Termination" shall mean (i) if
Employee's employment is terminated by the Employer for Disability, thirty (30)
days after Notice of Termination is given (provided that Employee shall not have
returned to the performance of his duties on a full-time basis during such
30-day period), and (ii) if Employee's employment is terminated for any other
reason, the date on which Notice of Termination is given.
(d) Disability. Employee shall be deemed to have a disability for
purposes of this Agreement if he is absent from his duties with and is unable to
perform the essential duties of his office with reasonable accommodation on a
full-time basis for 180 consecutive days as a result in incapacity due to
physical or mental illness and a failure to return to the performance of his
duties on a full-time basis during the 30-day period after Notice of Termination
is given.
(e) Good Reason. Termination by Employee of his employment for "Good
Reason" shall mean termination based on any of the following:
(i) A change in Employee's status or position(s) with the Employer,
which in employee's reasonable judgment, does not represent a promotion from his
status or position(s), or any removal of him from, or any failure to re-appoint
or reelect him to, such position(s), except in connection with the termination
of his employment for Cause or Disability or as a result of his death or by him
other than for Good Reason.
(ii) A reduction by the Corporation in Employee's base salary as in
effect immediately prior to the Change in Control.
(iii) The failure by the Corporation to continue in effect any Plan
(as hereinafter defined) in which Employee was participating at the time of the
change in control of the Corporation (or Plans providing him with at least
substantially similar benefits) other than
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<PAGE>
as a result of the normal expiration of any such Plan in accordance with its
terms as in effect at the time of the Change in Control, or the taking of any
action, or the failure to act, by the Corporation which would adversely affect
Employee's continued participation in any of such Plans on at least as favorable
a basis to Employee as is the case on the date of the Change in Control or which
would materially reduce Employee's benefits in the future under any of such
Plans or deprive Employee of any material benefit enjoyed by him at the time of
the Change in Control.
(iv) The failure by the Corporation to provide and credit Employee
with the number of paid vacation days to which he is then entitled in accordance
with the Corporation's normal vacation policy as in effect immediately prior to
the Change in Control.
(v) The Corporation's requiring Employee to be based anywhere other
than where Employee's office is located immediately prior to the Change in
Control except for required travel on the Corporation's business to an extent
substantially consistent with the business travel obligations which Employee
undertook on behalf of the Corporation prior to the Change in Control.
(vi) The failure by the Corporation to obtain from any successor the
assent to this Agreement.
(vii) Any refusal by the Corporation to continue to allow Employee
to attend to matters or engage in activities not directly related to the
business of the Corporation which, prior to the Change in Control, Employee was
permitted by the Board to attend to or engage in.
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<PAGE>
For purposes of this subsection, "Plan" shall mean any compensation
plan such as an incentive or stock option plan or any employee benefit plan such
as a thrift, pension, profit sharing, medical, disability, accident, life
insurance plan, or a relocation plan or policy or any other plan, program, or
policy of the Corporation intended to benefit employees.
(f) Notice of Termination. A "Notice of Termination" of Employee's
employment given by the Corporation shall mean a written notice given to
Employee of the termination of his employment which 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 Employee's employment under the provision so indicated.
(g) Person. The term "Person" shall mean and include any individual,
corporation, partnership, group, association, or other "person," as such term is
used in Section 3(a)(9) of the Exchange Act, other than the Corporation or any
employee benefit plan(s) sponsored by the Corporation.
13. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Chief Executive Officer of the Corporation with a copy to the
Secretary of the Corporation, or to such other address as either 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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<PAGE>
14. Proprietary Information
(a) Confidentiality. In consideration of the Employment, Employee
promises to hold the Employer Information (defined below) confidential between
himself and the rest of the world. He further promises not to disclose the
existence or contents of the Employer Information or any part thereof to any
person or entity anywhere in the world and not to use the Employer Information
in any way, for a period beginning on the effective date of this Agreement and
ending three (3) years after the termination thereof. The foregoing prohibition
on disclosure by Employee is subject to the following exceptions:
(i) Employee may disclose the Employer Information to Employer and
its employees, agents, and independent contractors during the Employment, but
only to the extent that the persons to whom the Employer Information is
disclosed have a need to know.
(ii) Employee may disclose the Employer Information with Employer's
prior express written permission.
(iii) Employee may disclose any of the Employer Information (a)
which was in the public domain at the time of its disclosure to him, (b) which
becomes public through disclosure by Employer, (c) which he later receives from
a third party that had no access to the Employer Information or (d) which he is
required to disclose by affirmative governmental order. In the event of (d),
Employee shall give notice to Employer in sufficient time for Employer to object
to such disclosure.
(iv) Employee will not be subject to this section if wrongfully
discharged, and such wrongful discharge is not remedied timely.
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(b) Employer Information. During the Employment, Employee will gain
access to proprietary information and trade secrets of Employer ("Employer
Information"). Employer Information may be in the form of verbal statements and
descriptions; or may be in tangible form and, more particularly, may consist of
hardware, software, or programming; of diagrams and other technical and
engineering information; of customer and marketing data, plans, or ideas; or of
financial projections, estimates, or other data; or of information concerning
Employer's operations and results. Employee acknowledges that the Employer
Information is a unique and valuable asset of Employer and is highly
confidential regardless of its status, or lack thereof, as a trade secret,
copyright, trademark, or patent. Employee further acknowledges that title to the
Employer Information remains totally and solely in Employer regardless of its
disclosure to him or others. Employer acknowledges that knowledge gained prior
to employment by Employment, even in the area of Employer Information, is not
Employer Information and is not subject to confidentiality.
(c) Return of Employer Information. At the end of the Employment,
Employee shall immediately return to the possession of Employer any Employer
Information in tangible form in his possession (i.e., not solely in his memory),
and shall not retain any copies, summaries, descriptions, or lists thereof of
any kind.
(d) Binding Agreement. Employee's obligations under this section shall
survive the termination of this Agreement for any reason.
(e) Covenant Not To Compete. Employee promises not to pursue, acquire,
or accept ownership (other than mere stock ownership not of a control basis),
manage, operate, control, or consult with respect to management or operations,
with any person or entity that
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competes with Employer, anywhere in the United States, for a period beginning on
the effective date of this Agreement and ending two (2) years after its
termination. Employee acknowledges that Employer operates or plans to operate
its business on a national business, and that the geographic scope of this
covenant is therefore reasonable. The parties hereby agree to the reasonableness
of these restrictions. This provision shall not apply if Employee is terminated
pursuant to paragraph 7(c) or paragraph 8(b).
15. Savings Clause. If any portion of this Agreement shall be declared
invalid, it is the intention of the parties that such invalidity shall cause
this Agreement to be reformed rather than declared void in toto, and that it be
reformed only to the minimum extent necessary to conform it to law.
16. No Assignment. Each party understands and acknowledges its unique
and personal value to the other party. Accordingly, the responsibilities under
this Agreement shall not be assigned or delegated.
17. Amendment and Waiver. This Agreement may be amended only by a
writing signed by both the parties. Any variation of its terms and conditions
shall apply only to the particular transaction with respect to which such
variation shall have been made, and shall not be generally construed as
modifying the Agreement with respect to any prior or subsequent transaction. A
party's failure to object to or take affirmative action with respect to any
conduct that is in violation of this Agreement shall not be construed as a
waiver of the violation, or of any prior or subsequent violation.
18. Choice of Law. This Agreement shall be governed by and interpreted
under the laws of the State of Ohio, notwithstanding principles of choice of
law.
- 16 -
<PAGE>
19. Remedies. The Parties acknowledge that injunction and other
equitable remedies (as well as other remedies) are appropriate relief in any
controversy or claim arising out of or relating to this Agreement or its breach
(actual or threatened).
20. Integration. The foregoing constitutes the entire agreement and
understanding of the Parties and supersedes all prior negotiation,
correspondence, undertakings and agreements between them.
WHEREFORE, Employer and Employee have affixed their signatures hereto,
intending to be legally bound.
EMPLOYER
SEILER POLLUTION CONTROL SYSTEMS, INC.
June 29, 1996 By /s/ Werner Heim
- ------------- ---------------
Date
Its President
EMPLOYEE
June 29, 1996 /s/ Niklaus Seiler
- ------------- -------------------
Date
- 17 -
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is effective January 1, 1996, between Seiler
Pollution Control Systems, Inc. ("Employer" or the "Corporation") with its
principal office located at 555 Metro Place North, Suite 100, Dublin, Ohio
43017, and Gerold Weser ("Employee"), an individual who resides at Dorfstrasse
12, Jersbek, Germany.
WITNESSETH:
WHEREAS, Employer wishes to employ Employee as the Vice President of
European Operations of the Corporation on the terms and conditions stated in
this Agreement, and Employee wishes to accept such employment;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Employment. Employer offers Employee, and Employee accepts,
employment in the position of Vice President of European Operations ("the
Employment") under the terms and conditions of this Agreement. The Employment,
which began prior to the effective date of this Agreement, shall continue for
the term of this Agreement. Employee will be compensated for the Employment at
an annual base salary of One Hundred Fifty Thousand Dollars (U.S.$150,000.00),
to be paid monthly. Salary payments shall be subject to withholding and other
applicable taxes. Employee shall receive perquisites equivalent to those of
Employer's other executive officers of similar title. These perquisites shall
include, but not be limited to participation in all life and health insurance
plans, pension plans, company stock option plans, disability plans, bonus plans
as well as reimbursement for club memberships and automobile expenses. In no
event shall the benefits provided to employee be less, in the aggregate, than
those provided as of the initial date of execution of this agreement.
<PAGE>
2. Responsibilities. Employee's responsibilities in the Employment
shall be the normal responsibilities for a person in the position of Vice
President of European Operations in a company such as Employer and shall be
specified in detail as the Parties agree from time-to-time hereafter during the
term of this Agreement. Employee shall use a high degree of skill, experience
and care in performing the duties and responsibilities.
3. Extent of Services. Employee shall devote his entire working time
and attention of Employer's business and shall not engage in any other business
activity, without the consent of Employer.
4. Term. Subject to the early termination provisions provided in this
agreement, the term of this agreement shall be five (5) years commencing on
January 1, 1996 and ending on January 1, 2001.
5. Escalation. Employee's base salary will automatically increase each
year on January 1st, by an amount to be determined by the parties, but in no
event less than the greater of 5% annually or the annual inflation percentage
based on the consumer price index.
6. Bonus. (a) Employee shall receive, as additional compensation, a
bonus calculated on Employer's operating profit, as defined below, as follows:
Operating Profit (U.S. Dollars) Percent Payable
------------------------------- ---------------
0-3 million 0%
3-5 million 1%
5-20 million .75%
- 2 -
<PAGE>
20-50 million .50%
Excess of 50 million .25%
(b) The term "operating profit" shall mean the combined gross income
from the operations of Employer and its subsidiaries, other than capital gains,
minus Employer's and subsidiaries' combined expenses, deductions, and credits
attributable to such operations. The operating profit shall be determined on a
consolidated basis by the annual audit prepared in accordance with generally
accepted accounting principles by Employer's independent auditors, and their
determination shall be binding and conclusive on the parties hereto. In
computing the operating profit, no deduction shall be taken or allowance made
for federal, state or foreign income taxes or for the payments required by this
or other bonus or incentive plans.
(c) Bonuses payable under this section shall be due and owing to
Employee on April 1st of each year, for the preceding year, commencing on April
1, 1997, provided, however, that Employer's Board of Directors, in its sole
discretion, may direct that payment of some or all of the bonus be deferred for
a period of up to nine (9) months in order to protect Employer's cash flow.
7. Termination.
(a) Death or Disability. This Agreement shall terminate on Employee's
death or Disability (as defined below) prior to the end of the Term, or any
extensions thereof. In this event, Employer shall be obligated to pay Employee
(in the event of disability), or Employee's designated beneficiary or estate (in
the event of death), Employee's entire salary, perquisites,
- 3 -
<PAGE>
bonuses, all accrued and unused annual leave, and any other amounts due and
owing to Employee as of the date of his death or disability, for a period of one
(1) year or to the end of the contract term whichever is less. Employer shall
have no further obligation to Employee under this Agreement.
(b) Termination with cause. The Board of Directors of the Corporation
may elect to terminate Employee's employment for cause, as defined below, at any
time during the term hereof or any extension thereof. In this event, Employee
shall be paid only for all accrued unused annual leave, and other amounts due
and owing to Employee as of the date of his termination, including, if
applicable, all amounts payable under paragraph 8 hereof. Employer shall have no
further obligations to Employee under this Agreement.
(c) Termination without cause. The Board of Directors of the
Corporation may elect to terminate Employee's employment without cause at any
time during the term hereof or any extension thereof. In this event, Employee
shall only be paid his full base salary, bonus, and perquisites for the
remaining term of this Agreement, plus all accrued unused annual leave and any
other amounts due and owing to Employee, including if applicable, all amounts
payable under paragraph 8 hereof. The Corporation shall have no further
obligations to Employee under this Agreement.
(d) Termination by Employee. Employee shall have the right to terminate
this Agreement at any time upon ninety (90) days written notice to the
Corporation. In the event that Employee terminates this Agreement pursuant to
this section, the Corporation shall pay Employee's full base salary plus all
accrued unused annual leave through the Date of Termination. The Corporation
shall have no further obligations to Employee under this Agreement.
- 4 -
<PAGE>
8. Change in Control.
(a) Severance Payment and Benefits If Termination Occurs Following
Change in Control, or With Good Reason.
If at any time during the term of this Agreement, any event
constituting a change in control (as defined below) of the Corporation occurs
and results in Employee's employment with the Corporation to terminate either
(i) by the Corporation without cause, or (ii) by Employee with Good Reason (as
defined below), Employee shall be entitled to a severance payment and other
benefits as follows:
(b) Termination Without Cause or With Good Reason.
If Employee's employment with Employer is terminated without cause by
Employer or with Good Reason by Employee, then Employer shall pay Employee, upon
demand, the following amounts (net of applicable payroll taxes):
(i) Employee's full base salary and bonus for the remaining term of
this Agreement (calculated for each remaining year in accordance with paragraph
6 of this Agreement as if he continued to be employed by Employer through the
remaining term of this Agreement) plus all accrued unused annual leave through
the Date of Termination at the rate in effect on the date the change in control
occurs.
(ii) As severance pay, an amount equal to the product of Employee's
"Base Amount" multiplied by the number 3.00. As used in the previous sentence,
Employee's "Base Amount" is Employee's annual compensation includible in his
gross income for federal income tax purposes as of the date of termination or as
of the date immediately preceding the change in control whichever is higher.
This shall include base salary; non-deferred amounts under annual incentive
(e.g. bonus); long-term performance benefits; profit-sharing plan benefits;
- 5 -
<PAGE>
retirement plan benefits (e.g. SEP or IRA); stock option plan benefits including
ordinary income realized by the exercising of stock options during the term of
the agreement; the ordinary income value, based on public market price, of any
unexercised stock options (with any negative valued stock options valuated at
zero); value of all perquisites; and the value of distributions for all
previously deferred amounts for Employee under any benefit plan during the term
of the agreement.
(c) Related Benefits.
Unless Employee's employment is terminated by Employer for cause, or by
Employee other than for Good Reason, Employer shall maintain in full force and
effect, for Employee's continued benefit for one year after the Date of
Termination, all noncash employee benefit plans, programs, or arrangements
(including, without limitation, pension and retirement plans and arrangements,
stock option plans, life insurance and health and accident plans and
arrangements, medical insurance plans, disability plans, and vacation plans) in
which Employee was entitled to participate immediately prior to the Date of
Termination provided that Employee's continued participation is permissible
after Termination under the general terms and provisions of such plans,
programs, and arrangements; provided, however, that if Employee becomes eligible
to participate in a benefit plan, program, or arrangement of another employer
which confers substantially similar benefits upon Employee, Employee shall cease
to receive benefits under this subsection in respect of such plan, program, or
arrangement. In the event that Employee's participation in any such plan,
program, or arrangement is not permitted, Employer shall arrange to provide
Employee with benefits substantially similar to those which Employee is entitled
to receive under such plans, programs and arrangements.
- 6 -
<PAGE>
9. Excess Parachute Payment. In the event and to the extent that any
payments or benefits Employee becomes entitled to pursuant to paragraph 8 of
this Agreement would subject Employee to the excise tax imposed by section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), the amount of the
payment that shall be payable under this Agreement shall be the largest amount
that shall not trigger excise tax liability under section 4999 of the Code.
(a) Limitation on Payments - Basic Rule. Any provision of this
Agreement to the contrary notwithstanding, in the event that the independent
auditors retained by most recently prior to a Change in Control (the "Auditors")
determine that any payment or transfer by the Corporation to or for the benefit
of the Employee, whether paid or payable (or transferred or transferable)
pursuant to the terms of this Agreement or otherwise (a "Payment"), would be
nondeductible by the Corporation for federal income tax purposes because of
section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then
the aggregate present value of all Payments shall be reduced (but not below
zero) to the Reduced Amount. For purposes of this section, the "Reduced Amount"
shall be the amount, expressed as a present value, which maximizes the aggregate
present value of the Payments without causing any Payment to be nondeductible by
the Corporation because of section 280G of the Code.
(b) Limitation on Payments - Reduction of Payments. If the Auditors
determine that any Payment would be nondeductible by the Corporation because of
section 280G of the Code, then the Corporation, within five (5) business days
after being notified by the Auditors, shall give the Employee notice to that
effect and a copy of the detailed calculation thereof and of the Reduced Amount.
The Employee may then elect, in the Employee's sole
- 7 -
<PAGE>
discretion, which and how much of the Payments shall be eliminated or reduced
(as long as after such election, the aggregate present value of the Payments
equals the Reduced Amount) and shall advise the Corporation in writing of his or
her election within thirty (30) days receipt of notice. If no such elections are
made by the Employee within such 30-day period, then the Corporation may elect
which and how much of the Payments shall be eliminated or reduced (as long as
after such election the aggregate present value of the Payments equal the
Reduced Amounts) and shall notify the Employee promptly of such election. For
purposes of this section 9, present value shall be determined in accordance with
section 280G(d)(4) of the Code. All determinations made by the Auditors under
this section 9 shall be binding upon the Corporation and the Employee and shall
be made within 60 days of the date of the employment termination.
(c) Limitation on Payments - Overpayments and Underpayments. As a
result of uncertainty in the application of section 280G of the Code, at the
time of an initial determination by the Auditors hereunder, it is possible that
Payments will have been made by the Corporation which should not have been made
(an "Overpayment") or that additional Payments which will not have been made by
the Corporation could have been made (an "Underpayment"), consistent in each
case with the calculation of the Reduced Amount hereunder. In the event that the
Auditors, based upon the assertion of a deficiency by the Internal Revenue
Service against the Corporation or the Employee which the Auditors believe has a
high probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Employee which
the Employee shall repay to the Corporation, together with interest at the
applicable federal rate provided for in section 7872(f)(2)(A) of the Code;
provided, however, that no amount shall be payable by the
- 8 -
<PAGE>
Employee to the Corporation if and to the extent that such payment would not
reduce the amount which is subject to taxation under section 4999 of the Code.
In the event that the Auditors determine that an Underpayment has occurred, such
Underpayment shall promptly be paid or transferred by the Corporation to or for
the benefit of the Employee, together with interest at the applicable federal
rate provided for in section 7872(f)(2)(A) of the Code.
10. Payment if Termination Occurs Following Change in Control for
Cause, or Without Good Reason.
If Employee's employment shall be terminated following a change in
control of the Corporation, by the Employer for cause, or by Employee other than
for Good Reason, Employee shall be paid only for all accrued unused annual
leave, and other amounts due and owing to the Employee as of the date of his
termination. Employer shall have no further obligations to Employee under this
Agreement.
11. No Mitigation. Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor, except as expressly set forth herein, shall the amount of any
payment provided for in this Agreement be reduced by any compensation earned by
Employee as the result of employment by another employer after the Date of
Termination, or otherwise.
12. Definitions of Certain Terms. For the purpose of this Agreement,
the terms defined in this Agreement shall have the meanings assigned to them
herein.
(a) Cause. Termination of Employee's employment by Employer for "Cause"
shall be mean termination because Employee was convicted of a felony or a crime
of moral turpitude, breached any fiduciary duty to Employer involving personal
profit, engaged in willful
- 9 -
<PAGE>
misconduct, committed an act of fraud, embezzlement, or theft, or committed an
act intentionally against the interest of the Corporation which caused the
Corporation material injury,
(b) Change in Control. A "Change in Control" of Employer shall mean:
(i) A change in control of a nature that would be required to be
reported in response to Item 1(a) of Form 8-K as in effect on the date hereof
pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"); provided
that, without limitation, such a change in control shall be deemed to have
occurred at such time as any Person hereafter becomes the "Beneficial Owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of thirty
(30) percent or more of the combined voting power of the Corporation's voting
securities; or
(ii) During the term of this agreement, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Corporation's shareholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were directors
at the beginning of the period; or
(iii) There shall be consummated (i) any consolidation or merger of
Employer in which Employer is not the continuing or surviving corporation or
pursuant to which voting securities would be converted into cash, securities, or
other property, other than a merger of Employer in which the holders of voting
securities immediately prior to the merger have the same proportionate ownership
of common stock of the surviving corporation immediately after the merger, or
(ii) any sale, lease, exchange, or other transfer (in one transaction or a
series of related transactions) of all, or substantially all of the assets of
Employer.
- 10 -
<PAGE>
(c) Date of Termination. "Date of Termination" shall mean (i) if
Employee's employment is terminated by the Employer for Disability, thirty (30)
days after Notice of Termination is given (provided that Employee shall not have
returned to the performance of his duties on a full-time basis during such
30-day period), and (ii) if Employee's employment is terminated for any other
reason, the date on which Notice of Termination is given.
(d) Disability. Employee shall be deemed to have a disability for
purposes of this Agreement if he is absent from his duties with and is unable to
perform the essential duties of his office with reasonable accommodation on a
full-time basis for 180 consecutive days as a result in incapacity due to
physical or mental illness and a failure to return to the performance of his
duties on a full-time basis during the 30-day period after Notice of Termination
is given.
(e) Good Reason. Termination by Employee of his employment for "Good
Reason" shall mean termination based on any of the following:
(i) A change in Employee's status or position(s) with the Employer,
which in employee's reasonable judgment, does not represent a promotion from his
status or position(s), or any removal of him from, or any failure to re-appoint
or reelect him to, such position(s), except in connection with the termination
of his employment for Cause or Disability or as a result of his death or by him
other than for Good Reason.
(ii) A reduction by the Corporation in Employee's base salary as in
effect immediately prior to the Change in Control.
(iii) The failure by the Corporation to continue in effect any Plan
(as hereinafter defined) in which Employee was participating at the time of the
change in control of the Corporation (or Plans providing him with at least
substantially similar benefits) other than
- 11 -
<PAGE>
as a result of the normal expiration of any such Plan in accordance with its
terms as in effect at the time of the Change in Control, or the taking of any
action, or the failure to act, by the Corporation which would adversely affect
Employee's continued participation in any of such Plans on at least as favorable
a basis to Employee as is the case on the date of the Change in Control or which
would materially reduce Employee's benefits in the future under any of such
Plans or deprive Employee of any material benefit enjoyed by him at the time of
the Change in Control.
(iv) The failure by the Corporation to provide and credit Employee
with the number of paid vacation days to which he is then entitled in accordance
with the Corporation's normal vacation policy as in effect immediately prior to
the Change in Control.
(v) The Corporation's requiring Employee to be based anywhere other
than where Employee's office is located immediately prior to the Change in
Control except for required travel on the Corporation's business to an extent
substantially consistent with the business travel obligations which Employee
undertook on behalf of the Corporation prior to the Change in Control.
(vi) The failure by the Corporation to obtain from any successor the
assent to this Agreement.
(vii) Any refusal by the Corporation to continue to allow Employee
to attend to matters or engage in activities not directly related to the
business of the Corporation which, prior to the Change in Control, Employee was
permitted by the Board to attend to or engage in.
- 12 -
<PAGE>
For purposes of this subsection, "Plan" shall mean any compensation
plan such as an incentive or stock option plan or any employee benefit plan such
as a thrift, pension, profit sharing, medical, disability, accident, life
insurance plan, or a relocation plan or policy or any other plan, program, or
policy of the Corporation intended to benefit employees.
(f) Notice of Termination. A "Notice of Termination" of Employee's
employment given by the Corporation shall mean a written notice given to
Employee of the termination of his employment which 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 Employee's employment under the provision so indicated.
(g) Person. The term "Person" shall mean and include any individual,
corporation, partnership, group, association, or other "person," as such term is
used in Section 3(a)(9) of the Exchange Act, other than the Corporation or any
employee benefit plan(s) sponsored by the Corporation.
13. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Chief Executive Officer of the Corporation with a copy to the
Secretary of the Corporation, or to such other address as either 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.
- 13 -
<PAGE>
14. Proprietary Information
(a) Confidentiality. In consideration of the Employment, Employee
promises to hold the Employer Information (defined below) confidential between
himself and the rest of the world. He further promises not to disclose the
existence or contents of the Employer Information or any part thereof to any
person or entity anywhere in the world and not to use the Employer Information
in any way, for a period beginning on the effective date of this Agreement and
ending three (3) years after the termination thereof. The foregoing prohibition
on disclosure by Employee is subject to the following exceptions:
(i) Employee may disclose the Employer Information to Employer and
its employees, agents, and independent contractors during the Employment, but
only to the extent that the persons to whom the Employer Information is
disclosed have a need to know.
(ii) Employee may disclose the Employer Information with Employer's
prior express written permission.
(iii) Employee may disclose any of the Employer Information (a)
which was in the public domain at the time of its disclosure to him, (b) which
becomes public through disclosure by Employer, (c) which he later receives from
a third party that had no access to the Employer Information or (d) which he is
required to disclose by affirmative governmental order. In the event of (d),
Employee shall give notice to Employer in sufficient time for Employer to object
to such disclosure.
(iv) Employee will not be subject to this section if wrongfully
discharged, and such wrongful discharge is not remedied timely.
- 14 -
<PAGE>
(b) Employer Information. During the Employment, Employee will gain
access to proprietary information and trade secrets of Employer ("Employer
Information"). Employer Information may be in the form of verbal statements and
descriptions; or may be in tangible form and, more particularly, may consist of
hardware, software, or programming; of diagrams and other technical and
engineering information; of customer and marketing data, plans, or ideas; or of
financial projections, estimates, or other data; or of information concerning
Employer's operations and results. Employee acknowledges that the Employer
Information is a unique and valuable asset of Employer and is highly
confidential regardless of its status, or lack thereof, as a trade secret,
copyright, trademark, or patent. Employee further acknowledges that title to the
Employer Information remains totally and solely in Employer regardless of its
disclosure to him or others. Employer acknowledges that knowledge gained prior
to employment by Employment, even in the area of Employer Information, is not
Employer Information and is not subject to confidentiality.
(c) Return of Employer Information. At the end of the Employment,
Employee shall immediately return to the possession of Employer any Employer
Information in tangible form in his possession (i.e., not solely in his memory),
and shall not retain any copies, summaries, descriptions, or lists thereof of
any kind.
(d) Binding Agreement. Employee's obligations under this section shall
survive the termination of this Agreement for any reason.
(e) Covenant Not To Compete. Employee promises not to pursue, acquire,
or accept ownership (other than mere stock ownership not of a control basis),
manage, operate, control, or consult with respect to management or operations,
with any person or entity that
- 15 -
<PAGE>
competes with Employer, anywhere in the United States, for a period beginning on
the effective date of this Agreement and ending two (2) years after its
termination. Employee acknowledges that Employer operates or plans to operate
its business on a national business, and that the geographic scope of this
covenant is therefore reasonable. The parties hereby agree to the reasonableness
of these restrictions. This provision shall not apply if Employee is terminated
pursuant to paragraph 7(c) or paragraph 8(b).
15. Savings Clause. If any portion of this Agreement shall be declared
invalid, it is the intention of the parties that such invalidity shall cause
this Agreement to be reformed rather than declared void in toto, and that it be
reformed only to the minimum extent necessary to conform it to law.
16. No Assignment. Each party understands and acknowledges its unique
and personal value to the other party. Accordingly, the responsibilities under
this Agreement shall not be assigned or delegated.
17. Amendment and Waiver. This Agreement may be amended only by a
writing signed by both the parties. Any variation of its terms and conditions
shall apply only to the particular transaction with respect to which such
variation shall have been made, and shall not be generally construed as
modifying the Agreement with respect to any prior or subsequent transaction. A
party's failure to object to or take affirmative action with respect to any
conduct that is in violation of this Agreement shall not be construed as a
waiver of the violation, or of any prior or subsequent violation.
18. Choice of Law. This Agreement shall be governed by and interpreted
under the laws of the State of Ohio, notwithstanding principles of choice of
law.
- 16 -
<PAGE>
19. Remedies. The Parties acknowledge that injunction and other
equitable remedies (as well as other remedies) are appropriate relief in any
controversy or claim arising out of or relating to this Agreement or its breach
(actual or threatened).
20. Integration. The foregoing constitutes the entire agreement and
understanding of the Parties and supersedes all prior negotiation,
correspondence, undertakings and agreements between them.
WHEREFORE, Employer and Employee have affixed their signatures hereto,
intending to be legally bound.
EMPLOYER
SEILER POLLUTION CONTROL SYSTEMS, INC.
June 29, 1996 By /s/ Werner Heim
- ------------- ---------------
Date
Its President
EMPLOYEE
June 29, 1996 /s/ Gerold Weser
- ------------- ----------------
Date
- 17 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet fo Seiler Pollution Control Systems, Inc. and
Subsidiaries as of June 30, 1996, as well as the related consolidated statements
of operations, changes in stockholders' equity and cash flows for the quarter
then ended, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 99,706
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 246,560
<PP&E> 290,511
<DEPRECIATION> 8,655
<TOTAL-ASSETS> 15,069,287
<CURRENT-LIABILITIES> 556,564
<BONDS> 3,440,383
0
0
<COMMON> 1,873
<OTHER-SE> 11,070,467
<TOTAL-LIABILITY-AND-EQUITY> 15,069,287
<SALES> 0
<TOTAL-REVENUES> 57,873
<CGS> 0
<TOTAL-COSTS> 581,107
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> (523,248)
<INCOME-TAX> 0
<INCOME-CONTINUING> (523,248)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (523,248)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
