EXHIBIT 10.32



 















EXHIBIT 10.32


EMPLOYMENT AGREEMENT




     THIS EMPLOYMENT AGREEMENT is made effective, nunc pro tunc, of June 1,
2004, by and between CUNO INCORPORATED, a Delaware corporation (the “Company”), and TIMOTHY B.
CARNEY (“Executive”).



RECITALS




     WHEREAS, Executive has been promoted to Senior Vice President — Worldwide Water Group of the
Company and is an integral part of its management;



     WHEREAS, Executive and the Company desire to continue their relationship with each other under
the terms of this Agreement;



     WHEREAS, the Company wishes to ensure that Executive will not compete with the Company for a
period of two years after the last date on which he is either an employee of the Company or a
member of the Board; and



     WHEREAS, Executive is prepared to enter into this employment agreement with the Company and to
give the Company assurances it desires;



     NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein set
forth, the parties hereto have agreed and do hereby mutually agree as follows:



     1. Employment, Contract Period. During the period specified in this Section 1, the Company
shall employ Executive, and Executive shall serve the Company, on the term and subject to the
conditions set forth herein. The term of Executive’s employment hereunder shall commence as of
June 1, 2004 (the “Effective Date”) and, subject to prior termination as provided in Section 5
hereof, shall continue through November 30, 2008. The term of Executive’s employment hereunder is
sometimes hereinafter referred to as the “Contract Period.”



     2. Responsibility. At all times during the Contract Period, Executive shall serve the Company
as the Company’s Senior Vice President — Worldwide Water Group and shall (a) devote his full
business time and effort exclusively to the performance of duties as assigned to him by the Chief
Executive Officer that are normally incident to the offices of Senior Vice President  — Worldwide
Water Group, and (b) use his best efforts to promote the interests of the Company and its
affiliates.



 









 





     3. Remuneration. At all times during the Contract Period, the Company shall pay to Executive
compensation as provided in this Section 3.



     (a) Base Salary. The Corporation shall pay Executive a base salary at an annual rate of not less
than $225,000 paid at least on a monthly basis. The annual rate of base salary may be increased at
the discretion of the Compensation Committee of the Board (the “Committee”). If increased, the
annual rate of base salary may not thereafter be decreased during the term of this Agreement.




     (b) Annual Incentive Compensation. The Corporation may pay Executive an annual bonus
under the provisions of the Company’s Management Incentive Plan and the Executive Management
Incentive Plan or any successor plans but only if and when authorized by the Committee. The
Executive’s combined annual incentive compensation target shall be 60% of his base salary
(effective for the Fiscal Year beginning November 1, 2004).




     (c) Restricted Shares. Provided the Executive remains in the employ of the Company,
the Company shall grant to Executive, a total of 12,000 restricted shares of the Company’s
Common Stock, to be issued in four equal awards of 3,000 shares each — the first award to be
made on December 1, 2004, the second award to be made on December 1, 2005, the third award
to be made on December 1, 2006, and the final award to be made on December 1, 2007. Each
award shall be made pursuant to the Company’s 1996 Stock Incentive Plan, as amended, (with
4-year vesting) or any successor plan.




     (d) Options.




Provided Executive remains in the employ of the Company, the Company shall grant to
Executive options to purchase shares of the Company’s Common Stock in the form of
non-qualified stock options pursuant to the Company’s 1996 Stock Incentive Plan, as amended,
or any successor plan. The option awards shall be as follows:



	 	 	 
	Date
	 	NQSOs

	December 1, 2004

December 1, 2005

December 1, 2006

December 1, 2007

	 	10,000

10,000

12,000

12,000







The Option Price for options granted pursuant to this paragraph 3(d) shall be the closing
price of the Company’s Common Stock on the day of the grant. If the grant date falls on
Saturday, Sunday or any other day when the Company’s Common Stock is not publicly traded,
the Option Price for such grant shall be the closing price of the Company’s Common Stock on
the next day when the Stock is publicly traded.



The options awards listed above are consistent with the Company’s current compensation
strategy. This strategy may be revised in the future based on new accounting rules for
options and other factors. The Company reserves the right to grant the Executive equivalent
value in other forms of long term incentive compensation during the course of this
Agreement.



     4. Employee Benefits. Executive shall be included, to the extent eligible thereunder with
respect to the requirements applicable to all employees eligible thereunder, under any and all
existing plans (and any plans that later may be adopted) providing benefits for the Company’s
employees. These plans, include, but are not limited to:



 









 





     (a) The Company’s group life insurance plan, under which Executive shall be eligible
for life insurance equal to four times his then-current base salary as defined in the Plan
or the Group Replacement Insurance plan, at Executive’s option.




     (b) The Company’s hospitalization and medical plans, as provided to all Company
employees.




     (c) The Company’s long-term disability plan, as provided to all Company employees.




     (d) Any pension, thrift plans, profit-sharing plans, stock purchase plans, and any and all other similar or comparable benefits.



Executive shall also be provided with a suitable automobile allowance of $1,100 per month under the
terms of the Company’s executive automobile program, automobile insurance, gas and maintenance,
paid vacation of at least four weeks per year, and officers’ and directors’ liability insurance
coverage in an amount reasonably available. Executive shall also be provided tax preparation and
estate planning counsel up to $10,000 per year, not to exceed a total of $25,000 during the term of
this Agreement.



5     Termination.




     (a) Death or Disability. Executive’s employment hereunder will terminate immediately
upon Executive’s death. The Company may terminate Executive’s employment hereunder
immediately upon giving notice of termination if Executive is disabled, by reason of
physical or mental impairment, to such an extent that he has been unable to substantially
perform his duties under this Agreement for an aggregate of 180 days (whether business or
non-business days and whether or not consecutive) during any period of twelve consecutive
calendar months.




     (b) For “Cause.” The Company may terminate Executive’s employment under this Agreement
for “Cause” only on the basis of:




     (i) Executive’s willful failure substantially to perform his duties with the
Company, after a written demand for substantial performance is delivered to Executive
by the Board, which written demand specifically identifies the manner in which the
Board believes Executive has not substantially performed his duties, or




     (ii) Executive’s willful engagement in conduct materially injurious to the
Company.




For purposes of this Agreement, no act or failure to act on Executive’s part shall be considered
“willful” unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that his action or omission was in the best interest of the Company.
Executive shall not be deemed to have been terminated for Cause unless and until there shall
have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of
not less than two-thirds of the entire membership of the Board at a meeting of the Board called
and held for that purpose, finding that in good faith opinion of the Board, Executive was guilty
of conduct set forth in clause (i) or clause (ii) of this subsection 5(b) and specifying the
particulars thereof in detail. No termination of Executive’s employment by the Company for
“Cause” shall be effective unless and until it is communicated by the Company to Executive by a
written notice that refers to either or both of clause (i) and clause (ii) of this subsection
5(b) as the specific termination provision or provisions relied upon by the Company and that
sets forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision or provisions so indicated.



 









 






     (c) Without “Cause.” The Company may terminate Executive’s employment under this
Agreement without “Cause” at any time, effective at such time as the Board may specify in a
motion duly adopted by the affirmative vote of two-thirds of the members of the Board then
in office.



          6. Compensation and Benefits Following Termination Without “Cause.” If the Company terminates
Executive’s employment under this Agreement without “Cause:”




     (a) the Company shall pay to Executive, in immediately available funds, within 10 days
of the date of termination of Executive’s employment, a lump sum amount that is equal to the
sum of (A) 24 months’ of base salary at the highest rate paid to Executive before the
termination, plus (B) two times the average of the annual cash bonuses, if any, received by
Executive under the provisions of the Company’s Incentive plans or any successor plan with
respect to each of the two most recent fiscal years of the Company ended before the
termination;




     (b) the restrictions on any restricted shares held by Executive immediately before the
termination of his employment shall expire simultaneously with the termination of his
employment;




     (c) any options to purchase shares in the Company held by Executive immediately
before the termination of his employment that were not otherwise exercisable by
Executive shall be exercisable by Executive at any time during the 90-day period
beginning immediately after the date of termination of his employment; and




     (d) with the exception of health and medical benefits, which the Company will provide
for a period of one year after termination, the Company shall not be obligated to pay any
compensation, benefits, or perquisites to Executive by reason of this Agreement after the
termination of his employment.



If Executive receives any payments under this Agreement as a result of termination of his
employment following a termination without Cause, those payments shall be in lieu of any and all
other claims or rights that Executive may have for severance, separation, and/or salary
continuation pay upon that termination of his employment.



          7. Compensation and Benefits Following Termination on Account of Disability. If the Company
terminates Executive’s employment under subsection 6(a) of this Agreement by reason of Executive’s
disability:




     (a) the Company shall pay and provide to Executive, not later than 75 days after the
end of the fiscal year in which the termination occurs, that portion of the total bonus, if
any, to which he would have been entitled had he continued to be employed under this
Agreement through the end of the fiscal year in which the termination occurs, equal to the
total bonus multiplied by a fraction, the numerator of which is the number of days in the
fiscal year ending on or before the date of Executive’s termination and the denominator of
which is 365;



     (b) the restrictions on any restricted shares held by Executive immediately before the termination
of his employment shall terminate simultaneously with the termination of his employment.



          8. Miscellaneous Services following Termination of Employment. Following termination of his
full-time employment under this Agreement, Executive shall make himself available at all reasonable
times for consultation by and with the Company’s officers and directors. If Executive is called
upon to render services of this nature, he shall, in consideration therefor and as a condition
thereto, receive



 









 







reasonable compensation for the services rendered and reimbursement for any travel or other
out-of-pocket expenses incurred in connection therewith.



          9. Benefit. This Agreement shall inure to the benefit of and be enforceable by Executive’s
personal and legal representatives, executors, administrators, successors, heirs, distributed,
devisees, and legatees. If Executive should die while any amounts are still payable to Executive
hereunder, all such amounts, unless otherwise provided herein shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee, or
other designee or, if there be no such designee, to Executive’s estate.



          10. Successor to the Company. The Company shall require any successor or assign (whether
direct or indirect by purchase, merger. consolidation or otherwise) to all or substantially all the
business and/or assets of the Company, by agreement in form and substance satisfactory to
Executive, expressly, absolutely and unconditionally to assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place.



          11. Confidential Information and Noncompetition. Executive agrees and acknowledges that
Executive’s talents, skills, and experience are unique, and that Company has invested considerable
efforts and money in developing and compiling customer lists, supplier lists, and trade and market
information, in developing business techniques and practices, and in maintaining valuable market
relationships; that such items and all other information that relates to the business of the
Company, the business of any customer or supplier of the Company, or the business of any person,
firm, or corporation that consults with or is affiliated with the Company, constitute for purposes
hereof the “Confidential Information” of the Company; and that the Confidential Information is
valuable property of the company and is vital to the operation and continuation of the Company’s
business. Confidential Information shall not include information so generally known as to be part
of the public domain. Executive acknowledges that the Company has and will disclose Confidential
Information to Executive and afford him access to Confidential Information in connection with his
employment with the Company. Executive agrees that he shall use such Confidential Information
solely for the benefit of the Company. Executive further acknowledges that the grant of restricted
shares referred to in section 3(c) is being made by the Company in order to induce Executive to
agree to the restrictions contained in this Section 11 and that



     Executive has received valuable consideration commensurate with those restrictions. Accordingly,
Executive agrees and acknowledges that:




     (a) Except as required in the performance of his duties as an
employee of the Company, Executive shall not at any time, either directly or indirectly, use,
divulge, disclose. or communicate to any person, firm, or corporation in any manner
whatsoever any Confidential Information.




     (b) Executive shall be given access to the Company’s Confidential Information solely for purposes relating to his employment by the Company. Executive shall
have no rights in such Confidential Information or any letters patent, copyrights, or other
proprietary rights relating thereto, and Executive hereby assigns to the Company any
supplemental or additional information relating to the Confidential Information acquired by
Executive, whether solely or in collaboration with others, that relates in any manner to
either the subject of Executive’s work for the Company or any business of the Company during the Contract Period
(“Improvements”). Executive will disclose promptly in writing to the Company all such
Improvements or information supplemental or related thereto, and such Improvements shall be
treated for all purposes as Confidential Information hereunder.



 









 






     (c) During the Contract Period and thereafter, at the request of the Company and
without expense to Executive, Executive shall cooperate in the procurement of any patent,
copyright, trademark, or trade name protection in the Company’s name that may be necessary
or desirable to vest, or to perfect the record of, title to the Confidential Information in
the Company. Executive agrees to execute all documents and do all things necessary or
desirable in any controversy or otherwise to aid Company in obtaining and enforcing proper
protection of its Confidential Information.



     (d) During the period commencing on the Effective Date and ending on the second anniversary of the
first date on which Executive is neither employed by the Company nor a member of the Board (the
“Restriction Period”), Executive shall not, directly or indirectly, own, operate, have any other
than a minor financial interest in, be employed by, or in any other manner take part in or consult
with any business that is the same as, similar to, or competitive with the business of the Company
as such business is conducted during the Contract Period. During the Restriction Period, Executive
shall not solicit (other than for the benefit of the Company during the Contract Period) any sale
or purchase to or from any person who is or was a customer or supplier of the Company during the
term of Executive’s employment by the Company, either as an employee, agent, consultant, licensee,
independent contractor; owner, or otherwise. Furthermore, during the Restriction Period, Executive
shall not, directly or indirectly, hire or solicit any employee of the Company.




     (e) At any time upon request of the Company and upon termination of his employment by
the Company, Executive shall deliver to the Company, and shall not retain for his own or
another’s Use, any and all lists, information, notes, memoranda, documents, devices, and any
other material, and all copies thereof, relating to Executive’s work or the products or
business of the company of which Executive had knowledge.



     (e) If
any provision of this Section 11is determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of
time or over too great a geographical area, it shall be interpreted to extend only over the maximum
period of time for which it may be enforceable, or over the maximum geographical area to which it
may be enforceable, or both; and such partial unenforceability shall not affect any other provision
of this Agreement. Executive acknowledges that, in light of the proprietary interest of the Company in the
Confidential Information, the restrictions set forth herein are reasonable and that the remedies at
law for the breach of any provision of this Section 11 are inadequate. Accordingly, in the event
of any breach, or reasonable belief as to the existence or imminence of a breach, of the provisions
hereof, the Company shall be entitled to injunctive relief to enjoin the breach (in addition to any
other legal and equitable remedies that the Company may have, including an equitable accounting of
gain to Executive resulting from the breach), together with all costs and expenses, including
reasonable attorney’s fees, related to the enforcement by the Company of its rights hereunder.



          12. Validity. The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement, which shall remain
in full force and effect.



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



          14. Legal Fees and Expenses. Except for fees and expenses related to the Company’s
enforcement of the provisions of Section 11, the Company shall pay all legal fees and expenses that
Executive may incur as a result of the Company’s contesting the validity, enforceability, or
Executive’s interpretation of, or determinations under, this Agreement.



 









 





          15. Notice. All notices under this Agreement shall be in writing and shall be deemed
effective when delivered in person, or three days after deposit thereof in the official U.S. mails,
postage prepaid, for delivery as registered or certified mail, addressed as follows:



          If to the Company:



CUNO Incorporated

Attention: Corporate Secretary

400 Research Parkway

Meriden, Connecticut 06450



          If to the Executive:



Timothy B. Carney

120 Field Brook Road

Madison, CT 06443



In lieu of personal notice or notice by deposit in the official U.S. mails, a party may give notice
by confirmed telegram or fax. Either party may change the address to which notice to that party
may be mailed by notifying the other party of the change in the

manner contemplated in this section.



          16. Effect on Termination and Change of Control Agreement.



               (a) Executive
and the Company have entered into a Termination and Change of Control Agreement dated as of October 31, 1997, pursuant to which Executive may become
entitled to severance compensation if Executive’s employment is terminated under certain
circumstances following a Change in Control, as defined in that agreement (the “Change in
Control Agreement’). Executive and the Company intend that if a Change in Control, as defined
in the Change in Control Agreement, occurs and thereafter Executive receives any payments
pursuant to Section 6 of this Agreement (any “Section 6 Payments”), the entire amount of such
Section 6 Payments will be treated as damages paid to the Executive by the Company as a result
of the Company’s breach of an employment contract with the Executive with the result that the
payments otherwise due under the Change in Control Agreement will be reduced by the full amount
of the Section 6 Payments.



               (b) Notwithstanding the foregoing, in the event of a Change of Control resulting in a
termination of Executive’s employment without “Cause”, to the extent not then issued, Executive
immediately shall be issued the balance of the non-qualified stock options eligible to be issued
pursuant to Paragraph 3(d). In addition, all Restricted Shares issued pursuant to Paragraph
3(c) and all non-qualified stock options issued pursuant to Paragraph 3(d) shall fully vest and
be fully exercisable immediately upon termination of the Executive’s employment without “Cause”
following the change of Control.



               (c) The provisions of this Section 16 shall prevail over any inconsistent language in the
Change in Control Agreement and, to the extent necessary to be effective shall be deemed to be
an amendment to the Change in Control Agreement.



 









 





     17. Entire Agreement. This Agreement expresses the entire agreement of the parties with
respect to the subject matter hereof, and all promises, representations, understandings,
arrangements, and prior agreements are merged herein and superseded hereby. No person, other than
pursuant to a resolution of the Board, shall have any authority on behalf of the Company to agree
to modify or change this Agreement or anything in reference thereto, and any such modification or
change must be in writing and signed by both parties.



     18. Governing Law. This Agreement has been entered into in, and is
Intended to be performed primarily within, the State of Connecticut and shall be construed,
interpreted, and governed in accordance with the laws of the State of Connecticut.



     IN WITNESS WHEREOF, the parties have executed this Agreement, as of the date first written above.



	 	 	 
	EXECUTIVE	 	
CUNO INCORPORATED
	/s/ Timothy B. Carney


TIMOTHY B. CARNEY	 	
/s/ Mark G. Kachur


MARK G. KACHUR

Chairman, President and CEO