Exhibit 10.4
EXECUTIVE SEVERANCE AGREEMENT
AGREEMENT by and between Keystone International, Inc. (the "Company") and
Nishan Teshoian (the "Employee"), dated as of the 15th day of December, 1995.
The Board of Directors of the Company (the "Board") has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Employee, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Employee by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control, to encourage the
Employee's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Employee with compensation arrangements upon a Change of Control which provide
the Employee with individual financial security and which are competitive with
those of other corporations and, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall be the first date
during the "Change of Control Period" (as defined in Section 1(b)) on which a
Change of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if the
Employee's employment with the Company is terminated involuntarily prior to the
date on which a Change of Control occurs, and it is reasonably demonstrated that
such termination (1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (2) otherwise arose in
connection with or in anticipation of a Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior to
the date of such termination.
(b) The "Change of Control Period" is the period commencing on the date
hereof and ending on the fifth anniversary of such date.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(i) The acquisition (other than from the Company) by any person, entity or
"group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act"), of beneficial ownership, (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either the then outstanding shares of common stock or the combined voting power
of the Company's then outstanding voting securities entitled to vote generally
in the election of directors; or
(ii) Individuals who, as of the date hereof, constitute the Board (as of
the date hereof the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided, however, that any person 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 a
majority of the directors then comprising the
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Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) shall be, for purposes of this Agreement, considered as though
such person were a member of the Incumbent Board; or
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, in each case, with respect to which persons who were
the stockholders of the Company immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's then outstanding voting
securities, or a liquidation or dissolution of the Company or of the sale of all
or substantially all of the assets of the Company; provided, however, that a
judicially supervised reorganization under 11 U.S.C. (S)101 et. seq. shall not
be considered a Change of Control.
3. Employment Period. The Company hereby agrees to continue the Employee in
its employ, and the Employee hereby agrees to remain in the employ of the
Company, in accordance with the terms and provisions of this Agreement for the
period commencing on the Effective Date and ending on the third anniversary of
such date (the "Employment Period").
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4. Terms of Employment. (a) Position and Duties.
(i) During the Employment Period, (A) the Employee's position (including
status, offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 90-day period immediately preceding the Effective Date and (B) the
Employee's services shall be performed at the location where the Employee was
employed immediately preceding the Effective Date or any office or location
which is the headquarters of the Company and is less than thirty-five (35) miles
from such pre-Effective Date location.
(ii) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Employee is entitled, the Employee 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 Employee hereunder, to use the Employee'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 Employee 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 do not significantly interfere with the performance of the
Employee's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Employee prior to the Effective
Date, the continued conduct of
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such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Employee's responsibilities to the
Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Employee shall receive an annual base salary (the "Annual Base Salary") which
shall be paid in equal installments on a monthly basis, at least equal to twelve
times the highest monthly base salary paid or payable to the Employee by the
Company and its affiliates in respect of the twelve month period immediately
preceding the month in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be substantially consistent
with increases in base salary awarded in the ordinary course of business to
other key employees of the Company and its affiliates. Any increase in Annual
Base Salary shall not serve to limit or reduce any other obligation to the
Employee under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used in this Agreement,
the term "affiliates" shall include any company controlled by, controlling or
under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Employee shall be
awarded, for each fiscal year during the Employment Period, an annual bonus (an
"Annual Bonus") in cash (or cash and stock if the Employee is then required to
take a percentage of his bonus in stock pursuant to the Company's executive
stock
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ownership policy) at least equal to the highest annual bonus payable to the
Employee from the Company and its subsidiaries in respect of the three fiscal
years immediately preceding the fiscal year in which the Effective Date (or the
annualized bonus for any fiscal year consisting of less than twelve full months
or with respect to which the Employee has been employed by the Company for less
than twelve full months).
(iii) Incentives Savings and Retirement Plans. In addition to Annual Base
Salary and Annual Bonus payable as herein provided, the Employee shall be
entitled to participate during the Employment Period in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other key employees of the Company and its subsidiaries. Such plans, practices,
policies and programs, in the aggregate, shall provide the Employee with
compensation, benefits and reward opportunities at least as favorable as the
most favorable of such compensation, benefits and reward opportunities provided
by the Company for the Employee under such plans, practices, policies and
programs as in effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Employee, as provided at any
time thereafter with respect to other key employees of the Company and its
subsidiaries.
(iv) Welfare Benefit Plans. During the Employment Period, the Employee
and/or the Employee's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life,
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accidental death and travel accident insurance plans and programs), at least as
favorable as the most favorable of such plans, practices, policies and programs
in effect at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Employee and/or the Employee's
family, as in effect at any time thereafter with respect to other key employees
of the Company and its subsidiaries.
(v) Expenses. During the Employment Period, the Employee shall be entitled
to receive prompt reimbursement for all reasonable employment expenses incurred
by the Employee in accordance with the most favorable policies, practices and
procedures of the Company and its subsidiaries in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Employee, as in effect at any time thereafter with respect to other key
employees of the Company and its subsidiaries.
(vi) Fringe Benefits. During the Employment Period, the Employee shall be
entitled to fringe benefits in accordance with the most favorable plans,
practices, programs and policies of the Company and its subsidiaries in effect
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Employee, as in effect at any time thereafter with
respect to other key employees of the Company and its subsidiaries.
(vii) Office and Support Staff. During the Employment Period, the Employee
shall be entitled to an office or offices of a size and with furnishings and
other appointments, and to secretarial and other assistance, at least equal to
the most favorable of the foregoing provided to the Employee by the Company and
its
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subsidiaries at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Employee, as provided at any time
thereafter with respect to other key employees of the Company and its
subsidiaries.
(viii) Vacation. During the Employment Period, the Employee shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its subsidiaries as in effect for the
Employee at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Employee, as in effect at any time
thereafter with respect to other key employees of the Company and its
subsidiaries.
5. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Employee's death during the
Employment Period. If the Company determines in good faith that Disability of
the Employee has occurred during the Employment Period (pursuant to the
definition of "Disability" as set forth below), it may give to the Employee
written notice of its intention to terminate the Employee's employment. In such
event, the Employee's employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Employee (the "Disability
Effective Date"), provided that, within the 30 days after such receipt, the
Employee shall not have returned to full-time performance of the Employee's
duties. For purposes of this Agreement, "Disability" shall mean the absence of
the Employee from the Employee's duties with the Company on a full-time basis
for 180 calendar days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected
by the
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Company or its insurers and acceptable to the Employee or the Employee's legal
representatives (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Employee's employment during the
Employment Period for "Cause." For purposes of this Agreement, "Cause" means (i)
an act or acts of personal dishonesty taken by the Employee and intended to
result in personal enrichment of the Employee at the expense of the Company,
(ii) repeated material breaches by the Employee of the Employee's obligations
under Section 4(a) of this Agreement (other than as a result of incapacity due
to physical or mental illness) which are demonstrably willful and deliberate on
the Employee's part and which are not remedied in a reasonable period of time
after receipt of written notice from the Company specifying such breach or (iii)
the conviction of the Employee of a felony.
(c) Good Reason. The Employee's employment may be terminated by the
Employee during the Employment Period for Good Reason. For purposes of this
Agreement, "Good Reason" means:
(i) the assignment to the Employee of any duties inconsistent in any
respect with the Employee's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or any other action by the
Company or any affiliate which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof
given by the Employee;
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(ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the Employee;
(iii) The Company's requiring the Employee to be based at any office
or location other than that described in Section 4(a)(i)(B) hereof, except
for travel reasonably required in the performance of the Employee's
responsibilities;
(iv) any purported termination by the Company of the Employee's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Employee shall be conclusive.
(d) Notice of Termination. Any termination by the Company for Cause or by
the Employee for Good Reason shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 12(b) of this 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) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee's employment under the
provisions 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 shall be not more than fifteen (15)
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days after the giving of such notice). The failure by the Employee 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 Employee or the Company hereunder or preclude the Employee or the Company
from asserting such fact or circumstance in enforcing the Employee's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means the date of receipt of
the Notice of Termination or any later date specified therein, as the case may
be; provided, however, that (i) if the Employee's employment is terminated by
the Company other than for Cause or Disability, the Date of Termination shall be
the date on which the Company notifies the Employee of such termination, and
(ii) if the Employee's employment is terminated by reason of death or
Disability, the Date shall be the date of death of the Employee or the
Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination. (a) Good Reason; Other than
for Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Employee's employment other than for Cause, Disability or
death or if the Employee shall terminate his employment for Good Reason:
(i) the Company shall pay to the Employee in a lump sum in cash within
30 days after the Date of Termination the aggregate of the following
amounts;
(A) to the extent not theretofore paid, the Employee's Annual
Base Salary through the Date of Termination; and
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(B) the product of (x) the Annual Bonus (computed as if any bonus
amount paid in stock pursuant to the Company's executive stock
ownership policy was paid in cash) paid to the Employee for the last
full fiscal year (if any) ending during the Employment Period or, if
higher, the Annual Bonus paid to the Employee for the last fiscal year
prior to the Effective Date (as applicable, the "Recent 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
(C) in the case of compensation previously deferred by the
Employee, all amounts previously deferred (together with any accrued
interest thereon) and not yet paid by the Company, and any accrued
vacation pay not yet paid by the Company (the sum of the amounts in
clauses (A), (B), and (C) shall be hereinafter referred to as the
"Accrued Obligations"); and
(D) the product of (x) 3.00 and (y) the sum of (i) the Annual
Base Salary and (ii) the Recent Bonus; and
(E) all amounts in the Employee's retirement plan accounts which
will become fully vested upon the Date of Termination notwithstanding
the existing vesting schedule; and
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(ii) for three years from the Date of Termination, or such longer
period as any plan, program, practice or policy may provide, the Company
shall continue benefits to the Employee and/or the Employee's family at
least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section
4(b)(iv) of this Agreement if the Employee's employment had not been
terminated, including health insurance and life insurance, in accordance
with the most favorable plans, practices, programs or policies of the
Company and its subsidiaries during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Employee, as in effect at
any time thereafter with respect to other key employees of the Company and
its subsidiaries and their families and for purposes of eligibility for
retiree benefits pursuant to such plans, practices, programs and policies,
the Employee shall be considered to have remained employed until the end of
the Employment Period and to have retired on the last day of such period.
If the terms of any benefit plan referred to in this section do not permit
continued participation by the Employee, then the Company will arrange for
other coverage, providing substantially similar benefits.
(iii) all options and similar awards granted to Employee by the
Company shall immediately vest notwithstanding any vesting schedule in any
option or award agreement.
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(b) Death. If the Employee's employment is terminated by reason of the
Employee's death during the Employment Period, this Agreement shall terminate
without further obligations to the Employee's legal representatives under this
Agreement, other than payment of the Accrued Obligations. All such Accrued
Obligations shall be paid to the Employee's estate or beneficiary, as
applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination. Anything in this Agreement to the contrary notwithstanding, the
Employee's family shall be entitled to receive benefits at least equal to the
most favorable benefits provided by the Company and any of its subsidiaries to
surviving families of employees of the Company and such subsidiaries under such
plans, programs, practices and policies relating to family death benefits, if
any, in accordance with the most favorable plans, programs, practices and
policies of the Company and its subsidiaries in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Employee and/or the Employee's family, as in effect on the date of the
Employee's death with respect to other key employees of the Company and its
subsidiaries and their families.
(c) Disability. If the Employee's employment is terminated by reason of the
Employee's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Employee, other than payment of all
Accrued Obligations. All such Accrued Obligations shall be paid to the Employee
in a lump sum in cash within 30 days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the Employee shall also be
entitled after the Disability Effective Date to receive disability and other
benefits at least equal to the most
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favorable of those provided by the Company and its subsidiaries to disabled
employees and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, in accordance with the
most favorable plans, programs, practices and policies of the Company and its
subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee and/or the
Employee's family, as in effect at any time thereafter with respect to other key
employees of the Company and its subsidiaries and their families.
(d) Cause; Other than for Good Reason. If the Employee's employment shall
be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Employee other than the obligation
to pay to the Employee the Annual Base Salary through the Date of Termination
plus the amount of any compensation previously deferred by the Employee
(together with accrued interest thereon) in each case to the extent theretofore
unpaid. If the Employee terminates employment other than for Good Reason, this
Agreement shall terminate without further obligations to the Employee, other
than those obligations accrued or earned and vested (if applicable) by the
Employee through the Date of Termination, including for this purpose, all
Accrued Obligations. All such Accrued Obligations shall be paid to the Employee
in a lump sum in cash within 30 days of the Date of Termination.
(e) The payments made to Employee pursuant to this Agreement shall be in
lieu of any amounts to which Employee would otherwise be entitled pursuant to
the
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paragraph labeled "Termination" in the letter dated July 12, 1995 to Employee
from the Company describing the terms of Employee's employment.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Company or any of its subsidiaries and for which the Employee may qualify, nor
shall anything herein limit or otherwise affect such rights as the Employee may
have under any stock option or other agreements with the Company or any of its
subsidiaries. Amounts which are vested benefits or which the Employee is
otherwise entitled to receive under any plan, policy, practice or program of the
Company or any of its subsidiaries at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program.
8. Full Settlement; Resolution of Disputes. (a) 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 Employee or others. In no event shall the Employee be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Employee under any of the provisions of this Agreement.
The Company agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Employee may incur as a result of any contest (regardless
of the outcome thereof) by the Company or others of the validity or
enforceability of, or liability under, any
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provision of this Agreement or any guarantee of performance thereof, plus in
each case interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code for any period during which the Company is in
default in its obligation to make any payment hereunder.
(b) If there shall be any dispute between the Company and the Employee (i)
in the event of any termination of the Employee's employment by the Company,
whether such termination was for Cause, or (ii) in the event of any termination
of employment by the Employee, whether Good Reason existed, then, unless and
until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that the
determination by the Employee of the existence of Good Reason was not made in
good faith, the Company shall pay all amounts, and provide all benefits, to the
Employee's family or other beneficiaries, as the case may be, that the Company
would be required to pay or provide pursuant to Section 6 as though such
termination were by the Company without Cause or by the Employee for Good
Reason; provided, however, that the Company shall not be required to pay any
disputed amounts pursuant to this paragraph except upon receipt of an
undertaking by or on behalf of the Employee to repay all such amounts to which
the Employee is ultimately adjudged by such court not to be entitled.
9. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by the Company to or for the benefit of the
Employee, whether paid or payable or distributed or distributable pursuant to
the terms of this
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Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, and hereinafter collectively
referred to as the "Excise Tax"), then the Employee shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Employee of all taxes, including any income or Excise Tax imposed
upon the Gross-Up Payment, the net amount payable to Employee hereunder shall
be equal to the aggregate amount Employee would have received hereunder if such
Excise Tax were not applicable.
(b) Subject to the provisions of Section 9(c), all determinations required
to be made under this Section 9, including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Co. (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Employee within 25 days of the Date of
Termination, if applicable, or such earlier time as is requested by the Company.
The initial Gross-Up Payment, if any, as determined pursuant to this Section
9(b), shall be paid to the Employee within 5 days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable to the Employee, it shall furnish the Employee with an
opinion that he has substantial authority not to report any Excise Tax on his
federal income tax return. Any determination by the Accounting Firm shall be
binding upon the Company and the Employee. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the
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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 9(c) and the Employee
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
Employee.
(c) The Employee shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Employee knows 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 Employee shall not pay such claim
prior to the expiration of the thirty-day period following the date on which the
Employee 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 Employee in writing prior to the expiration of such period
that it desires to contest such claim, the Employee 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
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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 effectively to
contest such claim;
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including attorneys fees and any additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Employee 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 9(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo 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 Employee to pay the tax claimed and ▇▇▇ for a
refund or contest the claim in any permissible manner, and the Employee agrees
to prosecute such contest to a 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
Employee to pay such claim and ▇▇▇ for a refund, the Company shall advance the
amount of such payment to the Employee, on an interest-free basis and shall
indemnify and hold the Employee
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harmless, on an after-tax basis, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed 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 Employee 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 Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other authority.
(d) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to Section 9(c), the Employee becomes entitled to receive any
refund with respect to such claim, the Employee shall (subject to the Company's
complying with the requirements of Section 9(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 Employee of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
the Employee shall not be entitled to any refund with respect to such claims and
the Company does not notify the Employee in writing of its intent to contest
such denial of refund prior to the expiration of thirty 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.
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10. Confidential Information. The Employee 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 subsidiaries, and their
respective businesses, which shall have been obtained by the Employee during the
Employee's employment by the Company or any of its subsidiaries and which shall
not be or become public knowledge (other than by acts by the Employee or his
representatives in violation of this Agreement). After termination of the
Employee's employment with the Company, the Employee shall not, without the
prior written consent of the Company, 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 provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Employee under this Agreement.
11. Successors. (a) This Agreement is personal to the Employee and without
the prior written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be
22
required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets.
12. 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 and 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 Employee:
Nishan Teshoian
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to the Company:
Keystone International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Board of Directors
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressees.
23
(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 or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
(e) The Employee's or the Company's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a waiver of such
provision or any other provision hereof.
(f) This Agreement contains the entire understanding of the Company and the
Employee with respect to the subject matter hereof.
(g) The Employee and the Company acknowledge the employment of the
Employee by the Company is "at will", and, prior to the Effective Date, may be
terminated by either the Employee or the Company at any time. Upon a termination
of the Employee's employment prior to the Effective Date, there shall be no
further rights under this Agreement.
[Remainder of page intentionally left blank--signature page follows.]
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IN WITNESS WHEREOF, the Employee has hereunto set his hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
/s/ Nishan Teshoian
---------------------------------
Nishan Teshoian
KEYSTONE INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Chairman of the Compensation Committee
of the Board of Directors
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