UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


Date of Report (Date of earliest event reported):      April 14, 2019

AquaVenture Holdings Limited
(Exact name of registrant as specified in Charter)

 

 

 

 

British Virgin Islands

001-37903

98-1312953

(State or other jurisdiction of

(Commission

(IRS Employer

incorporation or organization)

File No.)

Identification No.)

 

 

 

 

 

c/o Conyers Corporate Services (BVI) Limited

Commerce House, Wickhams Cay 1

P.O. Box 3140 Road Town

British Virgin Islands VG1110

(Address of principal executive office)

 

 

 

 

(813) 855-8636

(Registrant’s telephone number, including area code)

 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☒

 

 


 

Item 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Douglas Brown Amended Employment Letter

 

On April 17, 2019, AquaVenture Holdings Limited (the “Company”) and its Seven Seas Water Corporation subsidiary entered into an amendment dated as of January 1, 2019 to the offer letter with Mr. Brown, the Company’s Chairman and a continuing executive focusing on business development activities.  During 2019, his base salary is $450,000.  His base salary for 2020 will be determined by the Company’s Board of Directors (or the Compensation Committee thereof).  Mr. Brown is also eligible to receive discretionary bonuses as, and payable when, determined by the Board in its discretion.  In addition, on January 31, 2019, he was awarded 43,160 Restricted Share Units under the Company’s 2016 Share Option and Incentive Plan. 

 

Pursuant to his offer letter, in the event his employment is terminated by the Company other than for “cause” (as defined in the Key Executive Severance Plan described below), Mr. Brown will be entitled to receive salary continuation for the 12 month period following the termination of his employment, and any stock options and other stock-based awards he holds will vest as if he had completed an additional 12 months of service.  In addition, all outstanding and unvested stock options and other stock-based awards held by him vest in full immediately prior to the occurrence of a “change in control” (as defined in the Key Executive Severance Plan described below). 

 

In addition, Mr. Brown has entered into a new employee non-competition, non-solicitation, confidentiality and assignment agreement, with restrictive covenants that apply during the term of his employment and for 12 months thereafter.

 

Anthony Ibarguen Amended and Restated Employment Agreement

 

On April 16, 2019, the Company and its Quench USA, Inc. subsidiary (“Quench”) entered into an amended and restated employment agreement dated as of January 1, 2019 with Mr. Ibarguen, the Chief Executive Officer and President of the Company and Chief Executive Officer of Quench, which replaced his existing employment agreement in its entirety. 

 

Pursuant to his employment agreement, for 2019, Mr. Ibarguen’s base salary is $500,000 and his target bonus is $350,000.  Mr. Ibarguen’s base salary is required to be reviewed at least annually by the Board and may be increased but not decreased without his prior written consent.   His target bonus for a specific year is required to be at least 70% of his base salary for that year and is payable in accordance with the metrics, terms and conditions established and determined by the Board.  In addition, on January 31, 2019, Mr. Ibarguen was granted 47,960 Restricted Share Units under the Company’s 2016 Share Option and Incentive Plan.

 

His employment agreement provides that upon his death or disability, Mr. Ibarguen or his estate will be entitled to receive his base salary and vested benefits through the date of termination and a portion of his target bonus for the year in which the date of termination occurs, prorated for the portion of the year through the date of termination. 

 

In addition, his employment agreement provides that if the Company or Quench terminates his employment without “cause” or he resigns with “good reason,” in each case other than during the 24 months after a “change in control” (as each such quoted term is defined in his employment agreement), Mr. Ibarguen will be entitled to receive, subject to the execution and delivery of an effective release of claims in favor of the Company, (i) a lump sum cash payment equal to his base salary and target bonus for the year in which the date of termination occurs, (ii) a monthly cash payment equal to Quench’s contribution towards health insurance for up to 12 months after the date of termination, and (iii) 12 months of additional vesting of all outstanding and unvested stock options and other stock-based awards held by him, with any performance conditions of such awards being deemed satisfied at the target levels specified in the applicable award agreements. 

 

His employment agreement also provides that if the Company or Quench terminates his employment without “cause” or he resigns with “good reason,” in each case during the 24 months after a “change in control,” Mr. Ibarguen will be entitled to receive, in lieu of the payments and benefits described above and subject to the execution and delivery of an effective release of claims in favor of the Company, (i) a lump sum cash payment equal to (a) two times his base salary and target bonus for the year in which the date of termination occurs and (b) a portion of his target bonus for the year in which the date of termination occurs (prorated for the portion of the year through the date of termination), (ii) a monthly cash payment equal to Quench’s contribution towards health insurance for up to 24 months after the date of termination, and (iii) full accelerated vesting of all outstanding and unvested stock options and other stock-based awards held by him, with any performance conditions of such awards being deemed satisfied at the target levels specified in the applicable award agreements.

 

2


 

The payments and benefits provided under his employment agreement in connection with a change in control may not be eligible for a federal income tax deduction by us pursuant to Section 280G of the Internal Revenue Code. These payments and benefits may also subject him to an excise tax under Section 4999 of the Internal Revenue Code. If the payments or benefits payable to him in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to him.

 

In addition, Mr. Ibarguen’s employment agreement contains, among other things, non-competition and non-solicitation provisions that apply during the term of Mr. Ibarguen’s employment and for either (i) 12 months thereafter, or (ii) if his employment is terminated during the 24 months after a “change in control,” 24 months thereafter.

 

Key Executive Severance Plan

 

On April 14, 2019, the Company’s Board of Directors adopted the Key Executive Severance Plan (the “Severance Plan”), which provides severance benefits to key executives who are designated by the Board of Directors or the Compensation Committee thereof.  Eligible participants include Lee Muller, our Chief Financial Officer, Treasurer and Assistant Secretary, and Olaf Krohg, the Chief Executive Officer of our Seven Seas Water business, but not Messrs. Brown and Ibarguen.  As a condition to an eligible participant’s participation in the Severance Plan, such participant is required to (i) terminate all existing employment agreements and offer letters and (ii) enter into a new employee non-competition, non-solicitation, confidentiality and assignment agreement, with restrictive covenants that apply during the term of such participant’s employment and for 12 months thereafter.  In connection with their participation in the Severance Plan, Messrs. Muller and Krohg each agreed to terminate his existing offer letter and entered into the new employee non-competition, non-solicitation, confidentiality and assignment agreement.

 

The Severance Plan provides that, upon a participant’s death or “disability” (as defined in the Severance Plan), such participant or such participant’s estate will be entitled to receive such participant’s base salary and vested benefits through the date of termination and a portion of such participant’s target bonus for the year in which the date of termination occurs, prorated for the portion of the year through the date of termination. 

 

In addition, the Severance Plan provides that if a participant’s employer terminates such participant’s employment without “cause” or such participant resigns with “good reason,” in each case other than during the 12 months after a “change in control” (as each such quoted term is defined in the Severance Plan), such participant will be entitled to receive, subject to the execution and delivery of an effective release of claims in favor of the Company, (i) a lump sum cash payment equal to such participant’s base salary and target bonus for the year in which the date of termination occurs, (ii) a monthly cash payment equal to the employer’s contribution towards health insurance for up to twelve months after the date of termination, and (iii) 12 months of additional vesting of all outstanding and unvested stock options and other stock-based awards held by such participant, with any performance conditions of such awards being deemed satisfied at the target levels specified in the applicable award agreements. 

 

The Executive Severance Plan also provides that if a participant’s employer terminates such participant’s employment without “cause” or such participant resigns with “good reason,” in each case during the 12 months after a “change in control,” an eligible participant will be entitled to receive, in lieu of the payments and benefits described above and subject to the execution and delivery of an effective release of claims in favor of the Company, (i) a lump sum cash payment equal to (a) such participant’s base salary and target bonus for the year in which the date of termination occurs and (b) a portion of such participant’s target bonus for the year in which the date of termination occurs (prorated for the portion of the year through the date of termination), (ii) a monthly cash payment equal to the employer’s contribution towards health insurance for up to 12 months after the date of termination, and (iii) full accelerated vesting of all outstanding and unvested stock options and other stock-based awards held by such participant, with any performance conditions of such awards being deemed satisfied at the target levels specified in the applicable award agreements.

 

For 2019, Mr. Muller’s base salary is $325,000 and his target bonus is $115,000.  In addition, on January 31, 2019, he was granted 15,010 Restricted Share Units under the Company’s 2016 Share Option and Incentive Plan.

 

For 2019, Mr. Krohg’s base salary is $325,000 and his target bonus is $100,000.  In addition, on February 1, 2019, he was granted 11,990 Restricted Share Units under the Company’s 2016 Share Option and Incentive Plan.

 

The payments and benefits provided under the Severance Plan in connection with a change in control may not be eligible for a federal income tax deduction by us pursuant to Section 280G of the Internal Revenue Code. These payments and benefits may also subject an eligible participant, including the named executive officers, to an excise tax under Section 4999 of the Internal Revenue Code. If the payments or benefits payable to an eligible participant in connection with a change in control would be subject to the excise tax

3


 

imposed under Section 4999 of the Internal Revenue Code, those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to such participant.

 

Evan Lovell Notice That Not Standing for Re-election

 

On April 18, 2019, Evan Lovell informed the Company that he will not stand for re-election to the Board of Directors when his term expires at the Company’s upcoming 2019 annual meeting of shareholders.  Mr. Lovell’s decision did not result from a disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

 

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

The following materials are attached as exhibits to this Current Report on Form 8-K:

 

 

 

4


 

SIGNATURE

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 hereunto duly authorized.

 

 

 

 

 

 

 

Date: April 18, 2019

 

AquaVenture Holdings Limited

 

 

 

 

 

 

 

 

By:

 

/s/ Lee S. Muller

 

 

 

 

Lee S. Muller

 

 

 

 

Chief Financial Officer

 

 

 

 

(Principal Financial Officer)

 

5


Exhibit 10.1

 

AquaVenture Holdings Limited

 

January 1, 2019

 

PERSONAL AND CONFIDENTIAL

 

Douglas R. Brown

c/o Seven Seas Water Corporation

14400 Carlson Circle

Tampa, FL  33626

 

Re:  Amendment to Employment Letter

 

Dear Mr. Brown:

 

AquaVenture Holdings Limited (“Parent”) and Seven Seas Water Corporation (“SSWC”) are pleased to memorialize the revised terms of your continuing relationships with Parent and its direct and indirect subsidiaries, including SSWC (collectively, the “Company”).  You will continue to serve as the non-executive Chairman of the Board of Directors of Parent (the “Board”), while you are serving as a director of Parent and otherwise at the pleasure of the Board.  You will be employed by SSWC as a continuing executive focusing on business development activities.  You will devote 100% during 2019, and 50% during 2020, of your business time, energies, skills and attention to the business and affairs of the Company, provided that you may engage in other outside activities that (whether individually or in the aggregate) do not materially interfere with the fulfillment of your obligations and responsibilities to the Company and its affiliates.

 

During 2019, your base salary shall be at the rate of $450,000 per year.  Your base salary for 2020 shall be determined by the Board (or the Compensation Committee thereof).  Your base salary shall be payable in a manner that is consistent with SSWC’s usual payroll practices for senior executives as established or modified from time to time, but, in any event, on no less than a monthly basis.

 

You will be eligible to receive discretionary bonuses as, and payable when, determined by the Board in its discretion. 

 

You will be eligible to participate in benefits programs to the same extent as, and subject to the same terms, conditions and limitations applicable to, other employees of SSWC of similar rank and tenure.  SSWC reserves the right to modify or eliminate its benefit plans from time to time. 

 

On January 31, 2019, you were awarded 43,160 Restricted Share Units (as defined in Parent’s 2016 Share Option and Incentive Plan (the “Plan”)) under the Plan.  The award is subject to the terms and conditions of the Plan and the applicable RSU Award Agreement, which includes a four-year vesting schedule with 25% of such Restricted Share Units to vest one year after the grant date and the remaining 75% of such Restricted Share Units to vest in equal quarterly installments over the following three years.  In addition, notwithstanding anything to the contrary in the Plan or any applicable agreement representing an award under the Plan, all then unvested Restricted Share Units or other Awards (as defined in the Plan) shall vest in full immediately prior to the occurrence of a Change in Control (as defined in Parent’s Key Executive Severance Plan, as amended from time to time (the “Severance Plan”)).  You are required to enter into an RSU Award Agreement in the form to be approved by the Board as a condition to receiving this award. 

 


 

 

 

If the Company terminates your employment other than for Cause (as defined in the Severance Plan), SSWC will continue to pay you your base salary in effect at the time of your termination for 12 months after your termination date, and any additional Restricted Share Units or other Awards that would have vested during the 12 months after your termination date will vest effective as of your termination date.

 

As a condition of your continued employment and receipt of the aforementioned Restricted Share Unit grant, you will also be required to sign the Company's updated standard agreement regarding confidentiality, proprietary information, inventions, noncompetition and nonsolicitation of customers, suppliers, employees and others having business relationships with the Company and its affiliates.  A copy of this agreement will be made available to you.   

 

Except as expressly provided herein, all the provisions of the Existing Agreement and the other Agreements shall remain in full force and effect.

 

We are very interested in having you continue with the Company.  We look forward to receiving a response from you acknowledging that you have accepted the revised terms of your continuing relationships with the Company. 

 

 

 

 

 

 

Sincerely,

 

 

 

 

 

AQUAVENTURE HOLDINGS LIMITED

 

 

 

 

By:

/s/ Anthony Ibarguen

 

 

 

Anthony Ibarguen

 

 

Chief Executive Officer and President

 

 

 

 

 

 

SEVEN SEAS WATER CORPORATION

 

 

 

 

By:

/s/ Olaf Krohg

 

 

 

Olaf Krohg

 

 

Chief Executive Officer

 

 

AGREED TO AND ACCEPTED:

 

 

 

 

By:

/s/ Douglas R. Brown

 

 

Douglas R. Brown

 

Date:

April 17, 2019

 

 


Exhibit 10.2

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (the “Agreement”) dated as of January 1, 2019 (the “Effective Date”) by and among AquaVenture Holdings Limited, a business company organized under the laws of the British Virgin Islands (the “Parent”),  Quench USA, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Quench”), and Anthony Ibarguen (the “Executive”):

WHEREAS, before the Effective Date, the Executive served as the President of Parent and the President and Chief Executive Officer of Quench;

WHEREAS, the Executive has made, and is expected to continue to make, major contributions to the profitability, growth and financial strength of Parent and its direct and indirect subsidiaries, including Quench (collectively, the “Company”);

WHEREAS, Parent desires that the Executive, and the Executive desires to, serve as the Chief Executive Officer and President of Parent on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, Quench desires to continue to employ the Executive, and the Executive desires to continue to be employed by Quench, to render services to the Company on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, Quench and the Executive previously entered into the Executive Employment Agreement effective as of October 20, 2010 (the “Prior Agreement”), and now desire to amend and restate such Prior Agreement on the terms and subject to the conditions set forth in this Agreement, so that as so amended and restated the Prior Agreement shall read in its entirety as set forth in this Agreement;

NOW, THEREFORE, in consideration of these premises and of the covenants and agreements set forth in this Agreement, the parties hereto hereby agree as follows:

1. Employment .

(a) Term .  The term of the Executive’s employment under this Agreement shall commence on the Effective Date and continue until his employment is terminated in accordance with the provisions hereof (the “Term”). 

(b) Positions and Duties

(i) During the Term, the Executive shall serve as the Chief Executive Officer and President of Parent, and shall have supervision and control over and responsibility for the day‑to‑day business and affairs of Parent and the Company and shall have such other responsibilities, powers and duties as may from time to time be lawfully prescribed by the Board of Directors of Parent (the “Board”), provided that such duties are consistent with the Executive’s position or other positions that he may hold from time to time.

 

 


 

 

(ii) In addition, during the portions of the Term determined by the Board in its discretion, the Executive shall serve as the President and Chief Executive Officer of Quench, and shall have supervision and control over and responsibility for the day‑to‑day business and affairs of Quench and its subsidiaries and shall have such other responsibilities, powers and duties as may from time to time be lawfully prescribed by the Board, provided that such duties are consistent with the Executive’s position or other positions that he may hold from time to time. 

(iii) Executive’s principal place of employment during the Term shall be Quench’s headquarters in King of Prussia, Pennsylvania. The Company may from time to time require the Executive to travel temporarily to other locations on the Company’s business, but the Executive shall not be required to move his primary residence from Pennsylvania.

(iv) The Executive shall perform the duties and carry out the responsibilities assigned to the Executive, to the best of the Executive’s ability, in a trustworthy, businesslike and efficient manner for the purpose of advancing the business of the Company, shall comply with the Company’s policies and procedures in all material respects, and shall report to the Board.  The Executive acknowledges that the Executive’s duties and responsibilities hereunder will require the Executive’s full business time and effort and agrees that, during the Term, the Executive will not have any business interests which may conflict with or impair the performance of any of the Executive’s duties hereunder; provided, however , that nothing in this Section ‎1  shall be deemed to prohibit the Executive from (i)  making Permitted Investments (as defined below) or (ii) continuing to serve on those boards on which the Executive sits as of the Effective Date (which have been disclosed to the Compensation Committee of the Board) or, with the prior approval of the Board, serving on such other corporate, industry, civic, or charitable boards or committees, and retaining any compensation received for all such service, so long as such activities do not interfere with the performance of the Executive’s responsibilities as an officer of Parent or Quench or an employee of the Company in accordance with this Agreement, or violate the provisions contained in Section 7 of this Agreement. 

(v) The Executive represents and warrants that the Executive is not a party to or bound by any agreements or other business commitments that would in any manner restrict the Executive’s work, effort or activity on behalf of, and while serving as an officer of, of being employed by, the Company.  The Executive represents and warrants that the execution and delivery of this Agreement and performance of the Executive’s duties hereunder will not conflict with or breach any agreements or orders to which the Executive is a party or by which the Executive is bound.    The Executive also agrees that the Executive is not to breach any obligation of confidentiality that the Executive has to former employers, and the Executive agrees to honor all such obligations to former employers during the Executive’s employment with the Company.  The Executive has not, and shall not, become subject to any legal or contractual limitation on his ability to engage in the business of the Company that reasonably could be expected to have a materially adverse effect on his ability to attract or retain customers or perform the services hereunder.

2. Compensation and Related Matters .

(a) Base Salary .  During the Term, the Executive’s initial annual base salary shall be at the rate of $500,000 per year.  During the Term, the Executive's Base Salary shall be


 

 

reviewed at least annually by the Board and may be increased (but not decreased without the prior written consent of the Executive).  The base salary in effect at any given time is referred to herein as “Base Salary.”  The Base Salary shall be payable in a manner that is consistent with Quench’s usual payroll practices for senior executives, but, in any event, on no less than a monthly basis.

(b) Bonus .  During the Term, the Executive shall be eligible to receive annual cash incentive compensation as determined by the Board from time to time (the “Bonus”).  The Executive’s target Bonus for a specific year shall be not less than seventy percent (70%) of the Executive’s Base Salary for that year (“Target Bonus”).  The Executive’s Target Bonus shall be $350,000 for 2019.  The Bonus shall be payable in accordance with the metrics, terms and conditions established by the Board after consultation with the Executive and communicated by the Board to the Executive, which the Board shall use its reasonable efforts to do no later than March 15 of the applicable Bonus year.  The Bonus shall be payable as determined by the Board (including determinations regarding the established metrics, terms and conditions and the achievement thereof in its discretion) and, subject to the other provisions of this Agreement, shall be paid only if the Executive is employed by the Company as of the date such Bonus is determined to be paid by the Board, provided that such Bonus shall be paid no later than March 15 of the year following the year to which such Bonus relates.  The Board and Compensation Committee shall perform an annual review of the Executive’s Bonus based upon, among other things, the Executive’s performance of his duties and the Company’s other compensation policies.  The Executive will not earn or receive any prorated Bonus except as provided in Sections 4(b), 4(c) and 5.

(c) Long-Term Incentive Grants .  During the Term, the Executive shall be eligible to receive annual long-term incentive grants under Parent’s 2016 Share Option and Incentive Plan, as amended from time to time (the “Plan”), in the amounts, in the forms and subject to the conditions as determined by the Board from time to time (the “Equity Grants”).  For 2019, the Executive was awarded 47,960 Restricted Share Units (as defined in the Plan) under the Plan on January 31, 2019.  The award is subject to the terms and conditions of the Plan and the applicable RSU Award Agreement, which includes a four-year vesting schedule with 25% of such Restricted Share Units to vest one year after the grant date and the remaining 75% of such Restricted Share Units to vest in equal quarterly installments over the following three years.  The Executive is required to enter into an RSU Award Agreement in the form to be approved by the Board as a condition to receiving this award.

(d) Expenses .  During the Term, the Executive is authorized to incur, and shall be entitled to receive prompt reimbursement for, all reasonable expenses incurred by him during the Term in performing services hereunder, in accordance with the policies and procedures then in effect and established by Quench for its senior executive officers.

(e) Other Benefits .  During the Term, the Executive shall be eligible to participate in or receive benefits under Quench’s employee benefit plans in effect for the Company’s senior executives, as such benefits may be in place from time to time, subject to the terms of such plans. Notwithstanding the foregoing, during the Term, Quench shall continue to pay one hundred percent (100%) of the premiums for coverage for the Executive and his covered dependents under the Quench health insurance plan.


 

 

(f) Paid Time Off .  During the Term, the Executive shall accrue annual “paid time off” at the rate of twenty-five (25) days per calendar year, all in accordance with Company policy, which shall be accrued ratably.  Unused paid time off may not be carried over into the following calendar year and will not be paid out at the end of the calendar year or at any other time, except accrued but unused days will be paid out upon termination of the Executive’s employment.  The Executive shall also be entitled to all paid holidays given by the Company to its executives.

(g) Other Employing Subsidiary .  If the Executive is no longer an employee of Quench for any reason but the Executive’s employment pursuant to this Agreement has not been terminated, Parent may reassign the Executive’s employment to another direct or indirect wholly owned subsidiary of Parent that is incorporated in the United States of America and, from and after such reassignment, such other subsidiary shall assume all of Quench’s rights and obligations under this Agreement.

3. Termination .  During the Term, the Executive’s employment hereunder may be terminated without any breach of this Agreement under the following circumstances:

(a) Death .  The Executive’s employment hereunder shall terminate upon his death.

(b) Disability .  The Company (with the prior approval of the Board) may terminate the Executive’s employment if he is disabled and unable to perform the essential functions of his then existing position or positions under this Agreement with or without reasonable accommodation for a period of 180 days (which need not be consecutive) in any 12-month period.  If any question shall arise as to whether during any period the Executive is disabled so as to be unable to perform the essential functions of his then existing position or positions with or without reasonable accommodation, the Executive may, and at the request of the Board shall, submit to the Company a certification in reasonable detail by a physician selected by the Board and located in the Philadelphia, Pennsylvania metropolitan area to whom the Executive or the Executive’s guardian has no reasonable objection as to whether the Executive is so disabled or how long such disability is expected to continue, and such certification shall for the purposes of this Agreement be conclusive of the issue.  The Executive shall cooperate with any reasonable request of the physician in connection with such certification.  If such question shall arise and the Executive shall fail to submit such certification within a reasonable time period, the Board’s determination of such issue shall be binding on the Executive.  Nothing in this Section 3(b) shall be construed to waive the Executive’s rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq . and the Americans with Disabilities Act, 42 U.S.C. §12101 et seq. During any period of Executive’s disability during the Term, the Company shall pay the Executive his Base Salary, reduced by any payments the Executive is receiving, or would be receiving if the Executive had timely applied for benefits, under the Company-sponsored short-term disability and/or long-term disability plans or programs.

(c) Termination by Company for Cause .  The Company (with the prior approval of the Board) may terminate the Executive’s employment hereunder for Cause.  For


 

 

purposes of this Agreement, “Cause” shall mean the occurrence of any of the following events, as determined solely by the judgment of the Board: 

(i) the Executive's conviction of, or plea of guilty or nolo contendere to, (i) any felony or (ii) a misdemeanor involving a crime of fraud, embezzlement, dishonesty, disloyalty, moral turpitude or professional misconduct;

(ii) a material breach, non-performance or non-observance by the Executive of any of the terms of this Agreement or any other written agreement to which the Executive and the Company are parties, or the material breach, non-performance or non-observance by the Executive of his duties to the Company or any rules or written employment policies of the Company governing employee behavior (including, without limitation, any ethics policies, codes of conduct or policies concerning substance abuse and sexual harassment) if such breach, non-performance or non-observance is not cured within a period of thirty (30) days after written notice thereof by the Board to the Executive;

(iii) a breach by the Executive of any of the provisions contained in Section 7 of this Agreement;

(iv) any act, omission or conduct by the Executive which constitutes willful or gross misconduct (A) that is materially injurious to the Company or its business, either financially or otherwise, or (B) that materially interferes with or adversely affects the Executive’s performance of, or ability to perform, his duties under this Agreement;

(v) the Executive’s willful failure or refusal to follow or carry out the lawful instructions of the Board (other than as a result of illness or disability) concerning material duties or actions consistent with the Executive’s position in a timely manner and otherwise in a manner reasonably acceptable to the Board and such failure or refusal continues for a period of thirty (30) days after receipt of written notice from the Board describing such failure or refusal in reasonable detail;

(vi) intentional dishonesty with respect to any material matter by the Executive in any communications with the Board; or

(vii) the Executive’s failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Board to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation.

(d) Termination Without Cause .  The Company (with the prior approval of the Board) may terminate the Executive’s employment hereunder at any time without Cause.  Any termination by the Company of the Executive’s employment under this Agreement which does not constitute a termination for Cause under Section 3(c) and does not result from the death or disability of the Executive under Section 3(a) or (b) shall be deemed a termination without Cause.


 

 

(e) Termination by the Executive .  The Executive may terminate his employment hereunder at any time for any reason, including but not limited to Good Reason.  For purposes of this Agreement:

(i) “Good Reason” shall mean that the Executive has complied with the “Good Reason Process” (as defined below) following the occurrence of any of the following events, in each case that occurs without Executive’s express written consent: (A) Parent  fails to elect, reelect or otherwise maintain the Executive in the offices and positions in Parent in accordance with Section 1(b)(i) of this Agreement, or a change in the Executive’s reporting relationship with the Board as set forth in Section 1(b)(i) of this Agreement; (B) the Executive is not nominated for reelection as a director of Parent; (C) the Executive has been assigned material duties inconsistent with the offices and positions in Parent set forth in Section 1(b)(i) of this Agreement, or has suffered a material reduction in any of the duties, authority and/or responsibilities attached to the offices and positions in Parent set forth in Section 1(b)(i) of this Agreement; (D) a material diminution in the Executive’s Base Salary, except for across-the-board salary reductions based on the Company’s financial performance similarly affecting all or substantially all senior management employees of the Company; (E) the Executive’s Target Bonus for a specific year is set by the Board at an amount less than seventy percent (70%) of the Executive’s Base Salary for that year; (F) the Board shall require the Executive to have his principal location of work changed to any location which is more than 25 miles from the location of the Executive’s then principal place of employment under this Agreement; or (G) the material breach of this Agreement by Parent or Quench. 

(ii) “Good Reason Process” shall mean that (A) the Executive reasonably determines in good faith that a “Good Reason” condition has occurred; (B) the Executive notifies the Company in writing of the first occurrence of such Good Reason condition within sixty (60) days of the first occurrence of such condition, detailing such condition with specificity; (C) the Executive cooperates in good faith with the Company’s efforts, for a period of at least thirty (30) days following such notice (the “Cure Period”), to remedy such condition; (D) notwithstanding such efforts, such Good Reason condition continues to exist after the end of the Cure Period; and (E) the Executive terminates his employment within thirty (30) days after the end of the Cure Period.  If the Company cures the Good Reason condition before the Executive so terminates his employment pursuant to the preceding sentence, such Good Reason condition shall be deemed not to have occurred.

(f) Notice of Termination .  Except for termination as specified in Section 3(a), any termination of the Executive’s employment by the Company or any such termination by the Executive shall be communicated by written Notice of Termination to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

(g) Date of Termination .  “Date of Termination” shall mean: (i) if the Executive’s employment is terminated by his death, the date of his death; (ii) if the Executive’s employment is terminated on account of disability under Section 3(b), by the Company for Cause under Section 3(c) or by the Company without Cause under Section 3(d), the date on


 

 

which a Notice of Termination is given; (iii) if the Executive’s employment is terminated by the Executive under Section 3(e) without Good Reason, thirty (30) days after the date on which a Notice of Termination is given, and (iv) if the Executive’s employment is terminated by the Executive under Section 3(e) with Good Reason, the date on which a Notice of Termination is given after the end of the Cure Period.  Notwithstanding the foregoing, in the event that the Executive gives a Notice of Termination to the Company, the Company may unilaterally accelerate the Date of Termination and such acceleration shall not result in a termination by the Company for purposes of this Agreement, but the Executive shall continue to receive all Base Salary, and, if the Executive was participating in Quench’s group health plans immediately prior to the Date of Termination, then Quench shall continue to pay the premiums for the Executive’s participation in the Company’s group health plans, which would otherwise have been paid during the accelerated period.

4. Compensation Upon Termination .

(a) Termination Generally .  If the Executive’s employment with the Company is terminated for any reason, the Company shall pay or provide to the Executive (or to his authorized representative or estate) (i) any Base Salary earned through the Date of Termination, unpaid expense reimbursements (subject to, and in accordance with, Section 2(d) of this Agreement) and unused paid time off that accrued through the Date of Termination on or before the time required by law but in no event more than 30 days after the Executive’s Date of Termination; and (ii) any vested benefits the Executive may have under any employee benefit plan of the Company through the Date of Termination, which vested benefits shall be paid and/or provided in accordance with the terms of such employee benefit plans (collectively, the “Accrued Benefit”).

(b) Termination upon the Executive’s Death or Disability .  If the Executive’s employment with the Company is terminated under Section 3(a) or 3(b), the Executive or the Executive’s estate, if applicable, shall receive (i) the Accrued Benefit; (ii) any vested benefits that the Executive or the Executive’s estate may be entitled to receive under any applicable equity or other plans (including the Plan), and (iii) a prorated portion of the Executive’s Target Bonus for the year in which the Date of Termination occurs, prorated for the portion of the year through the Date of Termination (based on the number of days elapsed).

(c) Termination by the Company Without Cause, or by the Executive with Good Reason, Not in Connection with a Change in Control .  Except as provided in Section 5 of this Agreement, during the Term, if the Executive’s employment is terminated by the Company without Cause as provided in Section 3(d), or the Executive terminates his employment for Good Reason as provided in Section 3(e), then, subject to the Executive signing a separation agreement containing, among other provisions, a general release of claims in favor of the Company and related persons and entities, confidentiality, return of property, non-disparagement provisions and the other provisions set forth in Exhibit A to this Agreement and such other provisions as are mutually agreed upon by Parent and the Executive (the “Separation Agreement and Release”) and the Separation Agreement and Release becoming irrevocable within the time period set forth in the Separation Agreement and Release (but in no event later than 60 days after the Date of Termination):


 

 

(i) Quench shall also pay the Executive a lump sum in cash in an amount equal to   the Executive’s then current annual Base Salary (or if the Executive terminates his employment for Good Reason, the Executive’s Base Salary in effect immediately prior to the occurrence of any of the events that constitute the Good Reason for such termination, if higher) and Target Bonus for the year in which the Date of Termination occurs;

(ii) if the Executive was participating in Quench’s group health plans immediately prior to the Date of Termination and elects COBRA health plan continuation, then Quench shall pay the premiums for the Executive’s participation in the Company’s group health plans pursuant to COBRA until the earliest of (i) 12 months following the Date of Termination, (ii) the expiration of the Executive’s rights under COBRA, or (iii) the Executive’s eligibility for group health plan coverage through other employment.  The Executive shall promptly respond fully to any reasonable inquiries related to eligibility for other group health plan coverage and shall promptly report to the Company if the Executive becomes eligible for such coverage.  Notwithstanding the foregoing, if the Company determines at any time that its payments pursuant to this paragraph may be taxable income to the Executive, it may convert such payments to payroll payments directly to the Executive on the Company’s regular payroll dates, which shall be subject to tax-related deductions and withholdings; and

(iii) notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement, the Executive shall be entitled to 12 months of additional vesting of all stock options and other stock-based awards held by the Executive, measured from the Date of Termination. Such additional vesting shall be immediately accelerated, and the underlying option or stock-based award shall accordingly become exercisable or nonforfeitable, as of the Date of Termination; provided, that (A) the performance conditions applicable to any stock-based awards subject to performance conditions will be deemed satisfied at the target level specified in the terms of the applicable award agreement to the extent that such awards are accelerated as provided herein, and (B) any   termination or forfeiture of the unvested portion of any stock options and other stock-based awards held by the Executive that otherwise would have occurred on or within 60 days after the Date of Termination will be delayed until the 60th day after the Date of Termination (but in no event later than the expiration date thereof) and will only occur to the extent such portion of the stock options and other stock-based awards does not vest pursuant to this section.

The amounts payable under this Section 4(c) shall be paid or commence to be paid within 60   days after the Date of Termination; provided, however , that if the 60-day period begins in one calendar year and ends in a second calendar year, such amounts shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further , that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination.  Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2).

Notwithstanding the foregoing, if the Executive breaches any of the provisions contained in Section 7 of this Agreement, all payments under this Section 4(c) shall immediately cease.


 

 

5. Termination by the Company Without Cause, or by the Executive with Good Reason, in Connection with a Change in Control .  The provisions of this Section 5 set forth certain terms of an agreement reached between the Executive and the Company regarding the Executive’s rights and obligations from and after the occurrence of a Change in Control of Parent.  These provisions are intended to assure and encourage in advance the Executive’s continued attention and dedication to his assigned duties and his objectivity during the pendency and after the occurrence of any such event.  These provisions shall apply in lieu of, and expressly supersede, the provisions of Section 4(c) regarding severance pay and benefits upon a termination of employment, if such termination of employment occurs within 24 months after the occurrence of the first event constituting a Change in Control of Parent (the “Protection Period”).  These provisions shall terminate and be of no further force or effect after the end of the Protection Period.

(a) Change in Control .  During the Term, if within the Protection Period, the Executive’s employment is terminated by the Company without Cause as provided in Section 3(d) or the Executive terminates his employment for Good Reason as provided in Section 3(e), then, subject to the signing of the Separation Agreement and Release by the Executive and the Separation Agreement and Release becoming irrevocable within the time period set forth in the Separation Agreement and Release (but in no event later than 60 days after the Date of Termination):

(i) Quench shall pay the Executive a lump sum in cash in an amount equal to  the Executive’s Target Bonus for the year in which the Date of Termination occurs, prorated for the portion of the year through the Date of Termination (based on the number of days elapsed);

(ii) Quench shall also pay the Executive a lump sum in cash in an amount equal to   two times the sum of (A) the Executive’s then current Base Salary (or (x) the Executive’s Base Salary in effect immediately prior to the Change in Control, if higher or (y) if the Executive terminates his employment for Good Reason, the Executive’s Base Salary in effect immediately prior to the occurrence of any of the events that constitute the Good Reason for such termination, if higher) plus (B) the Executive’s Target Bonus for fiscal year in which the Date of Termination occurs;

(iii) notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement, the vesting of all stock options and other stock-based awards held by the Executive shall immediately accelerate such that any unvested portion shall immediately become fully vested, and fully exercisable or nonforfeitable as of the Date of Termination; provided, that (A) the performance conditions applicable to any stock-based awards subject to performance conditions will be deemed satisfied at the target level specified in the terms of the applicable award agreement to the extent that such awards are accelerated as provided herein, and (B) any   termination or forfeiture of the unvested portion of any stock options and other stock-based awards held by the Executive that otherwise would have occurred on or within 60 days after the Date of Termination will be delayed until the 60th day after the Date of Termination (but in no event later than the expiration date thereof) and will only occur to


 

 

the extent such portion of the stock options and other stock-based awards does not vest pursuant to this section; and

(iv) if the Executive was participating in Quench’s group health plan immediately prior to the Date of Termination and elects COBRA health continuation, then, Quench shall pay the premiums for the Executive’s participation in the Company’s group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) until the earliest of (i) 24 months following the Date of Termination, (ii) the expiration of the Executive’s rights under COBRA, or (iii) the Executive’s eligibility for group health plan coverage through other employment.  The Executive shall promptly respond fully to any reasonable inquiries related to eligibility for other group health plan coverage and shall promptly report to the Company if the Executive becomes eligible for such coverage.  Notwithstanding the foregoing, if the Company determines at any time that its payments pursuant to this paragraph may be taxable income to the Executive, it may convert such payments to payroll payments directly to the Executive on the Company’s regular payroll dates, which shall be subject to tax-related deductions and withholdings

The amounts payable under this Section 5(a) shall be paid or commence to be paid within 60 days after the Date of Termination; provided, however , that if the 60-day period begins in one calendar year and ends in a second calendar year, such payment shall be paid or commence to be paid in the second calendar year by the last day of such 60-day period; provided, further , that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination.  Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2).

Notwithstanding the foregoing, if the Executive breaches any of the provisions contained in Section 7 of this Agreement, all payments under this Section 5 shall immediately cease.

(b) Additional Limitation .

(i) Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G of the Code and the applicable regulations thereunder (the “Aggregate Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which the Executive becomes subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction shall only occur if it would result in the Executive receiving a higher After Tax Amount (as defined below) than the Executive would receive if the Aggregate Payments were not subject to such reduction.  In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological order beginning with the Aggregate Payments that are to be paid the furthest in time from


 

 

consummation of the transaction that is subject to Section 280G of the Code: (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits; provided that in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c) shall be reduced before any amounts that are subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c).

(i) For purposes of this Section 5(b), the “After Tax Amount” means the amount of the Aggregate Payments less all federal, state, and local income, excise and employment taxes imposed on the Executive as a result of the Executive’s receipt of the Aggregate Payments.  For purposes of determining the After Tax Amount, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in each applicable state and locality, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(i) The determination as to whether a reduction in the Aggregate Payments shall be made pursuant to Section 5(b)(i) shall be made by a nationally recognized accounting firm selected by the Board (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Board and the Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Board or the Executive.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.

(b) Definitions .  For purposes of this Section 5, the following terms shall have the following meanings:

“Change in Control” shall mean any of the following:

(i) the acquisition by any individual, entity or group (a “Person”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 50% or more of either (i) the then outstanding common shares of Parent (the “Outstanding Common Shares”) or (ii) the combined voting power of the then outstanding securities of Parent entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however , the following: (A) any acquisition directly from Parent (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from Parent), (B) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by Parent or any corporation controlled by Parent or (C) any acquisition by any Person pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this definition of “Change in Control”; or


 

 

(ii) individuals who, as of the beginning of any consecutive two-year period constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided that any individual who subsequently becomes a director of Parent and whose election, or nomination for election by Parent’s shareholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of Parent as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board, shall not be deemed a member of the Incumbent Board; or

(iii) the consummation of a reorganization, merger or consolidation of Parent or sale or other disposition of all or substantially all of the assets of Parent and its subsidiaries, taken as a whole (a “Corporate Transaction”); excluding, however , a Corporate Transaction pursuant to which (A) all or substantially all of the Persons who are the beneficial owners, respectively, of the Outstanding Common Shares and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such Person entitled to vote generally in the election of directors, as the case may be, of the Person resulting from such Corporate Transaction (including, without limitation, a Person which as a result of such transaction owns Parent or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Shares and the Outstanding Voting Securities, as the case may be, (B) no Person (other than: Parent; any employee benefit plan (or related trust) sponsored or maintained by Parent or any Person controlled by Parent; and the Person resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 50% or more of, respectively, the outstanding shares of common stock, or the combined voting power of the outstanding securities of such Person entitled to vote generally in the election of directors, as the case may be, of the Person resulting from such Corporate Transaction (including, without limitation, a Person which as a result of such transaction owns Parent or all or substantially all of the Company’s assets either directly or indirectly), and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors (or its equivalent) of the Person resulting from such Corporate Transaction; or

(iv) the consummation of a sale or other disposition by Parent of all or substantially all of the assets (which may include the stock of certain of its subsidiaries) of either of its Quench or Seven Seas Water operating platforms or, if Parent creates or adds additional businesses or operating platforms that are reported as separate reportable segments in Parent’s periodic filings with the United States Securities and Exchange Commission after the Effective Date,  any such additional business or operating platform.


 

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by Parent which, by reducing the number of shares of Outstanding Common Shares or Outstanding Voting Securities, increases the proportionate number of Outstanding Common Shares or Outstanding Voting Securities beneficially owned by any person to 50% or more of the combined voting power of all of the then Outstanding Common Shares or Outstanding Voting Securities; provided, however , that if any Person referred to in this sentence shall thereafter become the beneficial owner of any additional Outstanding Common Shares or Outstanding Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from Parent) and immediately thereafter beneficially owns 50% or more of the combined voting power of all of the then Outstanding Common Shares or Outstanding Voting Securities, then a “Change in Control” shall be deemed to have occurred for purposes of the foregoing clause (i).

6. Section 409A .

(a) Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s separation from service within the meaning of Section 409A of the Code, the Company determines that the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation otherwise subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Executive’s separation from service, or (B) the Executive’s death.  If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule. 

(b) All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement.  All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred.  The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses).  Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

(c) To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service.”  The determination of whether and when a separation from service has occurred shall


 

 

be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A‑1(h).

(d) The parties intend that this Agreement will be administered in accordance with Section 409A of the Code.  To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code.  Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A‑2(b)(2).  The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

(e) The Company makes no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

7. Confidential Information, Noncompetition and Cooperation .

(a) Confidential Information .  As used in this Agreement, “Confidential Information” means information belonging to the Company which is of value to the Company in the course of conducting its business and the disclosure of which could result in a competitive or other disadvantage to the Company.  Confidential Information includes, without limitation, financial information, reports, and forecasts; inventions, improvements and other intellectual property; trade secrets; know‑how; designs, processes or formulae; software; market or sales information or plans; customer lists; and business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management of the Company.  Confidential Information includes information developed by the Executive in the course of the Executive’s employment by the Company, as well as other information to which the Executive may have access in connection with the Executive’s employment.  Confidential Information also includes the confidential information of others with which the Company has a business relationship.  Notwithstanding the foregoing, Confidential Information does not include information in the public domain, unless due to breach of the Executive’s duties under Section 7(b).

(b) Confidentiality .  The Executive understands and agrees that the Executive’s employment creates a relationship of confidence and trust between the Executive and the Company with respect to all Confidential Information.  At all times, both during the Executive’s employment with the Company and after its termination, the Executive will keep in confidence and trust all such Confidential Information, and will not use or disclose any such Confidential Information without the prior written consent of the Company, except as may be necessary in the ordinary course of performing the Executive’s duties to the Company.  For avoidance of doubt, nothing in this Agreement shall be interpreted or applied to prohibit the Executive from making any good faith report to any governmental agency or other governmental entity concerning any act or omission that the Executive reasonably believes constitutes a possible violation of federal or state law or making other disclosures that are protected under the


 

 

anti-retaliation or whistleblower provisions of applicable federal or state law or regulation.  In addition, for the avoidance of doubt, pursuant to the federal Defend Trade Secrets Act of 2016, the Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

(c) Documents, Records, etc .  All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to the Executive by the Company or are produced by the Executive in connection with the Executive’s employment will be and remain the sole property of the Company.  The Executive will return to the Company all such materials and property as and when requested by the Company.  In any event, the Executive will return all such materials and property immediately upon termination of the Executive’s employment for any reason.  The Executive will not retain with the Executive any such material or property or any copies thereof after such termination.

(d) Noncompetition and Nonsolicitation .  During the Executive’s employment with the Company and either (x) for 12 months thereafter, or (y) if the Executive’s employment terminates during a Protection Period, 24 months thereafter, regardless of the reason for the termination, the Executive (i) will not, directly or indirectly, whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, engage, participate, assist or invest in any Competing Business (as hereinafter defined); (ii) will refrain from directly or indirectly retaining, employing, attempting to employ or recruiting any person who is an employee or independent contractor of the Company, or otherwise soliciting, inducing or influencing any person to leave employment with the Company (other than terminations of employment of subordinate employees undertaken in the course of the Executive’s employment with the Company); and (iii) will refrain from soliciting or encouraging any customer or supplier to terminate or otherwise modify adversely its business relationship with the Company.  The Executive understands that the restrictions set forth in this Section 7(d) are intended to protect the Company’s interest in its Confidential Information and established employee, independent contractor, customer and supplier relationships and goodwill, and agrees that such restrictions are reasonable and appropriate for this purpose.  For purposes of this Agreement, the term “Competing Business” shall mean a business that is (x) competitive with any business which the Company or any of its affiliates has conducted, or has invested significant resources in evaluating or preparing to conduct, at any time during the employment of the Executive, and (y) is conducted in any country in the world in which the Company or any of its affiliates has conducted, or has invested significant resources in evaluating or preparing to conduct, at any time during the employment of the Executive.  Notwithstanding the foregoing, the Executive may own up to two percent (2%) of the outstanding securities of a publicly held Person which constitutes or is affiliated with a Competing Business (each, a “Permitted Investments”).

(e) Third-Party Agreements and Rights .  The Executive hereby confirms that the Executive is not bound by the terms of any agreement with any previous employer or other party which restricts in any way the Executive’s use or disclosure of information or the Executive’s engagement in any business.  The Executive represents to the Company that the


 

 

Executive’s execution of this Agreement, the Executive’s employment with the Company and the performance of the Executive’s proposed duties for the Company will not violate any obligations the Executive may have to any such previous employer or other party.  In the Executive’s work for the Company, the Executive will not disclose or make use of any information in violation of any agreements with or rights of any such previous employer or other party, and the Executive will not bring to the premises of the Company any copies or other tangible embodiments of non-public information belonging to or obtained from any such previous employment or other party.

(f) Litigation and Regulatory Cooperation .  During and after the Executive’s employment, the Executive shall cooperate fully with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that transpired while the Executive was employed by the Company.  The Executive’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times.  During and after the Executive’s employment, the Executive also shall cooperate fully with the Company in connection with any investigation or review of any foreign, federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while the Executive was employed by the Company.  The Company shall reimburse the Executive for any reasonable out‑of‑pocket expenses incurred in connection with the Executive’s performance of obligations pursuant to this Section 7(f).  If reasonable prudence warrants that the Executive be represented by legal counsel in connection with such cooperation, the Company shall either provide legal representation for the Executive in connection with the activities described in this Section 7(f) or shall reimburse the Executive for his reasonable attorneys’ fees.  For the avoidance of doubt, if the Company offers to provide joint representation to the Executive in connection with such cooperation activities and the provision of such representation is permissible in accordance with applicable ethical rules, the Executive shall not be entitled to reimbursement for his attorneys’ fees if he elects to decline such representation.   

(g) Reformation of Restrictive Covenants .  If any court of competent jurisdiction shall at any time determine that the term of any covenant set forth in this Section 7 is too lengthy, the territory is too extensive or the scope or subject matter of any such covenant exceeds the limitations imposed by applicable law, the parties agree that the applicable provisions shall be amended to the minimum extent necessary such that the provisions are enforceable or permissible to the maximum extent allowed under such applicable law. 

(h) Injunction .  The Executive agrees that it would be difficult to measure any damages caused to the Company which might result from any breach by the Executive of the promises set forth in this Section 7, and that in any event money damages would be an inadequate remedy for any such breach.  Accordingly, subject to Section 10 of this Agreement, the Executive agrees that if the Executive breaches, or proposes to breach, any portion of this Agreement, the Company shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to the Company.


 

 

8. Nomination to Board of Directors . During the Term, the Company shall use all reasonable efforts to cause the Executive to be nominated for reelection as a director of Parent for so long as the Executive shall be an employee of the Company.  If the Executive’s employment with the Company is terminated for any reason, the Executive shall promptly (and in any event within three business days after such termination) resign in writing as a director and officer of Parent and each of Parent’s direct and indirect subsidiaries.

9. Indemnification Agreement .  The Indemnification Agreement between Parent and the Executive shall remain in full force and effect, unchanged by this Agreement.

10. No Mitigation Obligation . Parent and Quench hereby acknowledge that it will be difficult, and may be impossible, for the Executive to find reasonably comparable employment in the event the Executive’s employment is terminated by the Company without Cause as provided in Section 3(d) or the Executive terminates his employment for Good Reason as provided in Section 3(e), and that the noncompetition covenant contained in Section 7 will further limit the employment opportunities for the Executive.  Accordingly, the parties hereto expressly agree that the payment of the amounts required by Sections 4(b), 4(c) and 5, as the case may be, by Quench to the Executive in accordance with the terms of this Agreement will be liquidated damages, and that the Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of the Executive hereunder or otherwise.

11. Arbitration of Disputes .  Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be submitted and settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in the Philadelphia, Pennsylvania metropolitan area in accordance with the Employment Arbitration Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  Except as otherwise provided in this Agreement (including Section 22), the arbitrator shall award reasonable attorneys’ fees and costs to the prevailing party in any such arbitration; provided, however , that such award of attorneys’ fees and costs shall not apply to claims based on any statute, except to the extent that the statute authorizes an award of attorneys’ fees.  In the event that any person or entity other than the Executive or the Company may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person or entity’s agreement.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  This Section 11 shall be specifically enforceable. Notwithstanding the foregoing, this Section 11 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 11.

12. Consent to Jurisdiction .  To the extent that any court action is permitted consistent with or to enforce Section 11 of this Agreement, the parties hereby consent to the jurisdiction of


 

 

the courts of the Commonwealth of Pennsylvania and the United States District Court for the Eastern District of Pennsylvania.  Accordingly, with respect to any such court action, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

13. Integration .  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and extemporaneous negotiations, communications, arrangements and agreements between the parties concerning such subject matter, including without limitation the Prior Agreement. 

14. Withholding .  All payments made by the Company to the Executive under this Agreement shall be net of any tax or other amounts required to be withheld by the Company under applicable law.

15. Successor to the Executive .  This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal representatives, executors, administrators, heirs, distributees, devisees and legatees.  In the event of the Executive’s death after his termination of employment but prior to the completion by the Company of all payments due him under this Agreement, the Company shall continue such payments to the Executive’s beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation).

16. Enforceability .  The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions of this Agreement unless such invalidity or unenforceability, after taking into account the mitigation contemplated by the next sentence, deprives a party of a material benefit contemplated by this Agreement.  If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

17. Survival .  The provisions of this Agreement shall survive the termination of this Agreement and/or the termination of the Executive’s employment to the extent necessary to effectuate the terms contained herein.

18. Waiver .  No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party.  The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.


 

 

19. Notices .  Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with Quench or, in the case of Parent or Quench, at Parent’s main offices, attention of the Board.

20. Amendment .  This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.

21. Governing Law .  The law, including the statutes of limitation, of the Commonwealth of   Pennsylvania shall govern this Agreement, the interpretation and enforcement of its terms and any claim or cause of action (in law or equity), controversy or dispute arising out of or related to it or its negotiation, execution or performance, whether based on contract, tort, statutory or other law, in each case without giving effect to any conflicts-of-law or other principle requiring the application of the law of any other jurisdiction. 

22. Legal Fees and Expenses .  

(a) Except as provided in Sections 22(b) and (c), each party shall pay or cause to be paid, and shall be solely responsible for, any and all attorneys’ and related fees and expenses incurred by it in connection with the preparation, negotiation, execution and delivery of this Agreement and any dispute arising with respect to this Agreement; provided, however , that if the Executive prevails in any such dispute, the Company shall reimburse the Executive for any and all reasonable such fees and expenses incurred by the Executive in connection with such dispute. 

(b) Quench shall reimburse the Executive for all legal fees up to a maximum of $7,500 incurred by him in connection with the preparation, negotiation, execution and delivery of this Agreement.

(c) If, within the Protection Period, the Executive’s employment is terminated by the Company without Cause as provided in Section 3(d) or the Executive terminates his employment for Good Reason as provided in Section 3(e), it is the intent of the parties that the Executive not be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that, after a Change in Control, Parent or Quench has failed to comply with any of its obligations under this Agreement or if Parent, Quench or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Executive the benefits intended to be provided to the Executive hereunder, Parent and Quench irrevocably authorize the Executive from time to time to retain counsel of his choice, at the expense of Parent and Quench as hereinafter provided, to represent the Executive in connection with the initiation or defense of any litigation or other legal action, whether by or against Parent, Quench or any director, officer, stockholder or other person affiliated with Parent or Quench, in any jurisdiction. If a Change in Control has occurred, Parent and Quench shall pay or cause to be paid and shall be solely responsible for any and all reasonable attorneys’ and related fees and expenses incurred by the


 

 

Executive as a result of Parent’s or Quench’s failure to perform this Agreement or any provision hereof or as a result of Parent, Quench or any person contesting the validity or enforceability of this Agreement or any provision hereof as aforesaid.

23. Successor to Company .  Each of Parent and Quench shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Parent or Quench expressly to assume and agree to perform this Agreement to the same extent that Parent or Quench would be required to perform it if no succession had taken place.  Failure of Parent or Quench to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a material breach of this Agreement.

24. Counterparts .  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.  Facsimiles or other electronic forms of signatures (including e-mail, portable document format (.pdf) or similar generally accepted electronic means) shall be deemed to be originals.

IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.

 

 

 

 

 

AQUAVENTURE HOLDINGS LIMITED

 

 

 

 

By:

/s/ Douglas R. Brown

 

 

 

Douglas R. Brown

 

 

Chairman of the Board

 

 

 

 

 

QUENCH USA, INC.

 

 

 

 

By:

/s/ Thomas Breslin

 

 

 

Thomas Breslin

 

 

Chief Financial Officer

 

 

 

 

 

By:

/s/ Anthony Ibarguen

 

 

 

Anthony Ibarguen

 

 

Chief Executive Officer

 

 


 

 

Exhibit A

Form of Separation Agreement and Release 

This Separation Agreement and Release (the “Separation Agreement”), is entered into by and among AquaVenture Holdings Limited, a business company organized under the laws of the British Virgin Islands (the “Parent”),  Quench USA, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Quench”), and Anthony Ibarguen (the “Executive”).  This Separation Agreement is effective as of the Effective Date, as defined below.

WHEREAS, Parent, Quench and the Executive are parties to an Amended and Restated Employment Agreement dated as of January 1, 2019 (the “Employment Agreement”);

WHEREAS, [Parent and Quench wish to terminate the Executive’s employment with the Company without Cause][The Executive wishes to terminate his employment with the Company with Good Reason];

WHEREAS, the execution of this Separation Agreement is a condition precedent to the payment of severance as set forth in the Employment Agreement; and

WHEREAS, in consideration for the Executive’s signing of this Separation Agreement, the Company will provide the Executive with severance benefits pursuant to the Employment Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound hereby, Parent, Quench and the Executive agree as follows:

1. The Executive, for himself, the Executive’s spouse, heirs, administrators, children, representatives, executors, successors, assigns, and all other persons claiming through the Executive, if any (collectively, “Releasors”), does hereby release, waive, and forever discharge Parent and the Company and each of its and their respective agents, subsidiaries, parents, affiliates, related organizations, employees, officers, directors, attorneys, successors, and assigns (collectively, the “Releasees”) from, and does fully waive any obligations of Releasees to Releasors for, any and all liability, actions, charges, causes of action, demands, damages, or claims for relief, remuneration, sums of money, accounts or expenses (including attorneys’ fees and costs) of any kind whatsoever, whether known or unknown or contingent or absolute, which heretofore have been or which hereafter may be suffered or sustained, directly or indirectly, by Releasors in consequence of, arising out of, or in any way relating to: (a) the Executive’s employment with Parent and any of its subsidiaries; (b) the termination of the Executive’s employment with Parent and any of its subsidiaries; (c) the Employment Agreement; or (d) any events, acts, agreements or conduct occurring on or prior to the date of this Separation Agreement.  The foregoing release, discharge and waiver includes, but is not limited to, all claims and any obligations or causes of action arising from such claims, under common law including wrongful or retaliatory discharge, breach of contract (including but not limited to any claims under the Employment Agreement and any claims under any restricted stock or stock option or similar agreements between the Executive, on the one hand, and Parent or any of its

 


 

 

subsidiaries, on the other hand) and any action arising in tort including libel, slander, defamation or intentional infliction of emotional distress, and claims under any federal, state or local statute including the Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871 (42 U.S.C. § 1981), the National Labor Relations Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, or the discrimination or employment laws of any state or municipality, and/or any claims under any express or implied contract which any of the Releasors may claim existed with any of the Releasees.  This also includes a release of any claims for wrongful discharge and all claims for alleged physical or personal injury, emotional distress relating to or arising out of the Executive’s employment with Parent or any of its subsidiaries or the termination of that employment; and any claims under the WARN Act or any similar law, which requires, among other things, that advance notice be given of certain work force reductions.  This release and waiver does not apply to:  (i) any right to indemnification now existing under any statute, the charter or bylaws of Parent or the Company, or the Indemnification Agreement between Parent and the Executive; (ii) any rights to the receipt of employee benefits under any “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act, 29 U.S.C. § 1002(3), which vested on or prior to the date of this Separation Agreement; (iii) the right to receive severance benefits under Section 4 or 5 of the Employment Agreement; (iv) any right to employee-paid continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act, if available; and (v) any claim that cannot be waived by law.

2. The Executive represents and warrants that he has been paid for all time worked and has received all the leave of absence and leave benefits and protections for which the Executive was eligible.

3. Nothing contained in this Separation Agreement limits the Executive’s ability to file a charge or complaint with any federal, state or local governmental agency or commission (a “ Government Agency ”).  In addition, nothing contained in this Separation Agreement limits the Executive’s ability to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including the Executive’s ability to provide documents or other information, without notice to the Parent or the Company, nor does anything contained in this Separation Agreement apply to truthful testimony in litigation.  If the Executive files any charge or complaint with any Government Agency and if the Government Agency pursues any claim on the Executive’s behalf, or if any other third party pursues any claim on the Executive’s behalf, the Executive waives any right to monetary or other individualized relief (either individually or as part of any collective or class action); provided that nothing in this Separation Agreement limits any right you may have to receive a whistleblower award or bounty for information provided to the Securities and Exchange Commission. 

4. The Executive agrees never to seek personal recovery from Releasees in any forum for any claim covered by the above waiver and release language.  If the Executive violates this Separation Agreement by suing Releasees, other than under the ADEA or as otherwise set forth in Section 1 hereof, the Executive shall be liable to the Company for its reasonable attorneys’ fees and other litigation costs incurred in defending against such a suit to the extent permitted by law.

 


 

 

5. The provisions of the last paragraphs of Sections 4(c) and 5(a), Sections 6, 7 , 9, 11, 12, 14, 17, 19, 21 and 22 of the Employment Agreement, and the Indemnification Agreement between Parent and the Executive, shall continue in full force and effect in accordance with their terms.

6. Without limiting any of the terms of the Employment Agreement, the Executive acknowledges that he must return all property of the Company as of the Date of Termination and that he will not be in possession of any property of the Company, including, but not limited to, any keys, computer disks, flash drives, credit cards, Company identification cards, computers, tablets, phones, blackberries or other smartphones, proprietary materials, contracts, spreadsheets, financial data, designs, business plans, vendor lists, supplier lists, and other files and documents containing confidential or proprietary information following the Date of Termination.

7. The Executive agrees that he will not make any negative or disparaging statements about, or directly or indirectly take, support, encourage or participate in any action or attempted action which in any way would damage the reputation of, any of the Releasees, including but not limited to disparaging or criticizing any products or services of any of the Releasees.  In turn, each of Quench and Parent agrees to instruct its respective directors and senior executive officers (solely in their respective capacities as such directors and senior executive officers) not to (i) make any negative or disparaging statements about, or (ii) directly or indirectly take, support, encourage or participate in any action or attempted action which in any way would damage the reputation of, the Executive, including, but not limited to disparaging Executive or criticizing his service to the Company;   provided, however , that nothing in this paragraph shall apply to statements between or among such directors and/or senior executive officers related to the Executive or his or their performance of his or their responsibilities as directors and/or senior executive officers. Nothing contained in this Section 7 limits the ability of the Executive, Parent, Quench or any of the directors and senior executive officers of Quench and Parent to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including any such person’s ability to provide documents or other information, without notice to any other person, nor does anything contained in this Section 7 apply to truthful testimony by any person in litigation. 

8. The Executive acknowledges and recites that:

(a) the Executive has executed this Separation Agreement knowingly and voluntarily and is knowingly and voluntarily waiving any rights he has under the ADEA;

(b) the Executive has read and understands this Separation Agreement in its entirety;

(c) the Executive has been advised and directed in writing (and this subparagraph (c) constitutes such written direction) to seek legal counsel and any other advice the Executive wishes with respect to the terms of this Separation Agreement before executing it;

 


 

 

(d) the Executive’s execution of this Separation Agreement has not been forced by any employee or agent of the Company, and the Executive has had an opportunity to negotiate about the terms of this Separation Agreement;

(e) the Executive’s waiver does not apply to any rights or claims that arise after the date the Executive signs this Separation Agreement;

(f) the Executive has been offered twenty one (21) calendar days after receipt of this Separation Agreement to consider its terms before executing it; 1 and

(g) the payment of severance pursuant to Section 4 or 5 of the Employment Agreement is consideration for the Executive’s covenants and agreements set forth in this Separation Agreement and is in addition to anything of value to which the Executive is otherwise entitled.

9. Except for the application of pre-emptive Federal law, the law, including the statutes of limitation, of the Commonwealth of   Pennsylvania shall govern this Separation Agreement, the interpretation and enforcement of its terms and any claim or cause of action (in law or equity), controversy or dispute arising out of or related to it or its negotiation, execution or performance, whether based on contract, tort, statutory or other law, in each case without giving effect to any conflicts-of-law or other principle requiring the application of the law of any other jurisdiction.

10. The Executive shall have seven (7) days from the date he executes this Separation Agreement to revoke his waiver of any ADEA claims by providing written notice of the revocation to Parent and Quench as provided in the Employment Agreement.  In the event of such revocation, the terms of the Employment Agreement shall govern.  This Separation Agreement shall be effective on the first business day following the expiration of such seven (7) day period (the “Effective Date”).

11. Capitalized terms not defined in this Separation Agreement have the meanings given in the Employment Agreement.

12. This Separation Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

PLEASE READ CAREFULLY.  THIS AGREEMENT INCLUDES A WAIVER AND RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.  To signify their agreement to the terms of this Separation Agreement, the parties have executed this Separation Agreement on the dates set forth under their signatures, which appear below.


1   In the event the Company determines that the Executive’s termination constitutes “an exit incentive or other employment termination program offered to a group or class of employees” under the ADEA, the Company will provide the Executive with:  (1) 45 days to consider the General Release; and (2) the disclosure schedules required for an effective release under the ADEA.

 

 


 

 

AQUAVENTURE HOLDINGS LIMITED

 

 

 

 

 

By:

 

 

 

 

 

 

 

Anthony Ibarguen

Date:

 

 

Date:

 

 

 

 

 

QUENCH USA, INC.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 


 

Exhibit 10.3

AquaVenture Holdings Limited

Key Executive Severance Plan

1. Purpose .  AquaVenture Holdings Limited (the “Company”) considers it essential to the best interests of its shareholders to foster the continuous employment of key management personnel.  The Board of Directors of the Company (the “Board”) recognizes, however, that, as is the case with many publicly held companies, the possibility of an involuntary termination of employment, either before or after a Change in Control (as defined in Section 2 hereof), exists and that such possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders.  Therefore, the Board has determined that this Key Executive Severance Plan (the “Plan”) should be adopted to reinforce and encourage the continued attention and dedication of the Company’s Covered Executives to their assigned duties without distraction.  Nothing in this Plan shall be construed as creating an express or implied contract of employment and nothing shall alter the “at will” nature of the Covered Executives’ employment with the Company or any of its direct or indirect subsidiaries (the “Company Group”).

2. Definitions .  The following terms shall be defined as set forth below:

(a) “Accounting Firm” shall mean a nationally recognized accounting firm selected by the Company.

(b) “Administrator” means the Board or, if the Board delegates authority to it, the Compensation Committee or other committee of the Board. 

(c) “Applicable Percentage” means 100%.

(d) Base Salary ” shall mean the annual base salary in effect immediately prior to the Date of Termination (or (x) for purposes of Section 8 only, the Covered Executive’s base salary in effect immediately prior to the Change in Control, if higher, or (y) if the Covered Executive terminates his employment for Good Reason, the Covered Executive’s base salary in effect immediately prior to the occurrence of any of the events that constitute the Good Reason for such termination, if higher ).

(e) Cause ” shall mean, and shall be limited to, the occurrence of any one or more of the following events, as determined solely by the judgment of the Board:  

(i) the Covered Executive's conviction of, or plea of guilty or nolo contendere to, (i) any felony or (ii) a misdemeanor involving a crime of fraud, embezzlement, dishonesty, disloyalty, moral turpitude or professional misconduct;  

(ii) a material breach, non-performance or non-observance by the Covered Executive of any of the terms of any written agreement to which the Covered Executive and any member of the Company Group are parties, or the material breach, non-performance or non-observance by the Covered Executive of his or her duties to the

 

 


 

Company Group or any rules or written employment policies of any member of the Company Group governing employee behavior (including, without limitation, any ethics policies, codes of conduct or policies concerning substance abuse and sexual harassment) if such breach, non-performance or non-observance is not cured within a period of 30 days after written notice thereof by the Company to the Covered Executive; 

(iii) a breach by the Covered Executive of any of the Restrictive Covenants; 

(iv) the existence of any legal or contractual limitation on the Covered Executive’s ability to engage in the business of the Company Group that reasonably could be expected to have a materially adverse effect on the Covered Executive’s ability to attract or retain customers or perform the services to the Company Group if such limitation is not cured within a period of 30 days after written notice thereof by the Company to the Covered Executive;

(v) any act, omission or conduct by the Covered Executive which constitutes willful or gross misconduct (A) that is materially injurious to the Company Group or its business, either financially or otherwise, or (B) that materially interferes with or adversely affects the Covered Executive’s performance of, or ability to perform, his duties as an employee or officer of a member of the Company Group;

(vi) the Covered Executive’s willful failure or refusal to follow or carry out the lawful instructions of the Board, the Chief Executive Officer of the Company or the Covered Executive’s immediate supervisor or other more senior executives of a member of the Company Group with direct or indirect supervisory responsibility over the Covered Executive (other than as a result of illness or disability) concerning material duties or actions consistent with the Covered Executive’s position in a timely manner and otherwise in a manner reasonably acceptable to the Company and such failure or refusal continues for a period of 30 days after receipt of written notice from the Company describing such failure or refusal in reasonable detail;

(vii) intentional dishonesty with respect to any material matter by the Covered Executive in any communications with the Board, the Chief Executive Officer of the Company or the Covered Executive’s immediate supervisor or other more senior executives of a member of the Company Group with direct or indirect supervisory responsibility over the Covered Executive; 

(viii) the Covered Executive’s failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by Company to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation.

(f) Change in Control ” shall mean, and shall be limited to, the occurrence of any one or more of the following events:

 


 

(i) the acquisition by any individual, entity or group (a “Person”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 50% or more of either (A) the then outstanding common shares of Parent (the “Outstanding Common Shares”) or (B) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however , the following: (x) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (y) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (z) any acquisition by any Person pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this definition of “Change in Control”; or

(ii) individuals who, as of the beginning of any consecutive two-year period constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided that any individual who subsequently becomes a director of the Company and whose election, or nomination for election by the Company’s shareholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board, shall not be deemed a member of the Incumbent Board; or

(iii) the consummation of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant to which (A) all or substantially all of the Persons who are the beneficial owners, respectively, of the Outstanding Common Shares and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such Person entitled to vote generally in the election of directors, as the case may be, of the Person resulting from such Corporate Transaction (including, without limitation, a Person which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Shares and the Outstanding Voting Securities, as the case may be, (B) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any Person controlled by the Company; and the Person resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 50% or more of, respectively, the outstanding shares of common stock, or the combined voting power of the outstanding securities of

 


 

such Person entitled to vote generally in the election of directors, as the case may be, of the Person resulting from such Corporate Transaction (including, without limitation, a Person which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly), and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors (or its equivalent) of the Person resulting from such Corporate Transaction; or

(ix) the consummation of a sale or other disposition by the Company of all or substantially all of the assets (which may include the stock of certain of its subsidiaries) of either of its Quench or Seven Seas Water operating platforms or, if the Company creates or adds additional businesses or operating platforms that are reported as separate reportable segments in Parent’s periodic filings with the United States Securities and Exchange Commission after January 1, 2019, any such additional business or operating platform. 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Outstanding Common Shares or Outstanding Voting Securities, increases the proportionate number of Outstanding Common Shares or Outstanding Voting Securities beneficially owned by any person to 50% or more of the combined voting power of all of the then Outstanding Common Shares or Outstanding Voting Securities;   provided, however , that if any Person referred to in this sentence shall thereafter become the beneficial owner of any additional Outstanding Common Shares or Outstanding Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company) and immediately thereafter beneficially owns 50% or more of the combined voting power of all of the then Outstanding Common Shares or Outstanding Voting Securities, then a “Change in Control” shall be deemed to have occurred for purposes of the foregoing clause (i).

(g) “Change in Control Period” shall mean the period beginning on the date of a Change in Control and ending 12 months after the date of a Change in Control. 

(h) “Code” shall mean the United States Internal Revenue Code of 1986, as amended.

(i) “Covered Executives” shall mean those executives or employees designated as such by the Administrator in its sole discretion, who are listed in Exhibit A , attached hereto, as such exhibit is amended by the Administrator from time to time, and who meet the eligibility requirements set forth in Section 4 of this Plan. 

(j) “Date of Termination” shall mean the date that a Covered Executive’s employment with the Company (or any successor) ends, which date shall be specified in the Notice of Termination.  Notwithstanding the foregoing, a Covered Executive’s employment shall not be deemed to have been terminated solely as a result of the Covered Executive becoming an employee of any direct or indirect successor to the business or assets of the Company Group.

 


 

(k) “Disability” shall mean that the Covered Executive is disabled and unable to perform the essential functions of his or her then existing position or positions in the Company Group with or without reasonable accommodation for a period of 180 days (which need not be consecutive) in any 12-month period.  If any question shall arise as to whether during any period the Covered Executive is disabled so as to be unable to perform the essential functions of his or her then existing position or positions with or without reasonable accommodation, the Covered Executive may, and at the request of the Company shall, submit to the Company a certification in reasonable detail by a physician selected by the Company to whom the Covered Executive or the Covered Executive’s guardian has no reasonable objection as to whether the Covered Executive is so disabled or how long such disability is expected to continue, and such certification shall for the purposes of this Plan be conclusive of the issue.  The Covered Executive shall cooperate with any reasonable request of the physician in connection with such certification.  If such question shall arise and the Covered Executive shall fail to submit such certification within a reasonable time period, the Company’s determination of such issue shall be binding on the Covered Executive.  Nothing in this provision shall be construed to waive the Covered Executive’s rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq . and the Americans with Disabilities Act, 42 U.S.C. §12101 et seq. During any period of Covered Executive’s disability during the period through the Date of Termination, the Company shall pay the Covered Executive his base salary, reduced by any payments the Covered Executive is receiving, or would be receiving if the Covered Executive had timely applied for benefits, under any applicable short-term disability and/or long-term disability plans or programs sponsored by the member of the Company Group that employs the Covered Executive

(l) “Good Reason” shall mean that the Covered Executive has complied with the “Good Reason Process” following the occurrence of any of the following events, in each case that occurs without the Covered Executive’s express written consent :

(i) the Covered Executive has suffered a material reduction in any of the duties, authority and/or responsibilities attached to the Covered Executive’s offices and positions in the Company Group ;

(ii) a material reduction in the Covered Executive’s base salary except for across-the-board salary reductions similarly affecting all or substantially all senior management employees  of the Company Group ; or

(iii) the Company shall require the Covered Executive to have his or her principal location of work changed to any location which is more than 25 miles from the location of the Covered Executive’s then principal place of employment.

For purposes of Section 2(l)(i), a change in the reporting relationship, or a change in a title will not, by itself, be sufficient to constitute a material diminution of responsibilities, authority or duty.

(m) “Good Reason Process” shall mean:

(i) the Covered Executive reasonably determines in good faith that a

 


 

“Good Reason” condition has occurred;

(ii) the Covered Executive notifies the Company in writing of the occurrence of such Good Reason condition within 60 days of the first occurrence of such condition, detailing such condition with specificity;  

(iii) the Covered Executive cooperates in good faith with the Company’s efforts, for a period of 30 days following such notice (the “Cure Period”), to remedy the condition;

(iv) notwithstanding such efforts, such Good Reason condition continues to exist after the end of the Cure Period ; and

(v) the Covered Executive terminates his or her employment and provides the Company Group with a Notice of Termination with respect to such termination, each within 30 days after the end of the Cure Period. 

If the Company cures the Good Reason condition before the Covered Executive so terminates his or her employment, Good Reason shall be deemed not to have occurred.

(n) “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Plan relied upon for the termination of a Covered Executive’s employment and the Date of Termination.

(o) “Participation Agreement” shall mean an agreement between a Covered Executive and the Company that acknowledges the Covered Executive’s participation in the Plan.  

(p) Restrictive Covenants”   shall mean any confidentiality, invention assignment, non-competition or non-solicitation (whether of employees, independent contractors, customers or suppliers) or similar obligations of the Covered Executive to any member of the Company Group set forth in an agreement between a Covered Executive and a member of the Company Group.

3. Administration of the Plan .  

(a) Administrator .  The Plan shall be administered by the Administrator.

(b) Powers of Administrator .  The Administrator shall have all powers necessary to enable it properly to carry out its duties with respect to the complete control of the administration of the Plan.  Not in limitation, but in amplification of the foregoing, the Administrator shall have the power and authority in its discretion to:

(i) construe the Plan to determine all questions that shall arise as to interpretations of the Plan’s provisions;

(ii) determine which individuals are and are not Covered Executives, determine the benefits to which any Covered Executives may be entitled, the eligibility

 


 

requirements for participation in the Plan and all other matters pertaining to the Plan;

(iii) adopt amendments to the Plan which are deemed necessary or desirable to comply with all applicable laws and regulations, including but not limited to Code Section 409A and the guidance thereunder;

(iv) make all determinations it deems advisable for the administration of the Plan, including the authority and ability to delegate administrative functions to a third party;

(v) decide all disputes arising in connection with the Plan; and

(vi) otherwise supervise the administration of the Plan. 

(c) All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Covered Executives.

4. Eligibility .  All Covered Executives who have executed and submitted to the Company a Participation Agreement, and satisfied such other requirements as may be determined by the Administrator, are eligible to participate in the Plan.  Notwithstanding the foregoing, the Administrator may determine at any time that a Covered Executive should no longer be designated as such as a result of a material change in such Covered Executive’s role, and such individual shall cease to be eligible to participate in the Plan upon the Administrator taking action by resolution to update the applicable Exhibit hereto. 

5. Termination Benefits Generally .  If a Covered Executive’s employment with any member of the Company Group is terminated for any reason, the member of the Company Group that employs the Covered Executive shall pay or provide to the Covered Executive (i) any Base Salary earned by the Covered Executive through the Date of Termination, unpaid expense reimbursements due to the Covered Executive (subject to, and in accordance with, the policies and requirements regarding reimbursement of expenses) and unused paid time off, if applicable, that accrued for the benefit of the Covered Executive through the Date of Termination on or before the time required by law but in no event more than 30 days after the Executive’s Date of Termination; and (ii) any vested benefits the Covered Executive may have under any employee benefit plan of any member of the Company Group through the Date of Termination, which vested benefits shall be paid and/or provided in accordance with the terms of such employee benefit plans (collectively, the “Accrued Benefits”). 

6. Termination upon the Executive’s Death or Disability .  If the Covered Executive’s employment with the Company Group is terminated due to his or her death or Disability, the Covered Executive or the Covered Executive’s estate, if applicable, shall receive (i) the Accrued Benefit; (ii) any vested benefits that the Executive or the Executive’s estate may be entitled to receive under any applicable equity or other plans (including the Company’s 2016 Share Option and Incentive Plan, as amended from time to time), and (iii) a prorated portion of the Covered Executive’s target bonus for the year in which the Date of Termination occurs, prorated for the portion of the year through the Date of Termination (based on the number of days elapsed).

 


 

7. Termination by the Company Without Cause, or by the Covered Executive with Good Reason, Not in Connection with a Change in Control .  If (i)  the employment of the Covered Executive is terminated by (A) any member of the Company Group without Cause, or (B) the Covered Executive for Good Reason, and (ii) such termination occurs outside of the Change in Control Period, then with respect to such Covered Executive, in addition to the Accrued Benefits, subject to the Covered Executive signing a separation agreement containing, among other provisions, a general release of claims in favor of the Company Group and related persons and entities, confidentiality, return of property, non-disparagement provisions and the other provisions set forth in Exhibit B to this Plan and such other provisions as are mutually agreed upon by the Company and the Covered Executive (the “Separation Agreement and Release”) and the Separation Agreement and Release becoming irrevocable within the time period set forth in the Separation Agreement and Release (but in no event later than 60 days after the Date of Termination) (the “Release Requirement”):

(a) the member of the Company Group that employs the Covered Executive shall pay the Covered Executive a single lump sum cash amount equal to the Covered Executive’s then current annual Base Salary and target bonus for the year in which the Date of Termination occurs;

(b) if the Covered Executive was participating in the group health plans of a member of the Company Group immediately prior to the Date of Termination and elects COBRA health plan continuation, then, subject to the Covered Executive’s copayment of premium amounts at the active employees’ rate, the member of the Company Group that employs the Covered Executive shall pay the remainder of the premiums for the Covered Executive’s participation in such group health plans pursuant to COBRA until the earliest of (i) 12 months following the Date of Termination, (ii) the expiration of the Covered Executive’s rights under COBRA, or (iii) the Covered Executive’s eligibility for group health plan coverage through other employment.  The Covered Executive shall promptly respond fully to any reasonable inquiries related to eligibility for other group health plan coverage and shall promptly report to any member of the Company Group if the Covered Executive becomes eligible for such coverage.  Notwithstanding the foregoing, if the Company determines at any time that its payments pursuant to this paragraph may be taxable income to the Covered Executive, it may convert such payments to payroll payments directly to the Covered Executive on the regular payroll dates, which shall be subject to tax-related deductions and withholdings; and

(c) notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement, the Covered Executive shall be entitled to 12 months of additional vesting of all stock options and other stock-based awards held by the Covered Executive, measured from the Date of Termination. Such additional vesting shall be immediately accelerated, and the underlying option or stock-based award shall accordingly become exercisable or nonforfeitable, as of the Date of Termination; provided , that (i) the performance conditions applicable to any stock options and other stock-based awards subject to performance conditions will be deemed satisfied at the target level specified in the terms of the applicable award agreement to the extent that such awards are accelerated as provided herein, and (ii) any termination or forfeiture of the unvested portion of any stock options and other stock-based awards held by the Covered Executive that otherwise would have occurred on or within 60 days after the Date of Termination will be delayed until the 60th day after the Date of Termination

 


 

(but in no event later than the expiration date thereof) and will only occur to the extent such portion of the stock options and other stock-based awards does not vest pursuant to this section.

The amounts payable under this Section 7 shall be paid or commence to be paid within 60   days after the Date of Termination; provided, however , that if the 60-day period begins in one calendar year and ends in a second calendar year, such amounts shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further , that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination.  Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2).

Notwithstanding the foregoing, if the Covered Executive breaches any of the Restrictive Covenants, all payments under this Section 7 shall immediately cease.

For the avoidance of doubt, a non-renewal of the Plan does not entitle any Covered Executive to the severance pay and benefits under Section 7 of the Plan.

8. Termination by the Company Without Cause, or by the Executive with Good Reason, in Connection with a Change in Control .  If (i)  the employment of the Covered Executive is terminated (A) by any member of the Company Group without Cause, death or disability or (B) by the Covered Executive for Good Reason, and (ii) such termination occurs during the Change in Control Period, then with respect to such Covered Executive, in addition to the Accrued Benefits, subject to his or her satisfaction of the Release Requirement:

(a) the member of the Company Group that employs the Covered Executive shall pay the Covered Executive a lump sum in cash in an amount equal to the Covered Executive’s target bonus for the year in which the Date of Termination occurs, prorated for the portion of the year through the Date of Termination (based on the number of days elapsed);

(b) the member of the Company Group that employs the Covered Executive shall pay the Covered Executive a single lump sum cash amount equal to the Covered Executive’s then current annual Base Salary and target bonus for the year in which the Date of Termination occurs ;  

(c) notwithstanding anything to the contrary in any applicable option agreement or stock-based award agreement, the Applicable Percentage of the outstanding and unvested stock options and other stock-based awards held by the Covered Executive shall immediately become exercisable and vested as of the Date of Termination;   provided , that (i)  the performance conditions applicable to any stock options and other stock-based awards subject to performance conditions will be deemed satisfied at the target level specified in the terms of the applicable award agreement to the extent that such awards are accelerated as provided herein, and (ii) any   termination or forfeiture of the unvested portion of any stock options and other stock-based awards held by the Covered Executive that otherwise would have occurred on or within 60 days after the Date of Termination will be delayed until the 60th day after the Date of Termination (but in no event later than the expiration date thereof) and will only occur to the extent such portion of the stock options and other stock-based awards does not vest pursuant to this section; and

 


 

(d) if the Covered Executive was participating in the group health plans of a member of the Company Group immediately prior to the Date of Termination and elects COBRA health continuation, then, subject to the Covered Executive’s copayment of premium amounts at the active employees’ rate, the member of the Company Group that employs the Covered Executive shall pay the remainder of the premiums for the Covered Executive’s participation in such group health plans pursuant to COBRA until the earliest of (i) 12 months following the Date of Termination, (ii) the expiration of the Covered Executive’s rights under COBRA, or (iii) the Covered Executive’s eligibility for group health plan coverage through other employment.  The Covered Executive shall promptly respond fully to any reasonable inquiries related to eligibility for other group health plan coverage and shall promptly report to any member of the Company Group if the Covered Executive becomes eligible for such coverage.  Notwithstanding the foregoing, if the Company determines at any time that its payments pursuant to this paragraph may be taxable income to the Covered Executive, it may convert such payments to payroll payments directly to the Covered Executive on the regular payroll dates, which shall be subject to tax-related deductions and withholdings.

The amounts payable under this Section 8 shall be paid or commence to be paid within 60   days after the Date of Termination; provided, however , that if the 60-day period begins in one calendar year and ends in a second calendar year, such amounts shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further , that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination.  Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2).

For the avoidance of doubt, the severance pay and benefits provided in this Section 8 shall apply in lieu of, and expressly supersede, the provisions of Section 7, and no Covered Executive shall be entitled to the severance pay and benefits under both Section 7 and 8 hereof.

Notwithstanding the foregoing, if the Covered Executive breaches any of the Restrictive Covenants, all payments under this Section 8 shall immediately cease.

In addition, for the avoidance of doubt, a non-renewal of the Plan does not entitle any Covered Executive to the severance pay and benefits under Section 8 of the Plan.

9. Additional Limitation.

(a) Anything in this Plan to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by any member of the Company Group to or for the benefit of the Covered Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, calculated in a manner consistent with Section 280G of the Code and the applicable regulations thereunder (the “Aggregate Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which the Covered Executive becomes subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction shall only occur if it would result in the Covered Executive receiving a higher After Tax Amount (as defined below) than the Covered Executive would receive if the Aggregate

 


 

Payments were not subject to such reduction.  In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological order beginning with the Aggregate Payments that are to be paid the furthest in time from consummation of the transaction that is subject to Section 280G of the Code:  (i) cash payments not subject to Section 409A of the Code; (ii) cash payments subject to Section 409A of the Code; (iii) equity-based payments and acceleration; and (iv) non-cash forms of benefits; provided that in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c) shall be reduced before any amounts that are subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c).

(b) For purposes of this Section 8, the “After Tax Amount” means the amount of the Aggregate Payments less all federal, state, and local income, excise,  employment and social security taxes imposed on the Covered Executive as a result of the Covered Executive’s receipt of the Aggregate Payments.  For purposes of determining the After Tax Amount, the Covered Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes and social security at the highest marginal rates of individual taxation in each applicable state and locality, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(c) The determination as to whether a reduction in the Aggregate Payments shall be made pursuant to Section 8(a) shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to the Company and the Covered Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or the Covered Executive.  Any determination by the Accounting Firm shall be binding upon the Company and the Covered Executive.

10. Restrictive Covenant Agreement; Arbitration

(a) Restrictive Covenant Agreement .  As a condition to participating in the Plan, each Covered Executive shall enter into and continue to comply with the terms and conditions contained in an agreement that sets forth the Covered Executive’s Restrictive Covenants between the Covered Executive and a member of the Company Group and such other agreement(s) as designated in the applicable Participation Agreement.  If a Covered Executive has not entered into such an agreement with a member of the Company Group, he or she shall enter into such agreement prior to participating in the Plan. 

(b) Arbitration Agreement .  As a condition to participating in the Plan, the applicable Participation Agreement may provide that the terms, conditions and procedures set forth in an Arbitration Agreement or similar agreement entered into between the Covered Executive and the Company shall apply in all respects to any controversies, claims or disputes arising under or related to the Plan.   If a Covered Executive has not entered into an Arbitration Agreement or similar agreement with the Company, he or she shall enter into such agreement prior to participating in the Plan.

 


 

11. Withholding .  All payments made by the Company Group under this Plan shall be subject to any tax or other amounts required to be withheld by the Company Group under applicable law.

12. Section 409A.

(a) Anything in this Plan to the contrary notwithstanding, if at the time of the Covered Executive’s “separation from service” within the meaning of Section 409A of the Code, the Company determines that the Covered Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Covered Executive becomes entitled to under this Plan would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (i) six months and one day after the Covered Executive’s separation from service, or (ii) the Covered Executive’s death.  If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule.

(b) The parties intend that this Plan will be administered in accordance with Section 409A of the Code and that all amounts payable hereunder shall be exempt from the requirements of such section as a result of being “short term deferrals” for purposes of Section 409A of the Code to the greatest extent possible.  To the extent that any provision of this Plan is not exempt from Section 409A of the Code and ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner to comply with Section 409A of the Code.  Each payment pursuant to this Plan is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A‑2(b)(2).  The parties agree that this Plan may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

(c) To the extent that any payment or benefit described in this Plan constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Covered Executive’s termination of employment, then such payments or benefits shall be payable only upon the Covered Executive’s “separation from service.”  The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

(d) All in-kind benefits provided and expenses eligible for reimbursement under this Plan shall be provided by the Company or incurred by the Covered Executive during the time periods set forth in this Plan.  All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred.  The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect

 


 

the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses).  Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

(e) The Company makes no representation or warranty and shall have no liability to the Covered Executive or any other person if any provisions of this Plan are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section. 

13. Notice and Date of Termination

(a) Notice of Termination .  A termination of the Covered Executive’s employment shall be communicated by Notice of Termination from a member of the Company Group to the Covered Executive or vice versa in accordance with this Section 12. 

(b) Notice to the Company Group .  Any notices, requests, demands, and other communications provided for by this Plan shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage prepaid, to a Covered Executive at the last address the Covered Executive has filed in writing with a member of the Company Group, or to the Company Group at the following physical or email address (or such other address as the Company may provide by notice to the Covered Executives):

For employees of Quench USA, Inc. or any of its subsidiaries:

 

Quench USA, Inc.

630 Allendale Road, Suite 200

King of Prussia, PA 19406

Attention: Chief Financial Officer

e-mail:  tcbreslin@quenchonline.com

 

For employees of Seven Seas Water Corporation or any of its subsidiaries or affiliates (other than Quench USA, Inc.):

 

Seven Seas Water Corporation

14400 Carlson Circle

Tampa, FL 33626

Attention: Chief Financial Officer

e-mail:  lmuller@7seaswater.com

 

14. No Mitigation .  The Covered Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Covered Executive by the Company under this Plan. 

15. Benefits and Burdens .  This Plan shall inure to the benefit of and be binding upon the Company and the Covered Executives, their respective successors, executors, administrators, heirs and permitted assigns.  In the event of a Covered Executive’s death after a termination of

 


 

employment but prior to the completion by the Company of all payments due to him or her under this Plan, the Company shall continue such payments to the Covered Executive’s beneficiary designated in writing to the Company prior to his or her death (or to his or her estate, if the Covered Executive fails to make such designation).

16. Enforceability .  The provisions of this Plan shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions of this Plan unless such invalidity or unenforceability, after taking into account the mitigation contemplated by the next sentence, deprives a party of a material benefit contemplated by this Plan.  If any provision of this Plan, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Plan and the application of such provision to other persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

17. Waiver .  No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party.  The failure of any party to require the performance of any term or obligation of this Plan, or the waiver by any party of any breach of this Plan, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

18. Non-Duplication of Benefits and Effect on Other Plans .  Notwithstanding any other provision in the Plan to the contrary, the benefits provided hereunder shall be in lieu of any other severance payments and/or benefits provided by the Company, including, without limitation, any such payments and/or benefits pursuant to an employment agreement or offer letter between the Company and the Covered Executive. 

19. No Contract of Employment .  Nothing in this Plan shall be construed as giving any Covered Executive any right to be retained in the employ of the Company or shall affect the terms and conditions of a Covered Executive’s employment with the Company.

20. Amendment or Termination of Plan .  The Administrator may amend or modify the Plan at any time or from time to time and may terminate the Plan, which amendments, modifications or termination shall not require the consent of any Covered Executive but shall be binding on all Covered Executives and shall apply to the extent applicable without the consent of the Covered Executives; provided, however , that the consent of a Covered Executive whose benefits under the Plan are adversely affected by such amendment, modification or termination shall be required unless the Administrator determines that the amendment, modification or termination, taking into account any related actions, would not materially and adversely affect the Covered Executive’s benefits under the Plan and any related actions in the aggregate.  If the Administrator amends, modifies or terminates the Plan or the Plan is not renewed as contemplated by Section 25, the Administrator shall provide written notice to the Covered Executives of the amendment, modification, termination non-renewal of the Plan, including the details thereof.

 


 

21. Governing Law The law, including the statutes of limitation, of the Commonwealth of Pennsylvania shall govern this Plan, the interpretation and enforcement of its terms and any claim or cause of action (in law or equity), controversy or dispute arising out of or related to it or its negotiation, execution or performance, whether based on contract, tort, statutory or other law, in each case without giving effect to any conflicts-of-law or other principle requiring the application of the law of any other jurisdiction.

22. Obligations of Successors .  In addition to any obligations imposed by law upon any successor to the Company, any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company shall expressly assume and agree to perform this Plan in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

23. Gender Neutral .  Wherever used herein, a pronoun in the masculine gender shall be considered as including the feminine gender unless the context clearly indicates otherwise.

24. Legal Fees and Expenses .  

(a) Except as provided in Section 24(b), each party shall pay or cause to be paid, and shall be solely responsible for, any and all attorneys’ and related fees and expenses incurred by it in connection with any dispute arising with respect to this Plan;   provided, however , that if the Covered Executive prevails in any such dispute, the Company shall reimburse the Covered Executive for any and all such reasonable fees and expenses incurred by the Covered Executive in connection with such dispute. 

(b) If, within the Change in Control Period, the Covered Executive’s employment is terminated by the Company without Cause or the Covered Executive terminates his employment for Good Reason, it is the intent of the parties that the Covered Executive not be required to incur the expenses associated with the enforcement of his rights under this Plan by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Covered Executive hereunder. Accordingly, if it should appear to the Covered Executive that, after a Change in Control, the Company has failed to comply with any of its obligations under this Plan or if the Company or any other person takes any action to declare this Plan void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Covered Executive the benefits intended to be provided to the Covered Executive hereunder, the Company irrevocably authorizes the Covered Executive from time to time to retain counsel of his choice, at the expense of the Company as hereinafter provided, to represent the Covered Executive in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, shareholder or other person affiliated with the Company, in any jurisdiction. If a Change in Control has occurred, the Company shall pay or cause to be paid and shall be solely responsible for any and all reasonable attorneys’ and related fees and expenses incurred by the Covered Executive as a result of the Company’s failure to perform this Plan or any provision hereof or as a result of the Company or any person contesting the validity or enforceability of this Plan or any provision hereof as aforesaid.

 


 

25. Effectiveness and Term .  This Plan is effective as of April 14, 2019 (the “Effective Date”) and shall continue for a three-year period (the “Initial Term”), unless sooner terminated in accordance with Section 20, with such term to continue following the Initial Term for additional three-year periods, unless sooner terminated in accordance with Section 20 (each such three-year extension, a “Renewal”), subject to approval by the Administrator of each applicable Renewal.

 

 

 


 

 

Form of Key Executive Severance Plan Participation Letter

 

[DATE], 20__

 

[NAME]

[ADDRESS]

[ADDRESS]

[ADDRESS]

 

Re:   Key Executive Severance Plan

 

Dear [NAME],

 

AquaVenture Holdings Limited (the “Company”) is pleased to inform you that you have been designated as an eligible participant in the Company’s Key Executive Severance Plan, as amended from time to time (the “Severance Plan”), a copy of which (excluding Exhibit  A thereto) accompanies this letter.

 

Under certain circumstances, you will be eligible for certain severance benefits as described in the Severance Plan.  Any and all such severance benefits are subject to the terms and conditions of the Severance Plan.

 

As a condition to participate in the Severance Plan, you hereby acknowledge that the severance benefits that may be provided to you under the Severance Plan and as set forth herein will supersede and replace any severance benefit agreement, plan, policy or practice previously maintained by any member of the Company Group (as defined in the Severance Plan) that may have been applicable to you, including, without limitation, any severance benefits under any individually negotiated employment agreement, offer letter, or equity award agreement between you and any member of the Company Group.  For the avoidance of doubt, you hereby agree and acknowledge that any employment agreement or offer letter (in each case as amended) between you and any member of the Company Group be and is hereby terminated and shall have no further force or effect.  In addition, as a condition to participate in the Severance Plan, you shall enter into and comply with a new Key Executive Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement between you and one or more members of the Company Group.  Also as a condition to participate in the Severance Plan, you will devote 100% of your business time, energies, skills and attention to the business and affairs of the Company Group, provided that you may engage in other outside activities that (whether individually or in the aggregate) do not materially interfere with the fulfillment of your obligations and responsibilities to the Company Group.

 

Any controversy or claim arising out of or relating to the Severance Plan, the interpretation and enforcement of its terms and any claim or cause of action (in law or equity), controversy or dispute arising out of or related to the Severance Plan or your participation in the Severance Plan, whether based on contract, tort, statutory or other law, or otherwise arising out of your employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest

 

 


 

 

extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in the [for the employees of the Quench business – Philadelphia, Pennsylvania/ for the employees of the Seven Seas Water business – Tampa, Florida] metropolitan area in accordance with the Employment Arbitration Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  Except as otherwise provided in the Severance Plan (including Section 24), the arbitrator shall award reasonable attorneys’ fees and costs to the prevailing party in any such arbitration; provided, however , that such award of attorneys’ fees and costs shall not apply to claims based on any statute, except to the extent that the statute authorizes an award of attorneys’ fees.  In the event that any person or entity other than the Covered Executive or any member of the Company Group may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person or entity’s agreement.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  This paragraph shall be specifically enforceable. Notwithstanding the foregoing, this paragraph shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this paragraph.

 

To the extent that any court action is permitted consistent with or to enforce the preceding paragraph of this letter, the parties hereby consent to the jurisdiction of the courts of the [for the employees of the Quench business – Commonwealth of Pennsylvania and the United States District Court for the Eastern District of Pennsylvania/ for the employees of the Seven Seas Water business – State of Florida and the United States District Court for the Middle District of Florida].  Accordingly, with respect to any such court action, the parties (a) submit to the personal jurisdiction of such courts; (b) consent to service of process; and (c) waive any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process. 

 

Please review the information in this letter and the Severance Plan carefully.  If you have any questions regarding the letter or the Severance Plan, please contact the Company’s _________ at ________________.

 

 


 

 

To accept the terms of this letter and participate in the Severance Plan, please sign and date this letter in the space provided below and return the signed copy to the Company’s _______________ by [DATE].

 

 

 

AQUAVENTURE HOLDINGS LIMITED

 

 

 

 

 

 

Name:

 

Title:

 

 

 

AGREED AND ACCEPTED:

 

 

 

 

 

 

Name:

 

Date:

 

 

 

 


 

Exhibit A

Covered Executives

 

 

Individual

Title

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Exhibit B

Form of Separation Agreement and Release

This Separation Agreement and Release (the “Separation Agreement”), is entered into by and among AquaVenture Holdings Limited, a business company organized under the laws of the British Virgin Islands (the “Company”),  [name the member of the Company Group that employs the Covered Executive], a __________ and wholly owned subsidiary of the Company (“Employer”), and [name the Covered Executive] (the “Covered Executive”).  This Separation Agreement is effective as of the Effective Date, as defined below.

WHEREAS, the Covered Executive is a participant in the Company’s Key Executive Severance Plan (the “Plan”);

WHEREAS, [the Company and Employer wish to terminate the Covered Executive’s employment with the Company and Employer without Cause][the Covered Executive wishes to terminate his employment with the Company and Employer for Good Reason];

WHEREAS, the execution of this Separation Agreement is a condition precedent to the payment of severance and other benefits set forth in the Plan; and

WHEREAS, in consideration for the Covered Executive’s signing of this Separation Agreement, the Company will provide the Covered Executive with severance and other benefits pursuant to the Plan;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound hereby, the Company, Employer and the Covered Executive agree as follows:

1. The Covered Executive, for himself, the Covered Executive’s spouse, heirs, administrators, children, representatives, executors, successors, assigns, and all other persons claiming through the Covered Executive, if any (collectively, “Releasors”), does hereby release, waive, and forever discharge the Company, Employer and each other member of the Company Group and each of its and their respective agents, subsidiaries, parents, affiliates, related organizations, employees, officers, directors, attorneys, successors, and assigns (collectively, the “Releasees”) from, and does fully waive any obligations of Releasees to Releasors for, any and all liability, actions, charges, causes of action, demands, damages, or claims for relief, remuneration, sums of money, accounts or expenses (including attorneys’ fees and costs) of any kind whatsoever, whether known or unknown or contingent or absolute, which heretofore have been or which hereafter may be suffered or sustained, directly or indirectly, by Releasors in consequence of, arising out of, or in any way relating to: (a) the Covered Executive’s employment with the Company, Employer or any other member of the Company Group; (b) the termination of the Covered Executive’s employment with the Company, Employer or any other member of the Company Group; (c) any employment agreement or offer letter; or (d) any events, acts, agreements or conduct occurring on or prior to the date of this Separation Agreement.  The foregoing release, discharge and waiver includes, but is not limited to, all claims and any obligations or causes of action arising from such claims, under common law including wrongful or retaliatory discharge, breach of contract (including but not limited to any claims under any

 

 


 

 

 

employment agreement or offer letter and any claims under any restricted stock or stock option or similar agreements between the Covered Executive, on the one hand, and the Company, Employer or any other member of the Company Group, on the other hand) and any action arising in tort including libel, slander, defamation or intentional infliction of emotional distress, and claims under any federal, state or local statute including the Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871 (42 U.S.C. § 1981), the National Labor Relations Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, or the discrimination or employment laws of any state or municipality, and/or any claims under any express or implied contract which any of the Releasors may claim existed with any of the Releasees.  This also includes a release of any claims for wrongful discharge and all claims for alleged physical or personal injury, emotional distress relating to or arising out of the Covered Executive’s employment with the Company, Employer or any other member of the Company Group or the termination of that employment; and any claims under the WARN Act or any similar law, which requires, among other things, that advance notice be given of certain work force reductions.  This release and waiver does not apply to:  (i) any right to indemnification now existing under any statute, the charter or bylaws (or equivalent constituent documents) of the Company, Employer or any other member of the Company Group, or written indemnification agreement between the Covered Executive and the Company, Employer or any other member of the Company Group; (ii) any rights to the receipt of employee benefits under any “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act, 29 U.S.C. § 1002(3), which vested on or prior to the date of this Separation Agreement; (iii) the right to receive severance and other benefits under the Plan; (iv) any right to employee-paid continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act, if available; and (v) any claim that cannot be waived by law.

2. The Covered Executive represents and warrants that he has been paid for all time worked and has received all the leave of absence and leave benefits and protections for which the Covered Executive was eligible.

3. Nothing contained in this Separation Agreement limits the Covered Executive’s ability to file a charge or complaint with any federal, state or local governmental agency or commission (a “Government Agency”).  In addition, nothing contained in this Separation Agreement limits the Covered Executive’s ability to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including the Covered Executive’s ability to provide documents or other information, without notice to the Company, Employer or any other member of the Company Group, nor does anything contained in this Separation Agreement apply to truthful testimony in litigation.  If the Covered Executive files any charge or complaint with any Government Agency and if the Government Agency pursues any claim on the Covered Executive’s behalf, or if any other third party pursues any claim on the Covered Executive’s behalf, the Covered Executive waives any right to monetary or other individualized relief (either individually or as part of any collective or class action); provided that nothing in this Separation Agreement limits any right you may have to receive a whistleblower award or bounty for information provided to the Securities and Exchange Commission. 

 


 

 

 

4. The Covered Executive agrees never to seek personal recovery from Releasees in any forum for any claim covered by the above waiver and release language.  If the Covered Executive violates this Separation Agreement by suing Releasees, other than under the ADEA or as otherwise set forth in Section 1 hereof, the Covered Executive shall be liable to the Company for its reasonable attorneys’ fees and other litigation costs incurred in defending against such a suit to the extent permitted by law.

5. The provisions of the second to last paragraphs of Sections 7 and 8, Sections 3 and  9 through 24 of the Plan, the arbitration and consent to jurisdiction clauses of the Covered Executive’s participation letter,  any written indemnification agreement between the Covered Executive and the Company, Employer or any other member of the Company Group, and the Key Executive Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement between the Covered Executive and one or more members of the Company Group, shall continue in full force and effect in accordance with their terms.

6. The Covered Executive acknowledges that he must return all property of the members of the Company Group as of the Date of Termination and that the Covered Executive will not be in possession of any property of any member of the Company Group, including, but not limited to, any keys, computer disks, flash drives, credit cards, identification cards, computers, tablets, phones, blackberries or other smartphones, proprietary materials, contracts, spreadsheets, financial data, designs, business plans, vendor lists, supplier lists, and other files and documents containing confidential or proprietary information following the Date of Termination.

7. The Covered Executive shall not make any negative or disparaging statements about, or directly or indirectly take, support, encourage or participate in any action or attempted action which in any way would damage the reputation of, any of the Releasees, including but not limited to disparaging or criticizing any products or services of any of the Releasees, except as required by law. 

8. The Covered Executive acknowledges and recites that:

(a) the Covered Executive has executed this Separation Agreement knowingly and voluntarily and is knowingly and voluntarily waiving any rights he has under the ADEA;

(b) the Covered Executive has read and understands this Separation Agreement in its entirety;

(c) the Covered Executive has been advised and directed in writing (and this subparagraph (c) constitutes such written direction) to seek legal counsel and any other advice the Covered Executive wishes with respect to the terms of this Separation Agreement before executing it;

(d) the Covered Executive’s execution of this Separation Agreement has not been forced by any employee or agent of the Company, Employer or any member of the Company Group, and the Covered Executive has had an opportunity to negotiate about the terms of this Separation Agreement;

 


 

 

 

(e) the Covered Executive’s waiver does not apply to any rights or claims that arise after the date the Covered Executive signs this Separation Agreement;

(f) the Covered Executive has been offered twenty one (21) calendar days after receipt of this Separation Agreement to consider its terms before executing it;1 and

(g) the payment of severance pursuant to Section 7 or 8 of the Plan is consideration for the Covered Executive’s covenants and agreements set forth in this Separation Agreement and is in addition to anything of value to which the Covered Executive is otherwise entitled.

9. Except for the application of pre-emptive Federal law, the law, including the statutes of limitation, of the [Commonwealth of   Pennsylvania/State of Florida] shall govern this Separation Agreement, the interpretation and enforcement of its terms and any claim or cause of action (in law or equity), controversy or dispute arising out of or related to it or its negotiation, execution or performance, whether based on contract, tort, statutory or other law, in each case without giving effect to any conflicts-of-law or other principle requiring the application of the law of any other jurisdiction.

10. The Covered Executive shall have seven (7) days from the date s/he executes this Separation Agreement to revoke his waiver of any ADEA claims by providing written notice of the revocation to the Company and Employer.  In the event of such revocation, the terms of the Plan shall govern.  This Separation Agreement shall be effective on the first business day following the expiration of such seven (7) day period (the “Effective Date”).

11. Capitalized terms not defined in this Separation Agreement have the meanings given in the Plan.

12. This Separation Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

PLEASE READ CAREFULLY.  THIS AGREEMENT INCLUDES A WAIVER AND RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.  To signify their agreement to the terms of this Separation Agreement, the parties have executed this Separation Agreement on the dates set forth under their signatures, which appear below.

 

AQUAVENTURE HOLDINGS LIMITED

 

 

 

 

 

By:

 

 

 

 

 


1 In the event the Company determines that the Executive’s termination constitutes “an exit incentive or other employment termination program offered to a group or class of employees” under the ADEA, the Company will provide the Executive with:  (1) 45 days to consider the General Release; and (2) the disclosure schedules required for an effective release under the ADEA.

 


 

 

 

 

 

 

 

 

 

 

 

[Name of Covered Executive]

 

 

 

 

Date:

 

 

Date:

 

 

 

 

 

[EMPLOYER]

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 


Exhibit 10.4

AQUAVENTURE HOLDINGS LIMITED

 

Key Executive Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement

 

In consideration and as a condition of my employment or continued employment by AquaVenture Holdings Limited (the “Company”) or one or more of its direct or indirect subsidiaries, and in consideration of my participation in the Company’s Key Executive Severance Plan (the “Plan”) as a Covered Executive (as defined in the Plan), I (“employee”) agree:

 

(a)

to disclose and assign to the Company (or as the Company may direct) as its exclusive property, all inventions, discoveries, innovations, improvements, trade secrets and technical or business information which I may solely or jointly develop, conceive, reduce to practice or author during the period of my employment (1) that relate to the business or the present or demonstrated or reasonably foreseeable future research or development of the Company or its direct or indirect subsidiaries or affiliates (collectively, the “Company Group”), or (2) that result from or are suggested by any work that I may do for any member of the Company Group or (3) that are otherwise made through the use of any time, equipment, supplies, facilities, material or secret* or confidential* information or data of any member of the Company Group.   To the extent that any court of competent jurisdiction finds that any provision of this paragraph is unenforceable because it requires the assignment of any invention in contravention of the law or public policy of that jurisdiction, this paragraph shall be interpreted to impose only the maximum permissible assignment obligation;

 

(b)

that all original works of authorship that are made by me (solely or jointly with others) within the scope of my employment and that are protectable by copyright are “works made for hire,” as that term is defined in the United States Copyright Act (17 U.S.C. Sec.101), and I further agree, to the extent any such work is determined not to be a “work made for hire,” that I will disclose and assign to the Company (or as the Company may direct) as its exclusive property any such original work of authorship;

 

(c)

to execute, upon the request of the Company, all necessary papers and otherwise provide proper assistance (at the Company’s expense), during and subsequent to my employment, to enable the Company to obtain, for itself or any member of the Company Group or their respective nominees, patents, copyrights, or other legal protection for such inventions, discoveries, innovations, improvements, original works of authorship, trade secrets and technical or business information in any and all countries;

 

(d)

to make and maintain for the Company adequate and current written records of all such inventions, discoveries, innovations, improvements, original works of authorship, trade secrets and technical or business information;

 

(e)

at the Company’s request, or upon any termination of my employment, to deliver to the Company (or as the Company may direct) promptly all items that belong to any member of the Company Group or that by their nature are for the use of employees of members of the Company Group only, including, without limitation, all written and other materials that are of a secret* or confidential* nature relating to the business of any member of the Company Group;

 

(f)

not to use, publish or otherwise disclose (except as my duties to any member of the Company Group may require), either during or subsequent to my employment, any secret* or confidential* information or data of any member of the Company Group or any information or data of others that any member of the Company Group is obligated to maintain in confidence;

 

(g)

not to disclose or use in my work with the members of the Company Group any secret* or confidential* information of others (including any prior employers), or any inventions or innovations of my own that are not included within the scope of this agreement;

 

(h)

that the Company may, at any time and without further consent, access and monitor my usage of information and resources of any member of the Company Group, including but not limited to: computers, computer software, electronic mail, on-line services, voice mail, facsimile machines, telephones and photocopiers;

 


 

(i)

that my employment with the members of the Company Group is “at will” and that both the employing member of the Company Group and I have the right to terminate my employment at any time, with or without advance notice and with or without cause;

 

(j)

that during my employment and for a period of 12 months following the termination of my employment for any reason ,   without first notifying the Company in writing and obtaining its prior written consent (which may be withheld, delayed or conditioned for any reason or for no reason in the Company’s sole and absolute discretion), I (i) will not, directly or indirectly, whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, engage, participate, assist or invest in any Competing Business (as hereinafter defined); (ii) will refrain from directly or indirectly retaining, employing, attempting to employ or recruiting any person who is an employee or independent contractor of any member of the Company Group, or otherwise soliciting, inducing or influencing any person to leave employment with any member of the Company Group (other than terminations of employment of subordinate employees undertaken in the course of my employment with any member of the Company Group); and (iii) will refrain from soliciting or encouraging any customer or supplier to terminate or otherwise modify adversely its business relationship with any member of the Company Group.  I understand that the restrictions set forth in this Section (j) are intended to protect the interests of the Company Group in its secret* or confidential* information or data and established employee, independent contractor, customer and supplier relationships and goodwill, and I  agree that such restrictions are reasonable and appropriate for this purpose.  For purposes of this agreement, the term “Competing Business” shall mean a business that is (x) competitive with any business which any member of the Company Group has conducted, or has invested significant resources in evaluating or preparing to conduct, at any time during my employment with any member of the Company Group, and (y) is conducted in any country in the world in which any member of the Company Group has conducted, or has invested significant resources in evaluating or preparing to conduct, at any time during my employment with any member of the Company Group.  Notwithstanding the foregoing, I may own up to two percent (2%) of the outstanding securities of a publicly held Person which constitutes or is affiliated with a Competing Business (each, a “Permitted Investments”).  I acknowledge and agree that if I violate any of the provisions of this Section (j), the running of the period during which the provisions of this Section (j) will apply will be extended by the time during which I engage in such violation(s).

 

This agreement supersedes and replaces any existing agreement between any member of the Company Group and me relating generally to the same subject matter.  This agreement may not be modified or terminated, in whole or part, except in writing signed by an authorized representative of the Company and me.  Discharge of my undertakings in this agreement shall be an obligation of my executors, administrators, or other legal representatives or assigns.   In the event that any court of competent jurisdiction concludes that any provision (or portion of any provision) of this agreement is unenforceable because it conflicts with the law or public policy of that jurisdiction, the parties agree that the court should first narrow or otherwise interpret the provision to the extent necessary to conform it to the law or public policy of that jurisdiction.  In the event that the court concludes that it is unable to narrow or otherwise interpret the provision so that it is neither invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

 

I represent that, except as stated below, I have no agreements with or obligations to others in conflict with the foregoing.

 

*These terms are used in the ordinary sense and do not refer to the official security classifications of the United States or other government.  The Company generally considers “secret” or “confidential” any information or data that is not generally known - regardless of whether such information or data is in oral, written, machine readable or other form.  When in doubt, you should assume that information or data is secret or confidential unless or until determined otherwise by the Company.  Without limitation, examples of information or data that may be of a secret or confidential nature are: drawings, manuals, notebooks, reports, models, inventions, formulas, processes, machines, compositions, computer programs, accounting methods, business plans and information systems.  For further information, you should consult the Company’s Chief Financial Officer.

 

[Signature Page Follows]


 

 

 

AQUAVENTURE HOLDINGS LIMITED

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Name:

 

 

 

Employee Name:     

 

 

 

 

 

 

Title:

 

 

 

 

 

 

***************************

 

The following are the only agreements to which I am a party that may be in conflict with the obligations undertaken above:

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to   Key Executive Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement