AGREEMENT
Exhibit 10.1
THIS AGREEMENT (this “Agreement”) is entered into as of November 1, 2010 (the “Effective Date”),
between NCI Building Systems, Inc., a Delaware corporation (the “Company”), and its wholly-owned
subsidiary, NCI Group, Inc., a Nevada corporation (“Employer”), and Xxxxxxx X. Xxxxx, a resident of
the State of Texas (“Employee”). The Company, Employer and Employee are sometimes hereinafter
collectively referred to as the “Parties.”
BACKGROUND
Employer hires and retains in its employment such personnel as are required by the Company and its
other Affiliates, and makes its employees so retained available to provide services to the Company
and its Affiliates.
This Agreement sets forth the terms and conditions of the employment of Employee by Employer, and
the duties and responsibilities of Employee, on the one hand, and of Employer and the Company, on
the other hand, to each other.
Capitalized terms not defined in the body of this Agreement have the meanings set forth on the
attached Appendix “A.”
AGREEMENT AMONG PARTIES
In consideration of the foregoing and of the mutual covenants and agreements set forth in this
Agreement, and subject to the terms and conditions set forth herein, the Parties agree as follows:
1. Employment. Employer hereby agrees to continue Employee in its employ, and Employee hereby
agrees to remain in the employ of Employer, pursuant to the terms and conditions set forth herein.
2. Duties and Authority. Employee shall serve as the Vice President—Finance and Chief
Accounting Officer of the Company or such other position or title to which the Employee is
promoted, with those authorities, duties and responsibilities customary to that position and such
other authorities, duties and responsibilities as the Board of Directors of the Company (the
“Board”) or the Chief Executive Officer or his designee may reasonably assign Employee from time to
time. Employee shall use his best efforts, including the highest standards of professional
competence and integrity, and shall devote substantially all of his business time and effort, in
and to his employment hereunder, and shall not engage in any other business activity which would
conflict with the rendition of his services hereunder, except that Employee may hold directorships
or related positions in charitable, educational or not-for-profit organizations, or directorships
in business organizations if expressly approved by
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the Board, and make passive investments, which do not unreasonably interfere with Employee’s
day-to-day performance of his responsibilities to the Company.
3. Term. This Agreement shall be effective as of the Effective Date, and shall remain in
effect until October 31, 2011 subject to earlier termination or extension as described below. The
period from the Effective Date until this Agreement shall have expired in accordance with this
Section or been terminated in accordance with Section 5 is hereafter referred to as “the term
hereof” or “the term of this Agreement.” The term hereof shall be extended automatically for an
additional year as of November 1, 2011 and as of each subsequent annual anniversary of such date
(each such extension date is referred to herein as a “Renewal Date”) unless at least one (1) year
prior to any such Renewal Date either Party shall have given notice to the other Party that the
term of this Agreement shall not be so extended. Notwithstanding any provision of this Agreement
to the contrary, if a Change in Control or Potential Change in Control occurs, the term of this
Agreement shall be extended for a period of two (2) years after the date of the occurrence of the
Change in Control or Potential Change in Control, and the last day of such extended term shall
become the applicable Renewal Date.
4. Compensation.
a. Base Salary. Employer shall pay Employee a base salary at his current annualized
rate, payable in accordance with Employer’s normal payroll procedures. The salary of
Employee will be reviewed at least once annually by the Company and/or, to the extent
required, the Compensation Committee of the Board. In the event that Employee’s salary is
required to be approved by the Compensation Committee of the Board, such review shall be
conducted by the Compensation Committee at the same time as it reviews the salaries of
other senior executives of the Company, and any adjustment shall be solely within the
discretion of the Compensation Committee of the Board.
b. Annual Bonus. Employee shall participate under the currently existing NCI Building
Systems, Inc. Bonus Program, as amended and restated from time to time (the “Bonus Plan”)
or, if the Bonus Plan is amended, replaced or superseded, under any amended, replacement or
successor bonus program adopted for senior executives of the Company and its Affiliates.
Bonuses, if any, paid to Employee pursuant to the Bonus Plan shall be paid after the end of
each fiscal year of the Company at the same time as bonuses are paid to other participants,
but no later than March 15 of the following calendar year. Employee understands that
bonuses cannot be earned under the Bonus Plan except as specifically set forth therein
based on the level of participation specified by the
Compensation Committee in its discretion and, if the employment of a participant
terminates for any reason prior to certain dates specified in the Bonus Plan, no bonus
shall be payable thereunder. In the event
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Employee terminates employment, for any reason
other than Cause, after the end of the fiscal year but before payment of the bonus,
Employee shall be entitled to receive the amount of the bonus that would have otherwise
been payable under the Bonus Plan, as determined by the Compensation Committee, on the date
bonuses are paid to other participants. Employee also understands that the Bonus Plan may
be amended, replaced, superseded or terminated at any time and from time to time by the
Board of Directors in its sole discretion.
c. Health and Welfare Benefits. Employee shall be entitled to participate in and
receive the health, hospitalization, medical, dental, life insurance, accidental death,
disability and other insurance plans and benefits provided by Employer and the Company, and
to participate in the 401(k) and other qualified profit-sharing, deferred compensation,
pension, savings and other similar plans of Employer and the Company, as and to the extent
Employer and the Company provide such benefits generally to other employees of Employer and
the Company or to executive employees of the Company. It is understood and agreed that
such benefits may be changed or discontinued from time to time in the sole discretion of
Employer and the Company.
5. Termination Payments.
a. Minimum Termination Compensation. Employee shall serve in an at-will capacity and
the Company and/or Employer may terminate the employment of Employee at any time with or
without Cause. Upon any termination of employment of Employee for any reason other than as
set forth in Section 5(b), whether on, before or after the expiration of the term of this
Agreement (including any extension of the term hereof pursuant to the provisions of this
Agreement), Employee shall be entitled to receive (i) that portion of his annual base
salary, at the rate then in effect, earned by him or accrued for his account through the
date of the termination of his employment hereunder or for which he is entitled to payment
for events or circumstances occurring on or through the date of termination of his
employment, and (ii) any bonus to which he is entitled under the Bonus Plan pursuant to
Section 4(b) for the fiscal year ending prior to the date of termination.
b. Payment Following a Change in Control or Potential Change in Control. If
Employee’s employment is terminated by the Company without Cause or by Employee for Good
Reason within twenty-four (24) months after a Change in Control or during a Potential
Change in Control Period, then Employee shall be entitled to receive (i) two (2) times his
annual base salary at the highest annualized rate in effect during the one
(1) year period immediately preceding the date of the Change in Control or Potential
Change in Control, as applicable, (the “Payment”) and (ii) medical and dental coverage at
the active employee rate for the period of
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coverage applicable to Employee (up to a maximum
of eighteen (18) months) under the Consolidated Omnibus Budget Reconciliation Act of 1985,
currently embodied in Section 4980B of the Internal Revenue Code of 1986, as amended (the
“Code”). The Payment shall be payable in a single lump sum within thirty (30) days of
termination, except as otherwise set forth in Section 25 hereof. The Employee’s right to
receive the Payment and benefits provided herein shall be conditioned on the Employee’s
execution, delivery and non-revocation of a general release of any and all claims against
the Company and its Affiliates within thirty (30) days following the date of termination as
set forth on Exhibit G (“Exhibit G”) to the Investment Agreement, dated as of
August 14, 2009, by and between NCI Building Systems, Inc. and Xxxxxxx, Dubilier & Rice
Fund VIII, L.P., as amended.
c. Parachute Tax Limitation. Notwithstanding anything in this Agreement to the
contrary, if any amounts due to Employee under this Agreement and any other plan or program
or award of Employer, the Company or any Affiliate constitute a “parachute payment,” as
such term is defined in Section 280G(b)(2) of the Code, and the amount of the parachute
payment, reduced by the excise tax imposed pursuant to Section 4999 of the Code, is less
than the amount Employee would receive if he were paid three times his “base amount,” as
defined in Section 280G(b)(3) of the Code, less one dollar, then the aggregate of the
amounts constituting the parachute payment shall be reduced to an amount that will equal
three times his base amount less one dollar. The calculations to be made with respect to
this subsection shall be made by an accounting firm jointly selected by the Company and
Employee and paid by the Company.
d. No Duty to Mitigate. Notwithstanding anything in this Agreement to the contrary,
if Employee’s employment is terminated following a Change in Control of the Company,
Employee shall have no duty to seek other employment nor shall any payments made or to be
made to Employee pursuant to this Agreement following such Change in Control be offset by
any amount earned from other employment.
e. Full Satisfaction of Obligations. Payment by Employer or the Company of the
amounts owed to Employee pursuant to this Section 5 shall fully satisfy all obligations of
Employer and the Company to Employee under this Agreement if the employment of Employee is
terminated hereunder prior to the expiration of the term of this Agreement, and all
obligations of Employer and Employee to each other set forth in Sections 1 through 4 of
this Agreement shall terminate and be of no further force or effect. No termination of
employment hereunder, whether by Employer or Employee and whether with or without Cause or Good Reason, shall
terminate the provisions of Sections 6 or 7 or any subsequent sections of this Agreement
and each of such sections shall
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remain in full force and effect as binding obligations of
the Parties in accordance with their express terms or, if no express term is stated, until
the latest to expire of those sections having express terms.
6. Business Disclosures. Employee acknowledges that Employee has had and will have access to
and has or will become familiar with all or substantially all of the Confidential Information of
the Company and its Affiliates. As a material inducement to the Company and Employer to enter into
this Agreement and to pay to Employee the compensation stated herein, Employee covenants and agrees
that Employee will not, at any time during or following the termination of his employment with the
Company, directly or indirectly divulge or disclose for any purpose whatsoever any Confidential
Information that has been obtained by or disclosed to Employee in connection with his employment
with the Company or any of its Affiliates. If Employee is required in or pursuant to any legal,
judicial or administrative proceeding (by oral questions, interrogatories, requests for information
or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential
Information, Employee shall notify, as promptly as practicable, the Company of such request or
requirement so that the Company, at its expense, may seek an appropriate protective order or waive
compliance with the provisions of this Agreement, and/or take any other action deemed appropriate
by the Company. If, in the absence of a protective order or the receipt of a waiver hereunder,
Employee is compelled or required by law or the order of any governmental, regulatory or
self-regulatory body to disclose the Confidential Information, Employee may disclose only that
portion of the requested Confidential Information which he is compelled or required to disclose,
and Employee will exercise his reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded the Confidential Information.
7. Non-Competition.
a. Employee shall not, directly or indirectly and whether on his own behalf or on
behalf of any other person, partnership, association, corporation or other entity, engage
in or be an owner, director, officer, employee, agent, consultant or other representative
of or for, or lend money or equipment to or otherwise support, any business that
manufactures, engineers, markets, sells or provides, within a 250-mile radius of any then
existing manufacturing facility of the Company and its subsidiaries and affiliates, metal
building systems or components (including, without limitation, primary and secondary
framing systems, roofing systems, end or side wall panels, insulated metal panels,
sectional or roll-up doors, windows, or other metal components of a building structure),
coated or painted steel or metal coils, coil coating or coil painting services, or any
other products or services that are the same as or similar to those manufactured,
engineered, marketed, sold or provided by the Company or its subsidiaries and affiliates during the period of employment of
Employee. Ownership by Employee of equity securities of the Company, or of equity
securities in other public or privately-owned
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companies that compete with the Company
constituting less than 1% of the voting securities in such companies, shall be deemed not
to be a breach of this covenant. Employee agrees and stipulates that in any action or
claim brought by him or in any action or claim brought against him involving the provisions
of this Section 7, Employee hereby waives any claim or defense that the above
non-competition covenants are unenforceable, void or voidable, for any reason, including,
but not limited to, fraud, misrepresentation, illegality, unenforceable restraint of trade,
failure of consideration, illusory contract, mistake, or any other substantive legal
defense.
The foregoing covenant in this Section 7.a shall remain in effect (i) during the period of
employment of Employee by the Company and Employer, and (ii) in the event that Employee
receives payment under Section 5.b hereof, for the period of years following Employee’s
termination that is equal to the multiple of annual base salary to which Employee is
entitled under Section 5.b hereof.
b. Employee shall not, directly or indirectly and whether on his own behalf or on
behalf of any other person, partnership, association, corporation or other entity, either
(i) seek to hire or solicit the employment or service of any employee, agent or consultant
of the Company or its Affiliates in a commercial capacity; (ii) in any manner attempt to
influence or induce any employee, agent or consultant of the Company or its Affiliates to
leave the employment or service of the Company or its Affiliates; (iii) use or disclose to
any person, partnership, association, corporation or other entity any information
concerning the names and addresses of any employees, agents or consultants of the Company
or its Affiliates unless such use or disclosure is of a personal nature, is requested by
the Company or is required by due process of law; or (iv) call upon, solicit, divert or
attempt to call upon, solicit or divert the business of any customer, vendor or acquisition
prospect of the Company or any of its Affiliates with whom Employee dealt, directly or
indirectly, during his engagement with the Company or its Affiliates. Employee shall not
be prohibited from hiring or soliciting the employment or service of an agent or consultant
of the Company for purposes which do not violate Section 7 of this Agreement. Employee
agrees and stipulates that in any action or claim brought by him or in any action or claim
brought against him involving the provisions of this Section 7, Employee hereby waives any
claim or defense that the above non-solicitation covenants are unenforceable, void or
voidable, for any reason, including, but not limited to, fraud, misrepresentation,
illegality, unenforceable restraint of trade, failure of consideration, illusory contract,
mistake, or any other substantive legal defense.
The foregoing covenant in this Section 7.b shall remain in effect during the period of
employment of Employee by the Company and Employer and,
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after such employment terminates
for any reason whatsoever, for a period of three (3) years immediately following the longer
of (i) the termination of such employment or (ii) the period during which Employee is
entitled to receive payments under this Agreement.
8. Consideration for Covenants; Reasonableness. Employee acknowledges and agrees as follows:
a. The Confidential Information of the Company and its Affiliates is unique and was
developed or acquired by them through the expenditure of valuable time and resources; that
Employer, the Company and their Affiliates derive independent economic value from this
Confidential Information not being generally known to the public or to other persons who
can obtain economic value from its disclosure or use; that Employer, the Company and their
Affiliates have taken all prudent and necessary measures to preserve the proprietary and
confidential nature of its Confidential Information, and that the covenants set forth in
Sections 6 and 7 are the most reasonable, efficient and practical means to protect the
Confidential Information.
b. The covenants set forth in Sections 6 and 7 are necessary to protect the goodwill
of the Company and its Affiliates during the employment of Employee hereunder, and to
ensure that such goodwill will be preserved and continued for the benefit of the Company
and its Affiliates after his employment terminates.
c. Due to the nature of the business as heretofore conducted by the Company and its
Affiliates and as contemplated to be continued and conducted by the Company and its
Affiliates, the scope and the duration of the covenants set forth in Sections 6 and 7 of
this Agreement are in all respects reasonable.
d. The covenants set forth in Sections 6 and 7 each constitute a separate agreement
independently supported by good and adequate consideration and that each such agreement
shall be severable from the other provisions of this Agreement and shall survive this
Agreement. The existence of any claim or cause of action of Employee against Employer or
the Company, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Employer and the Company of the covenants and agreements of
Employee set forth in Sections 6 and 7.
9. Surrender of Books and Records. Employee shall on the termination of his employment in any
manner immediately surrender to the Company all lists, books, and records and other documents
incident to the business of the Company and its Affiliates, and all other property belonging to
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any of them,
it being understood that all such lists, books, records and other documents are the property of the
Company and its Affiliates.
10. Waiver of Breach. The failure of the Company, Employer or Employee at any time to require
performance by the other of any provision hereof shall in no way affect any of their respective
rights thereafter to enforce the same, nor shall the waiver by the Company, Employer or Employee of
any breach of any provision hereof be taken or held to be a waiver of any succeeding breach of any
provision or as a waiver of the provision itself.
11. Remedies. In the event of Employee’s breach, or threatened breach, of any term or
provision contained in Section 6 or 7 of this Agreement, Employee agrees that the Company and its
Affiliates shall suffer irreparable harm not compensable by damages or other legal remedies, and
that accordingly the Company and/or Employer shall be entitled to both temporary and permanent
injunctive relief without the necessity of independent proof by it as to the inadequacy of legal
remedies or the nature or extent of the irreparable harm suffered by it. The right of the Company
and/or Employer to such relief shall not be construed to prevent it from pursuing, either
consecutively or concurrently, any and all other legal or equitable remedies available to it for
such breach or threatened breach, specifically including, without limitation, the recovery of
monetary damages.
12. Severability. It is the desire and intent of the Parties that the provisions of
Sections 6 and 7 be enforced to the fullest extent permissible under the laws and public policies
of each jurisdiction in which enforcement is sought. If any provision of Sections 6 or 7 relating
to the time period, scope of activities or geographic area of restrictions is declared by a court
of competent jurisdiction to exceed the maximum permissible time period, scope of activities or
geographic area, the same shall be reduced to the maximum which such court deems enforceable. If
any provision of Sections 6 and 7 other than those described in the preceding sentence are
adjudicated to be invalid or unenforceable, the invalid or unenforceable provisions shall be deemed
amended (with respect only to the jurisdiction in which such adjudication is made) in such manner
as to render them enforceable and to effectuate as nearly as possible the intentions and agreement
of the Parties. Furthermore, if any other provision contained in this Agreement should be held
illegal, invalid or unenforceable in whole or in part by a court of competent jurisdiction, then it
is the intent of the Parties hereto that the balance of this Agreement be enforced to the fullest
extent permitted by applicable law and, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement, a provision as similar in
its terms to such invalid provision as may be possible and be legal, valid, and enforceable.
13. Attorneys’ Fees. In the event of any suit or judicial proceeding (other than an
arbitration proceeding) between the Parties hereto with respect to this Agreement, the prevailing
Party shall, in addition to such other relief as the
court may award, be entitled to reasonable attorneys’ fees and costs, all as
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actually incurred
and including, without limitation, attorneys’ fees and costs incurred in appellate proceedings;
provided, however, that following a Change in Control of the Company, only Employee will be
entitled to recover the attorneys’ fees and costs described in this Section.
14. Survival. Notwithstanding anything to the contrary contained herein, the provisions of
Sections 5, et seq. hereof shall survive the termination of this Agreement.
15. Notice. All notices hereunder shall be in writing and shall be delivered personally, sent
by facsimile transmission or sent by certified, registered or overnight mail, postage prepaid.
Such notices shall be deemed to have been duly given upon receipt, if personally delivered, upon
telephonic confirmation of receipt if sent by facsimile transmission, and if mailed, five days
after the date of mailing (two days in the case of overnight mail), in each case addressed to the
Parties at the following addresses or at such other addresses as shall be specified in writing and
in accordance with this Section:
| If to Employee: | Address shown on the employment records of the Company | |||
| If to the Company or Employer | NCI Building Systems, Inc. 00000 Xxxxx Xxx Xxxxxxx Xxxxxxx Xxxx Xxxxxxx, Xxxxx 00000 Telecopier: (000) 000-0000 Attention: Chief Executive Officer |
16. Entire Agreement. This Agreement, together with the execution copies of the agreements
attached as exhibits hereto, supersedes any and all other agreements, either oral or written,
between the Parties hereto with respect to the subject matter hereof, and contains all of the
covenants and agreements between the Parties with respect thereto. The specific arrangements
referred to herein are not intended to exclude or limit Employee’s participation in other benefits
available to Employee or personnel of the Company generally, or to preclude or limit other
compensation or benefits as may be authorized by the Board at any time, or to limit or reduce any
compensation or benefits to which Employee would be entitled but for the Agreement.
17. Modification. No change or modification of this Agreement shall be valid or binding upon
the Parties hereto, nor shall any waiver of any term or condition in the future be so binding,
unless such change or modification or waiver shall be in writing and signed by the Parties hereto.
18. Governing Law and Venue. This Agreement, and the rights and obligations of the Parties
hereunder, shall be governed by and construed in
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accordance with the laws of the State of Texas and
venue for any action pursuant hereto shall be in the appropriate state or federal court in Xxxxxx
County, Texas.
19. Acknowledgment Regarding Counsel. Each of the Parties to this Agreement acknowledges that
he or it has had the opportunity to seek and has sought counsel to review this Agreement and to
obtain and has obtained the advice of such counsel relating thereto.
20. Counterparts. This Agreement may be executed in counterparts, each of which shall
constitute an original, but all of which shall constitute one and the same document.
21. Assignment. Subject to compliance with the provisions of this Agreement, each of the
Company and Employer shall have the right to assign this Agreement and its obligations hereunder to
any of their Affiliates. No such assignment shall operate to relieve Employer, the Company or any
successor assignor from liability hereunder, and this Agreement shall remain an enforceable
obligation of Employer, the Company and each such successor. The rights, duties and benefits to
Employee hereunder are personal to him, and no such right or benefit may be assigned by him. For
purposes of this Agreement, all references herein to Employer and the Company is deemed to be also
a reference to any Affiliate of Employer or the Company that either has or is required to assume
the obligations of the Company pursuant to this section.
22. Tax Withholding. The Company and/or Employer, as appropriate, may withhold from any
payments or benefits payable under this Agreement all federal, state, city or other taxes that will
be required pursuant to any law or governmental regulation or ruling.
23. Joint and Several Obligations. The duties and obligations of Employer and the Company set
forth herein shall be the joint and several obligations of each of them.
24. Estate. If Employee dies prior to termination of employment, any monies that may be due
him under this Agreement as of the date of his death will be paid to his estate.
25. Section 409A.
a. If Employee is a “specified employee,” as such term is defined in Section 409A and
determined as described below in this Section 25(a), and if the Payment under Section 5(b)
hereof is subject to Section 409A, the character and timing of the Payment shall be as
determined in this Section 25(a). It is hereby specified that the amount of the Payment
under Section 5(b) that does not exceed the limit specified in
Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) is considered a separate payment
and shall be paid at the time specified in Section 5(b).
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To the extent that the Payment
under Section 5(b) exceeds the limit specified in Treasury Regulation Section
1.409A-1(b)(9)(iii)(A), such excess amount shall not be payable before the earlier of (i)
the date that is six months after Employee’s termination, (ii) the date of Employee’s
death, or (iii) the date that otherwise complies with the requirements of Section 409A.
Employee shall be a “specified employee” for the twelve-month period beginning on April 1
of a year if Employee is a “key employee” as defined in Section 416(i) of the Code (without
regard to Section 416(i)(5)) as of December 31 of the preceding year or using such dates as
designated by the Compensation Committee of the Board in accordance with Section 409A and
in a manner that is consistent with respect to all of the Company’s nonqualified deferred
compensation plans. For purposes of determining the identity of specified employees, the
Compensation Committee of the Board may establish procedures as it deems appropriate in
accordance with Section 409A.
b. Employee and the Company agree that this Agreement is intended to comply with
Section 409A and that any ambiguous provisions will be construed in a manner that is
compliant with or exempt from the application of Section 409A.
26. Captions. The captions, headings, and arrangements used in this Agreement are for
convenience only and do not in any way affect, limit, amplify, or modify the terms and provisions
hereof.
27. Binding Effect. This Agreement shall be binding upon the Parties hereto, together with
their respective executors, administrators, successors, personal representatives, heirs and
assigns.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date set forth
herein.
EMPLOYEE
By: |
||||
NCI BUILDING SYSTEMS, INC.
By: |
||||
| Xxxx X. Xxxxx | ||||
| Executive Vice President and General Counsel |
NCI GROUP, INC.
By: |
||||
| Xxxx X. Xxxxx | ||||
| Executive Vice President and General Counsel |
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APPENDIX A
DEFINITIONS
The following terms have the indicated meanings for purposes of this Agreement:
(a) “Affiliate” means any entity controlled by, controlling or under common control with a person
or entity.
(b) “Bonus Plan” means the Company’s Bonus Program, as amended and restated and as may be amended,
restated, extended, supplemented or otherwise modified in writing from time to time in the sole
discretion of the Board of Directors of the Company or the Compensation Committee of the Board of
Directors of the Company.
(c) “Cause” shall mean: (i) Employee’s willful and continued failure to substantially perform his
duties and other obligations under this Agreement and such failure continues for a period of thirty
(30) days after written notice by the Company of the existence of such failure; provided, however,
that only one such notice by the Company need be sent and, if such failure re-occurs thereafter, no
further notice and opportunity to cure such failure shall be required; (ii) the willful engaging by
Employee in gross misconduct materially and demonstrably injurious to the Company, as determined by
the Company; or (iii) Employee’s conviction for committing an act of fraud, embezzlement, theft or
other act constituting a felony (which shall not include any act or offense involving the operation
of a motor vehicle); provided, however, that the Board of Directors of the Company or the then
current Chairman of the Board must first provide to Employee written notice clearly and fully
describing the particular acts or omissions which the Board or the then current Chairman of the
Board reasonably believes in good faith constitutes Cause hereunder and an opportunity, within
thirty (30) days following the receipt of such notice, to meet in person with the Board of
Directors or the then current Chairman of the Board to explain the alleged acts or omissions relied
upon by the Board of Directors and, to the extent practicable, to cure such acts or omissions. For
purposes of this Agreement, any termination of Employee’s employment for Cause shall be effective
only upon delivery to Employee of a certified copy of a resolution of the Board of Directors of the
Company, adopted by the affirmative vote of a majority of the entire membership of the Board of
Directors following a meeting at which Employee was given an opportunity to be heard on at least
five (5) business days’ advance written notice, finding that Employee was guilty of the conduct
constituting Cause, and specifying the particulars thereof. Further, for the purposes of this
Agreement, no act or failure to act on Employee’s part shall be considered willful unless done, or
omitted from being done, by Employee not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.
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(d) “Change in Control” of the Company means the occurrence of any of the following events:
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) is or becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 20 percent or more of the combined voting power of the
Company’s then outstanding securities;
(ii) as a result of, or in connection with, any tender offer or exchange
offer, merger, or other business combination (a “Transaction”), the persons who
were directors of the Company immediately before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any successor to
the Company;
(iii) the Company is merged or consolidated with another corporation or
transfers substantially all of its assets to another corporation and as a result
of the merger, consolidation or transfer less than 50 percent of the outstanding
voting securities of the surviving or resulting corporation shall then be owned in
the aggregate by the former stockholders of the Company; or
(iv) a tender offer or exchange offer is made and consummated for the
ownership of securities of the Company representing 30 percent or more of the
combined voting power of the Company’s then outstanding voting securities.
(e) “Common Stock” means the common stock, $.01 par value, of the Company.
(f) “Confidential Information” means all information, whether oral or written, previously or
hereafter developed, that relates to the business as heretofore conducted by the Company, or which
is hereafter otherwise acquired or used by the Company or its subsidiaries and Affiliates that is
not generally known to others in the Company’s area of business or, if known, was obtained
wrongfully by such other person or entity or with knowledge that it was proprietary or confidential
information of or relating to the business as heretofore conducted by the Company or of or relating
to the business of the Company or its subsidiaries and Affiliates. Confidential Information shall
include, without limitation, trade secrets, methods or practices, financial results or plans,
customer or client lists, personnel information, information relating to negotiations with clients
or prospective clients, proprietary software, databases, programming or data transmission methods,
or copyrighted materials (including without limitation, brochures, layouts, letters, art work,
copy, photographs or illustrations). It is
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expressly understood that the foregoing list shall be illustrative only and is not intended to be
an exclusive or exhaustive list of Confidential Information.
(g) “Good Reason” means any of the following events that occurs after a Change in Control or within
thirty (30) days prior to a Change in Control without Employee’s prior written consent:
(i) any reduction in the amount of Employee’s then current base salary in
excess of ten percent (10%) in any twelve month period;
(ii) (A) a material reduction in the Employee’s title; or (B) a material,
adverse reduction in the duties or responsibilities of the Employee relative to
Employee’s duties or responsibilities as described in section 2 hereof;
(iii) the breach or failure by the Company or Employer to perform any of its
material covenants contained in this Agreement; or
(iv) any relocation of Employee’s principal place of employment outside the
Houston, Texas metropolitan area.
In order for a termination of the Employee to constitute a termination for Good Reason, the
Employee must notify the Company of the circumstances claimed to constitute Good Reason in writing
not later than the thirtieth (30th) day after such circumstances have arisen or occurred and must
provide the Company with at least thirty (30) days within which to cure such circumstances before
terminating employment, and, failing a cure, the Employee must terminate his employment within
thirty (30) days following the expiration of such cure period.
(h) “Potential Change in Control” of the Company shall be deemed to have occurred, if:
(i) the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control of the Company;
(ii) any person (including the Company) publicly announces an intention to
take or to consider taking actions which if consummated would constitute a Change
in Control of the Company; or
(iii) the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.
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(i) “Potential Change in Control Period” means the period beginning on the date the Potential
Change in Control occurs and ending as of the earlier of (i) the end of the month in which a Change
in Control occurs or (ii) the date the Board makes a good faith determination that the risk of a
Change in Control has terminated.
(j) “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
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