**EXHIBIT10 (d)**

 

October 5, 2001

 

Mr. Philip M. Rolchigo

Osmonics, Inc.

Fairfield Facilities

218 Little Falls Road

Cedar Grove, NJ  07009-1277

 

Dear Phil:

 

This letter will confirm our prior conversation.  I am happy to confirm that, as we discussed,if you continue your employment with Osmonics, Inc. (the “Company”) throughJuly 31, 2001, the Company will pay you upon your termination of employment atany time after July 31, 2001, a lump sum payment in the amount of $305,000 (the“2001 Noncompetition Payment”).  Your2001 Noncompetition Payment will be made within forty-eight (48) hours afteryour termination of employment with the Company.  In consideration of the Company’s payment to you of the 2001Noncompetition Payment you agree that, during the one year period beginning onyour termination of employment, you will not, without the Company’s priorwritten approval, which approval shall not be unreasonably withheld: (i)compete with the Company in the separations and filtration industry within themarkets which the Company is serving at the time of the termination of youremployment, (ii) divulge or use the Company’s confidential information, (iii)solicit or otherwise assist anyone in hiring any of the Company’s employees,nor (iv) interfere with or assist anyone in interfering with any of theCompany’s business relationships.

 

As we also discussed, if you remain in the employment of the Companythrough July 31, 2002, the Company will pay you upon termination of youremployment with the Company at any time thereafter, the sum of three (3) timesyour annual base salary plus your annual incentive target bonus for the fiscalyear in which your employment with the Company terminates (the “2002Noncompetition Payment”) in addition to the 2001 Noncompetition Payment. The2002 Noncompetition Payment will be paid in sixteen consecutive equal quarterlypayments.  The first payment will be dueon the last day of the first calendar quarter ending after your termination ofemployment with the Company. In consideration of the Company’s payment to youof the 2002 Noncompetition Payment, you agree that, during the four year periodbeginning with your termination of employment, you will not, without theCompany’s prior written approval, which approval shall not be unreasonablywithheld: (i) compete with the Company in the separations and filtrationindustry within the markets which the Company is serving at the time of thetermination of your employment, (ii) divulge or use the Company’s confidentialinformation, (iii) solicit or otherwise assist anyone in hiring any of theCompany’s employees, nor (iv) interfere

 

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with or assist anyone in interfering with any of the Company’s businessrelationships. The 2002 Noncompetition Payments will cease if you breach yourobligations not to compete, not to disclose confidential information, not tohire the Company’s employees, and not to interfere with the Company’s businessrelationships.

 

You agree to notify the Company of any employment or consultingarrangement you intend to accept prior to your acceptance and the Companyagrees to promptly review the proposed employment or consulting arrangement andto notify you if it reasonably believes that such employment or consultingwould violate your obligation set forth above.

 

You will be entitled to your 2001 and 2002 Noncompetition Payments evenif the Company terminates your employment as long as the Company’s terminationof your employment is not for cause. Only your (i) embezzlement from the Company, (ii) commission of a felonywhich materially harms the Company finances or its reputation, (iii) breach ofyour obligation not to disclosure or use the Company’s confidential informationor (iv) breach of your obligations set forth below, will constitute cause.

 

Further, as we discussed, if at any time the Company wrongfully failsto pay you your 2001 Noncompetition Payment or 2002 Noncompetition Payment, theCompany will be responsible for any and all legal fees you incur in enforcingyour rights under this agreement.  Inaddition, if the Company wrongfully fails to pay your 2002 NoncompetitionPayment, the Company will be obligated to pay you twice the amount of 2002Noncompetition Payment as liquidated damages.

 

It is further agreed that the amount of time you are required to spendoutside of your home state of New Jersey in connection with your employmentwith the Company will be determined by you in the exercise of your professionaljudgment.  However, in no event will yoube required to spend fifty percent (50%) or more of your time outside of NewJersey so that you will be able to satisfy your custody requirements under your50-50 joint custody arrangement with your spouse under your pending divorce.

 

After your termination of employment with the Company, and during thethree (3) year period beginning with the date of  your termination of employment, you agree to offer the Company afirst right of refusal to buy any invention created by you after yourtermination of employment which involves separation and filtration in themarket then served by the Company.

 

If this letter agrees with your understanding of our discussion, pleasesign this letter below where indicated and return a copy to me as soon aspossible.  This letter supercedes allprior agreements between you and the company and the payments to be madehereunder are in lieu of any and all other payments to be made to you under anyother plan providing for payments upon or as a result of  your termination of employment other than thosepayments due under the company’s 

 

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401(k) plan or stock option plan.

 

I appreciate this opportunity to continue to work with you and to haveyou assist the Company in developing and transitioning the development of thoseproducts with which you have been involved to your successor.

 

Sincerely,

 
| OSMONICS, INC.                   |   |
|----------------------------------|--------|
|                             |   |
|                             |   |
| /s/ Michael L. Snow              |   |   |
| Michael L. Snow                  |   |
| Chairman, Compensation Committee |   |
|                             |   |
|                             |   |
|                                  |        |  |

 

Agreed to and accepted this 5  day of  Oct 2001.

 
|                          |   |
|-------------------------------|--------|
|                          |   |
|  /s/ Philip  M. Rolchigo |   |   |
| Philip M. Rolchigo            |   |
|                          |   |
|                               |        |  |

 

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