EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of
September 29, 2005 (the "Effective Date"), by and between Xxxxxxxxxxx
International Ltd., a Bermuda exempted company (the "Company"), and Xxxxxx X.
Xxxxxx (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Board has previously determined that it is in the best
interests of the Company and its shareholders to retain the Executive and to
induce the employment of the Executive for the long-term benefit of the Company;
WHEREAS, the Company desires to employ the Executive on the terms set
forth below to provide services to the Company and its affiliated companies, and
the Executive is willing to accept such employment and provide such services on
the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the parties hereto do hereby agree:
1. Certain Definitions.
(a) "Affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act.
(b) "Beneficial Owner" shall have the meaning set forth
in Rule 13d-3 under the Exchange Act
(c) "Board" shall mean the Board of Directors of the
Company.
(d) "Cause" shall mean:
(i) the willful and continued failure of the
Executive to substantially perform the Executive's duties with the Company
(other than any such failure resulting from incapacity due to physical or mental
illness or anticipated failure after the issuance of a Notice of Termination for
Good Reason by the Executive pursuant to Section 4(d)), after a written demand
for substantial performance is delivered to the Executive by the Board which
specifically identifies the manner in which the Executive has not substantially
performed the Executive's duties, or
(ii) the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially and demonstrably
injurious to the Company.
No act, or failure to act, on the part of the Executive shall
be considered "willful" unless it is done, or omitted to be done, by the
Executive in bad faith or without reasonable belief that the Executive's action
or omission was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Chief Executive Officer or of a more
senior officer of the Company or based upon the advice of counsel for the
Company (which may be the General Counsel or other counsel employed by the
Company or its subsidiaries) shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not be deemed to
be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Executive, and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(e) "Change of Control" shall be deemed to have occurred
if the event set forth in any one of the following paragraphs shall have
occurred:
(i) any Person is or becomes the Beneficial
Owner, directly or indirectly, of 20 percent or more of either (A) the
then outstanding common shares of the Company (the "Outstanding Company
Common Stock") or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"),
excluding any Person who becomes such a Beneficial Owner in connection
with a transaction that complies with clauses (A), (B) and (C) of
paragraph (iii) below;
(ii) individuals, who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least two-thirds of the Incumbent Board shall
be considered as though such individual was a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) the consummation of a reorganization,
merger, amalgamation, consolidation or similar transaction of the
Company or any of its subsidiaries or the sale, transfer or other
disposition of all or substantially all of the Company's Assets (a
"Corporate Transaction"), unless, following such Corporate Transaction
or series of related Corporate Transactions, as the case may be, (A)
all of the individuals and entities (which, for purposes of this
Agreement, shall include, without limitation, any corporation,
partnership, association, joint-stock company, limited liability
company, trust, unincorporated organization or other business entity)
who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction beneficially own,
directly or indirectly, more than 66 2/3 percent of, respectively, the
then outstanding common shares and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors (or other governing body), as the case may be, of
the entity resulting from such Corporate Transaction (including,
without limitation, an entity which as a result of such transaction
owns the Company or all or substantially all of the Company's Assets
either directly or through one or more subsidiaries or entities) in
substantially the same proportions as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities, as the case may
be, (B) no Person (excluding any entity resulting from such Corporate
Transaction or any employee benefit plan (or related trust) of the
Company or such entity resulting from such Corporate Transaction)
beneficially owns, directly or indirectly, 20 percent or more of,
respectively, the then outstanding shares of common stock of the entity
resulting from such Corporate Transaction or the combined voting power
of the then outstanding voting securities of such entity except to the
extent that such ownership existed prior to the Corporate Transaction
and (C) at least two-thirds of the members of the board of directors
(or other governing body) of the entity resulting from such
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Corporate Transaction were members of the Incumbent Board at the time
of the approval of such Corporate Transaction; or
(iv) Approval or adoption by the Board of
Directors or the shareholders of the Company of a plan or proposal
which could result directly or indirectly in the liquidation, transfer,
sale or other disposal of all or substantially all of the Company's
Assets or the dissolution of the Company.
(f) "Company's Assets" shall mean the assets (of any
kind) owned by the Company, including, without limitation, the securities of the
Company's direct and indirect subsidiaries and any of the assets owned by such
subsidiaries
(g) "Disability" shall mean the absence of the Executive
from performance of the Executive's duties with the Company on a substantial
basis for 120 calendar days as a result of incapacity due to mental or physical
illness.
(h) "Employment Period" shall mean the period commencing
on the Effective Date and ending on the third anniversary of the Effective Date;
provided, however, that commencing on the date one year after the Effective
Date, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Employment Period shall be automatically
extended so as to terminate three years after such Renewal Date, unless at least
60 days prior to the Renewal Date the Company shall give notice to the Executive
that the Employment Period shall not be so extended.
(i) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(j) "Good Reason" shall mean the occurrence of any of the
following:
(i) the assignment to the Executive of any
position, authority, duties or responsibilities that are not materially
consistent with the Executive's position (including status, offices and
titles), authority, duties or responsibilities as contemplated by
Section 3(a) of this Agreement, or any other action by the Company
which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose any action not taken in
bad faith and which is remedied by the Company after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with
any of the provisions of this Agreement (including, without limitation,
its obligations under Section 3(a)), other than any failure not
occurring in bad faith and which is remedied by the Company after
receipt of notice thereof given by the Executive;
(iii) any failure by the Company to continue to
provide the Executive with benefits currently enjoyed by the Executive
under any of the Company's compensation, bonus, retirement, pension,
savings, life insurance, medical, health and accident, or disability
plans, or the taking of any other action by the Company which would
directly or indirectly reduce any of such benefits or deprive the
Executive of any fringe benefits or perquisites currently enjoyed by
the Executive;
(iv) the Company's requiring the Executive to be
based at any office or location other than as provided in Section
3(a)(i) hereof or the Company's requiring the Executive to travel on
Company business to a substantially greater extent than required
immediately prior to the date hereof;
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(v) any purported termination by the Company of
the Executive's employment;
(vi) any failure by the Company to comply with
and satisfy Section 10(b) of this Agreement; or
(vii) following a Change of Control, the giving of
notice by the Company to the Executive that the Employment Period shall
not be extended.
In the event of a Change of Control or other Corporate Transaction in
which the Company's common shares cease to be publicly traded, "Good Reason"
shall be deemed to exist upon the occurrence of any of the events listed in
clauses (i) - (vii) above and also in the event Executive is assigned to any
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities that are (A) not at or with the
publicly-traded ultimate parent company of the successor to the Company or the
corporation or other entity surviving or resulting from such Corporate
Transaction or (B) inconsistent with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3(a).
For purposes of this Agreement, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(k) "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering by the
Company of such securities, or (iv) a corporation or other entity owned,
directly or indirectly, by the shareholders of the Company in the same
proportions as their ownership of common shares of the Company.
2. Employment Period. The Company hereby agrees that the
Company will continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the terms and
conditions of this Agreement during the Employment Period. During the Employment
Period, the Executive may be seconded to the employment of Weatherford U.S.,
L.P. (or such other affiliated entity) (the "Seconded Affiliate Company"), but
without prejudice to the Company's obligations or the Executive's rights under
this Agreement. The Executive shall carry out his/her duties as if they were
duties to be performed on behalf of the Company. Each Seconded Affiliate Company
shall be subject to all of the obligations and agreements of the Company under
this Agreement and the Company shall be responsible for actions and inactions of
the Seconded Affiliate Company. Any breach or failure to abide by the terms and
conditions of this Agreement by a Seconded Affiliate Company shall be deemed to
constitute a breach or failure to abide by the Company.
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the
Executive's position (including status, offices, titles, authority,
duties and responsibilities) shall be Vice President - Finance of the
Company and (B) the Executive's services shall be performed at the
Company's executive office in Houston, Texas or other locations less
than 35 miles from such location.
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(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities assigned
to the Executive hereunder, to use the Executive's reasonable best
efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic or
charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities in clause (A), (B),
and (C) together do not significantly interfere with the performance of
the Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and agreed
that to the extent that such activities have been conducted by the
Executive prior to the date hereof, the continued conduct of such
activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the date hereof shall not thereafter be deemed
to interfere with the performance of the Executive's responsibilities
to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period,
the Executive shall receive an annual base salary equal to the current
base salary being received by the Executive ("Annual Base Salary"),
which shall be paid at a monthly rate. During the Employment Period,
the Annual Base Salary shall be reviewed no more than 12 months after
the last salary increase awarded to the Executive prior to the date
hereof and thereafter at least annually; provided, however, that a
salary increase shall not necessarily be awarded as a result of such
review. Any increase in Annual Base Salary may not serve to limit or
reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase. The
term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased.
(ii) Annual Bonus. The Executive shall be
eligible for an annual bonus for each fiscal year ending during the
Employment Period on the same basis as other executive officers under
the Company's executive officer annual incentive program. Each such
Annual Bonus shall be paid no later than the end of the third month of
the fiscal year next following the fiscal year for which the Annual
Bonus is awarded.
(iii) Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans, practices,
policies and programs applicable generally to all executive officers of
the Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate,
than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices,
policies and programs as in effect on the date hereof. As used in this
Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible to participate in and shall receive all benefits
under welfare benefit and retirement plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental
death and travel accident insurance
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plans and programs) to the extent applicable generally to all executive
officers of the Company and its affiliated companies, but in no event
shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate,
than the most favorable of those provided by the Company and its
affiliated companies for the Executive under than such plans,
practices, policies and programs of the Company and its affiliated
companies in effect for the Executive on the date hereof.
(v) Fringe Benefits. During the Employment
Period, the Executive shall be entitled to (A) a monthly car allowance
and (B) such other fringe benefits (including, without limitation,
payment of club dues, financial planning services, cellular telephone,
mobile email, annual physical examinations, payment of professional
fees and professional taxes and payment of related expenses, as
appropriate) in accordance with the most favorable plans, practices,
programs and policies of the Company and its affiliated companies in
effect for the Executive on the date hereof.
(vi) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of the Company and
its affiliated companies in effect for the Executive on the date
hereof.
(vii) Vacation. During the Employment Period, the
Executive shall be entitled to at least three weeks paid vacation or
such greater amount of paid vacation as may be applicable to the
executive officers of the Company and its affiliated companies.
(viii) Deferred Compensation Plan. During the
Employment Period, the Executive shall be entitled to continue to
participate in any deferred compensation or similar plans in which
executive officers of the Company and its affiliated companies
participate.
(c) Termination of Prior Agreements. The Executive
acknowledges and agrees that this Agreement is being executed in replacement of
any and all Employment Agreements existing between the Executive and Xxxxxxxxxxx
International, Inc. or its affiliates (the "Prior Agreements"). As a result, the
Executive and the Company agree that any and all Prior Agreements are hereby
terminated and of no further force and effect.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period, it may provide the Executive with written
notice in accordance with Section 11(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective 30 days after receipt of such notice
by the Executive (the "Disability Effective Date"), provided that within the
30-day period after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. In addition, if a physician
selected by the Executive determines that the Disability of the Executive has
occurred, the Executive (or his representative) may provide the Company with
written notice in accordance with Section 11(b) of this Agreement of the
Executive's intention to terminate his employment. In such event, the Disability
Effective Date shall be 30 days after receipt of such notice by the Company.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause.
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(c) Good Reason. The Executive's employment may be
terminated by the Executive at any time during the Employment Period for Good
Reason.
(d) Notice of Termination. Any termination during the
Employment Period by the Company for Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 11(b) of the Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the
termination date (which date, in the case of a notice by the Company, shall be
not more than 30 days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" shall
mean:
(i) if the Executive's employment is terminated
by the Company for Cause, or by the Executive for Good Reason, the date
of receipt of the Notice of Termination or any later date specified
therein, as the case may be;
(ii) if the Executive's employment is terminated
by the Company other than for Cause, the Date of Termination shall be
the date on which the Executive receives notice of such termination;
and
(iii) if the Executive's employment is terminated
by reason of death or Disability, the Date of Termination shall be the
date of death of the Executive or the Disability Effective Date, as the
case may be.
5. Obligations of the Company Upon Termination.
(a) Death, Disability, Good Reason or Other than For
Cause. If, during the Employment Period, the Executive's employment is
terminated by reason of the Executive's death or Disability, by the Company for
any reason other than for Cause or by the Executive for Good Reason:
(i) The Company shall pay to the Executive (or
Executive's heirs, beneficiaries or representatives as applicable) in a
lump sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
(A) the sum of (1) the Executive's
Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (2) the product of (x) the higher
of (I) the highest Annual Bonus received by the Executive in
the preceding five calendar years and (II) the Annual Bonus
that would be payable in respect of the current fiscal year
(and annualized for any fiscal year consisting of less than 12
months) (such higher amount being referred to as the "Highest
Annual Bonus") and (y) a fraction, the numerator of which is
the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365, and (3)
any compensation previously deferred by the Executive under
any deferred compensation plan sponsored by the Company
(together with any accrued interest or earnings thereon), and
any accrued vacation pay, in each case to the extent not
theretofore paid (the
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sum of the amounts described in clauses (1), (2) and (3) shall
be hereinafter referred to as the "Accrued Obligations");
(B) an amount equal to two times the
sum of (i) the highest Annual Base Salary received by the
Executive in the last five years ended prior to the
Termination Date and (ii) the Highest Annual Bonus;
(C) an amount equal to the total of the
employer basic and matching contributions credited to the
Executive under the Company's 401(k) Savings Plan (the "401(k)
Plan") and any other deferred compensation plan (excluding the
Company's ERP (as defined below)) during the 12-month period
immediately preceding the month of the Executive's Date of
Termination multiplied by two, such amount to be grossed up so
that the amount the Executive actually receives after payment
of any federal or state taxes payable thereon equals the
amount first described above; and
(D) the total value of all fringe
benefits received by the Executive on an annualized basis
multiplied by two.
(ii) For a period of two years from the
Executive's Date of Termination, or such longer period as may be
provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue benefits to the Executive and the
Executive's family equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies
described in Section 3(b)(iv) of this Agreement if the Executive's
employment had not been terminated; provided, however, that with
respect to any of such plans, programs, practices or policies requiring
an employee contribution, the Executive (or Executive's heirs or
beneficiaries as applicable) shall continue to pay the monthly employee
contribution for same, and provided further, that if the Executive
becomes re-employed by another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan,
the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such
applicable period of eligibility. To the extent that the Executive or
the Executive's family is precluded from continuing participation in
any of the foregoing plans, programs, practices or policies for any
portion of such two year period, the Executive shall be provided with
the after-tax economic equivalent of the benefits that would have been
provided under such plans, programs, practices and policies for the
portion of such two year period in which the Executive or Executive's
family is unable to participate for the full period of three years.
(iii) All benefits and amounts under the Company's
deferred compensation plan and all other benefit plans (except as
specifically provided for in Section 6(b) below), including all stock
options, restricted stock or other stock-based awards held by the
Executive, not already vested shall become immediately 100% vested and
fully exercisable as of the Date of Termination.
(iv) To the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive any
other amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy or
practice or contract or agreement of the Company and its affiliated
companies (collectively, the "Other Benefits").
(v) If the Executive's employment is terminated
by reason of the Executive's death, then Other Benefits (as defined in
this Section) shall also include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the
Company and its affiliated companies to the estates and beneficiaries
of the executive officers of the Company and such affiliated companies
under such plans,
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programs, practices and policies relating to death benefits, if any, in
effect on the date hereof or, if more favorable, those in effect on the
date of the Executive's death.
(vi) If the Executive's employment is terminated
by reason of the Executive's Disability, then Other Benefits (as
defined in this Section) shall also include, without limitation, and
the Executive shall be entitled after the Disability Effective Date to
receive, disability and other benefits at least equal to the most
favorable benefits generally provided by the Company and its affiliated
companies to the Executive's disabled peer executive officers and/or
their families in accordance with such plans, programs, practices and
policies relating to disability, if any, in effect generally on the
date hereof or, if more favorable, those in effect at the time of the
Disability
(b) Cause. If the Executive's employment is terminated
for Cause during the Employment Period, this Agreement shall terminate without
further obligations to the Executive, other than the obligation to pay to the
Executive (x) his Annual Base Salary through the Date of Termination, (y) the
amount of any compensation previously deferred by the Executive and (z) Other
Benefits, in each case to the extent theretofore unpaid.
(c) Termination by Executive Other Than for Good Reason.
If the Executive voluntarily terminates his employment during the Employment
Period for any reason other than for Good Reason, the Executive's employment
shall terminate without further obligations to the Executive, other than for
payment of Accrued Obligations and Other Benefits and the rights provided in
Section 6. In such case, all Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days after the Date of Termination subject to
such other options or restrictions as provided by law.
6. Other Rights.
(a) Except as provided herein, nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Except as otherwise provided herein, amounts which are vested benefits, which
vest according to the terms of this Agreement or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company or any of its affiliated companies at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement. If the
Executive has any other employment or similar agreement with the Company at the
Date of Termination, the Executive agrees that he shall have the right to
receive all of the benefits provided under this Agreement or such other
agreement, whichever one, in its entirety, the Executive chooses, but not both
agreements, and when the Executive has made such election, the other agreement
shall be superseded in its entirety and shall be of no further force and effect.
The Executive also agrees that to the extent he may be eligible for any
severance pay or similar benefit under any laws providing for severance or
termination benefits, such other severance pay or similar benefit shall be
coordinated with the benefits owed hereunder, such that the Executive shall not
receive duplicate benefits.
(b) With respect solely to the Company's Nonqualified
Executive Retirement Plan ("ERP"), if the Executive's employment is terminated
for any reason whatsoever, with or without Cause, and no Change of Control has
occurred or is pending, any ERP benefits payable shall only be those that are
payable, if any, under the terms of the ERP as of the Date of Termination.
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7. Full Settlement.
(a) No Rights of Offset. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others.
(b) No Mitigation Required. The Company agrees that, if
the Executive's employment with the Company terminates, the Executive is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to this Agreement. Further, the
amount of any payment or benefit provided for in this Agreement shall not be
reduced by any compensation earned by the Executive as the result of employment
by another employer, by retirement benefits, by offset against any amount
claimed to be owed by the Executive to the Company, or otherwise.
(c) Legal Fees. The Company agrees to pay as incurred, to
the full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company or the Executive of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereto (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any 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, but determined without regard to any additional payments required
under this Section 8) (a "Payment") would be subject to the excise tax or other
tax imposed by Section 4999 of the Code (and any successor provisions or
sections to Section 4999) or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination shall be made
by PricewaterhouseCoopers or, as provided below, such other certified public
accounting firm as may be designated by the Executive (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days after the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the Company to the
Executive within five days after the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm, absent manifest error,
shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application
10
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service (the "IRS") that, if successful, would
require the payment by the Company of the Gross-Up Payment (or an additional
Gross-Up Payment) in the event the IRS seeks higher payment. Such notification
shall be given as soon as practicable, but no later than ten business days after
the Executive is informed in writing of such claim, and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which he gives such notice
to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the Executive
in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in
writing from time to time, including without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order to effectively contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such costs and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and xxx for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issues raised by the IRS or any other taxing authority.
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(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 8(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 8(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) Any provision in this Agreement or any other plan or
agreement to the contrary notwithstanding, if the Company is required to pay a
Gross-Up Payment pursuant to the provisions of this Agreement and pursuant to
the provisions of another plan or agreement, then the Company shall pay the
greater of the amount determined pursuant to this Agreement or the amount
determined pursuant to the provisions of such other plan or agreement, but in no
event shall the Company pay amounts pursuant to both provisions.
9. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies, provided that it shall not apply to information which is
or shall become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement), information
that is developed by the Executive independently of such information, or
knowledge or data or information that is disclosed to the Executive by a third
party under no obligation of confidentiality to the Company. After termination
of the Executive's employment with the Company, the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it. In no event shall
an asserted violation of the provision of this Section 9 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
10. Successors.
(a) This Agreement is personal to the Executive and shall
not be assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
(b) In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation, amalgamation, operation
of law or otherwise (including any purchase, merger, amalgamation, Corporate
Transaction or other transaction involving the Company or any subsidiary or
Affiliate of the Company), to all or substantially all of the Company's business
and/or the Company's Assets to expressly 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 had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as the Executive would be entitled to hereunder if the Executive were to
terminate the Executive's employment for Good Reason after a Change of Control,
except that, for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement,
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"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as provided above.
11. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES
OF CONFLICT OF LAWS. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: Xxxxxx X. Xxxxxx
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
If to the Company: Xxxxxxxxxxx International Ltd.
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the failure to
assert any right to the Executive or the Company may have hereunder, including
without limitation, the right of the Executive to terminate employment for Good
Reason shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
(f) This Agreement constitutes the entire agreement and
understanding between the parties relating to the subject matter hereof and
supersedes all prior agreements between the parties relating to the subject
matter hereof, including, without limitation, the Prior Agreements.
13
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
/s/ Xxxxxx X. Xxxxxx
-------------------------------------------------
Xxxxxx X. Xxxxxx
XXXXXXXXXXX INTERNATIONAL LTD.
By: /s/ Xxxxxxx X. Duroc-Xxxxxx
-----------------------------------------------
Xxxxxxx X. Duroc-Xxxxxx
Chairman, President & Chief Executive Officer
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