Exhibit 10.4
CHANGE OF CONTROL AGREEMENT
This change of control agreement ("Agreement") is made effective as of May
27, 2008, by and between Ameron International Corporation, a Delaware
corporation (the "Company") and Xxxxxxx X. Xxxxxxx ("Employee").
WITNESSETH
WHEREAS, if certain corporate transactions were proposed or pending, such
potential transactions could result in distractions to Employee's performance at
a critical period; and
WHEREAS, Employee and Company wish to enter into this Agreement in order to
provide security to Employee as a means of maintaining performance under such
circumstances;
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the Company and Employee agree as follows:
2. Term.
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2.1 The term of this Agreement (the "Term") shall commence on May 27, 2008
and shall be for two years, subject to earlier termination in accordance with
the provisions of Section 4 hereinbelow. Beginning on May 28,2008 and on each
day thereafter, the Term shall automatically be extended for an additional day,
unless the Company notifies Employee in writing that it does not wish to further
extend the Term.
3. Position and Title.
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3.1 The Company, on behalf of itself and its affiliates and subsidiaries,
currently employs Employee as Senior Vice President, Secretary and General
Counsel.
3.2 Employee shall devote substantially all of his efforts on a full-time
basis to the business and affairs of the Company and shall not engage in any
business or perform any services in any capacity whatsoever adverse to the
interests of the Company.
3.3 Employee shall at all times faithfully, industriously, and to the best
of his ability, experience, and talents perform all of the duties of his
position.
4. Compensation.
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4.1 As of the date of this Agreement, Employee's annual base salary is
$340,000. Employee's base salary and performance shall be reviewed periodically
at intervals determined by the Board of Directors of the Company (the "Board"),
and Employee's base salary may be increased from time to time based on merit or
such other considerations as the Board may deem appropriate.
5. Termination of Employment.
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For purposes of this Agreement only, a Termination Without Cause shall
exist if Employee is terminated by the Company for any reason except:
(1) Willful breach of duty by Employee in the course of his
employment or habitual neglect of his duty or continued incapacity to
perform it, as contemplated by Section 2924 of the California Labor
Code;
(2) Willful malfeasance or gross negligence by Employee in the
performance of his duties;
(3) Any act of fraud, insubordination or other conduct by
Employee which demonstrates gross unfitness for service; or
(4) Employee's conviction (or entry of a plea of guilty, nolo
contendere or the equivalent) for any crime involving moral turpitude,
dishonesty or breach of trust or any felony which is punishable by
imprisonment in the jurisdiction involved.
Additionally, if Employee terminates employment with the Company because
(a) Employee's annual base salary is reduced below the amount stated in
Paragraph 3.1 hereinabove (unless such reduction is part of an across the board
reduction affecting all Company executives with a comparable level of
responsibility, title or stature), or (b) Employee is removed from or denied
participation in incentive plans, benefit plans, or perquisites generally
provided by the Company to other executives with a comparable level of
responsibility, title or stature, or (c) Employee's target incentive
opportunity, benefits or perquisites are reduced relative to other executives
with comparable responsibility, title or stature, or (d) Employee's title,
duties or responsibilities with the Company are significantly reduced, or (e)
Employee is required to relocate to an area outside the Metropolitan Los Angeles
area, such event shall be considered a Termination Without Cause; provided that
Employee must furnish written notice to the Company setting forth the reasons
for Employee's intention to terminate employment under this paragraph, and the
Company shall have an opportunity to cure the actions or omissions forming the
basis for such intended termination, if possible, within thirty (30) days after
receipt of such written notice.
6. Change of Control.
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6.1 In the event of a Change of Control of the Company at any time during
the Term of this Agreement, and Employee's Termination Without Cause within a
period of twelve (12) months following the date of such Change of Control,
Employee shall be entitled to the following benefits:
(1) The Company shall pay Employee a lump-sum severance amount
within thirty (30) days following Termination Without Cause equal to
two (2) times the sum of (a) the higher of the Employee's annual base
salary at the time of Termination Without Cause or the annual base
salary stated in Paragraph 3.1 above, and (b)the average of the two
most recent annual bonuses which have been earned by Employee (whether
paid or payable in cash or deferred) under the Company's annual bonus
plan (currently known as the "Management Incentive Compensation Plan")
and the amounts of which have been determined prior to the Termination
Without Cause. In the event Employee has not been employed by the
Company long enough to have at least two such annual bonuses earned
and determined prior to the Termination Without Cause, then the
"average of the two most recent annual bonuses" for purposes of clause
(b) of this paragraph shall mean (x) Employee's one annual bonus which
has been earned and determined prior to the Termination Without Cause,
if Employee has only one such bonus, or (y) Employee's annualized
target bonus for his or her first annual bonus cycle, if Employee has
no annual bonuses which have been earned and determined prior to the
Termination Without Cause.
(2) The Company shall provide for Employee to receive medical,
dental, life, and disability insurance coverage for two (2) years
following Termination Without Cause at levels and a net cost to
Employee comparable to that provided to Employee immediately prior to
Employee's Termination Without Cause.
(3) The Company shall pay Employee an additional lump-sum amount
within thirty (30) days following Employee's Termination Without Cause
equal to a pro-rated portion of Employee's target incentive bonuses
(based on the period prior to Termination Without Cause in proportion
to the entire period for which such bonuses are payable) under the
Company's annual and long-term management cash incentive plans, which
are currently known as the "Management Incentive Compensation Plan"
and "Key Executive Long-Term Cash Incentive Plan."
6.2 In the event of a Change of Control at any time during the term of this
Agreement, all unvested restricted stock grants and stock options granted to
Employee shall automatically vest in full upon the Change of Control.
6.3 Notwithstanding any other provisions in this Agreement or any other
agreement, plan or arrangement, if any payment or benefit received or to be
received by Employee, whether under terms of this Agreement or any other
agreement, plan or arrangement with the Company or an affiliate of the Company
(all such payments and benefits being hereinafter referred to as "Total
Payments"), would be subject, in whole or in part, to taxes imposed by Internal
Revenue Code ("IRC") Section 4999, then the Total Payments shall be reduced to
the extent necessary so that no portion of the Total Payments shall be subject
to the parachute excise tax (the "Excise Tax") imposed by IRC Section 4999
(after taking into account any reduction in the Total Payments provided by
reason of IRC Section 280G in any other plan, arrangement or agreement). Total
Payments shall not include any amounts which are not considered as "parachute
payments" under IRC Section 280G in the opinion of suitable experts selected by
the Company's Board of Directors. The Company shall provide Employee with the
calculation of the foregoing amounts and any supporting materials reasonably
necessary for Employee to evaluate the calculations. Any reduction in the Total
Payments in accordance with this Paragraph 5.3 shall be made in a manner such
that the reduction of compensation to be provided to Employee as a result of
this Paragraph 5.3 is minimized. In applying this principle, the reduction shall
be made in a manner consistent with the requirements of IRC Section 409A and
where two economically equivalent amounts are subject to reduction but payable
at different times, such amounts shall be reduced on a pro rata basis but not
below zero.
6.4 As used herein, the term "Change of Control" means either (a) the
dissolution or liquidation of the Company, (b) a reorganization, merger or
consolidation of the Company with one or more entities as a result of which the
Company is not the surviving entity, (c) approval by the stockholders of the
Company of any sale, lease exchange or other transfer (in one or a series of
transactions) of all or substantially all of the assets of the Company, (d)
approval by the stockholder of the Company of any merger or consolidation of the
Company in which the holders of voting stock of the Company immediately before
the merger or consolidation will not own fifty percent (50%) or more of the
outstanding voting shares of the continuing or surviving entity immediately
after such merger or consolidation, or (e) a change of 25% or more (rounded to
the next whole person) in the membership of the Board of Directors of the
Company within a 12-month period, unless the election or nomination for election
by stockholders of each new director within such period was approved by the vote
of at least 85% (rounded to the next whole person) of the directors then still
in office who were in office at the beginning of the 12-month period.
6.5 Employee shall not be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to Employee under any
provisions of this Agreement, and the amounts payable to Employee hereunder
shall not be reduced or offset by any payments received by Employee on account
of other employment.
7. Covenants.
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7.1 Employee acknowledges that he has entered into an "Employee Patent
Assignment and Non-Disclosure Agreement" with the Company.
7.2 Employee agrees to provide a release of any claims with respect to
termination of his employment on such form as reasonably requested by the
Company upon payment of the sums provided in Paragraph 5.1 hereinabove and the
Company's agreement to perform its other obligations under this Agreement and
any other agreement(s) between the Company and Employee.
8. Miscellaneous Provisions.
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8.1 All terms and conditions of this Agreement are set forth herein, and
there are no warranties, agreements or understandings, express or implied,
except those expressly set forth herein.
8.2 Any modifications to this Agreement shall be binding only if evidenced
in writing signed by all parties hereto.
8.3 Any notice or other communication required or permitted to be given
hereunder shall be deemed properly given if personally delivered or deposited in
the United States Mail, registered or certified and postage prepaid, addressed
to the Company at 000 X. Xxx Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000 or to Employee at
his most recent home address on file with the Company, or at such other
addresses as may from time to time be designated in writing by the respective
parties.
8.4 The laws of the State of California shall govern the validity of this
Agreement, the construction of its terms, and the interpretation of the rights
and duties of the parties involved.
8.5 In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable,
the same shall not affect any other provision of this Agreement, but this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been contained herein.
8.6 This Agreement shall be binding upon, and inure to the benefit of, the
successors and assigns of the Company and the personal representatives, heirs
and legatees of Employee.
8.7 The term "Company" shall include, with respect to employment hereunder,
any subsidiary or affiliate of the Company, as well as any successor employer
following a Change of Control.
8.8 Notwithstanding any other provisions of this Agreement, in the event
the Employee is a specified employee (within the meaning of IRC Section 409A and
as determined pursuant to any rules adopted for such purposes by the Company) as
of the date of his termination of employment, any payment or benefit otherwise
required to be made as a result of Employee's termination of employment that is
considered to be deferred compensation under IRC Section 409A(a)(2)(B)(i)
payable on account of a "separation from service" (as distinguished from, for
instance, at a specified time or fixed schedule as described under Treas. Reg.
ss. 1.409A-3(a)(4) and -3(i)) and that is not exempt from IRC Section 409A as
involuntary separation pay or a short-term deferral (or otherwise), shall not be
paid, provided or commenced until the later of (i) six months after the date of
Employee's "separation from service" (within the meaning of IRC Section 409A),
or, if earlier, Employee's death, and (ii) the payment date or commencement date
specified in the Agreement for such payment(s) or benefit(s). On the earliest
date on which such payments or benefits can be made, provided or commenced
without violating the requirements of IRC Section 409A(a)(2)(B)(i), Employee
shall be paid, in a single cash lump sum, an amount equal to the aggregate
amount of all payments and benefits delayed pursuant to the preceding sentence.
The provisions of this paragraph shall only apply to the minimum extent required
to avoid Employee's incurrence of any additional tax or interest under IRC
Section 409A or any regulations or other Internal Revenue Service guidance
promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
AMERON INTERNATIONAL CORPORATION
By /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Chairman of the Board and
Chief Executive Officer
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
