AMENDMENT NO. 2 TO
EMPLOYMENT AGREEMENT
This Amendment No. 2 to Employment Agreement (this "Second Amendment") is
made as of the 31st day of March, 2002, by and between Xxxxxx Industries, Inc.,
a Delaware corporation, Xxxxxx Shipyard, L.L.C., a Louisiana limited liability
company (together, the "Company"), and Xxxxx X. Xxxxxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and Executive have entered into that certain
Employment Agreement, dated as of March 31, 1998 (the "Employment Agreement"),
with an Initial Term (as defined in the Employment Agreement) of three years;
WHEREAS, the Company and Executive have entered into that certain Amendment
No. 1 to Employment Agreement, dated March 31, 2001 (the "First Amendment")
pursuant to which, among other things, the Company and the Executive mutually
elected to extend the term of the Employment Agreement until March 31, 2002; and
WHEREAS, the Company desires to continue to employ Executive, and Executive
desires to remain employed by the Company, for an extended term beginning on the
date hereof and ending on December 31, 2004, pursuant to the terms of the
Employment Agreement as amended by the First Amendment and as modified herein.
NOW, THEREFORE, for and in consideration of the continued employment of
Executive by the Company and the payment of salary and other compensation to
Executive by the Company, the parties hereto agree as follows, effective March
31, 2002:
Section 1. Except as expressly amended hereby, all of the terms and
provisions of the Employment Agreement, as amended by the First Amendment, shall
remain in full force and effect. Capitalized terms used herein, unless otherwise
defined herein, shall have the meaning given to them in the Employment Agreement
and the First Amendment.
Section 2. The second sentence of paragraph 2(b)(iii) of the Employment
Agreement is hereby amended to read in its entirety as follows:
"As used in this Agreement, including, but not limited to, paragraph
11, the terms "Change in Control" and "Change of Control" shall have the
meaning assigned to the term "Change of Control" in the Xxxxxx Industries,
Inc. 2002 Stock Plan."
Section 3. Paragraph 3 of the Employment Agreement is hereby amended to
read in its entirety as follows:
"3. Non-Competition Agreement.
(a) Executive recognizes that the Company's willingness to enter into this
Agreement is based in material part on Executive's agreement to the provisions
of this paragraph 3 and that Executive's breach of the provisions of this
paragraph 3 could materially damage the Company. Subject to the further
provisions of this Agreement, Executive will not, during the term of his
employment with the Company, and for a period of two years immediately following
the termination of such employment for any reason whatsoever, except as may be
set forth herein, directly or indirectly:
(i) carry on or engage in any business in direct competition with the
construction, conversion or repair of marine vessels or the fabrication of
modular components for offshore drilling rigs or floating production,
storage and offloading vessels (collectively, the "Businesses") of the
Company or any subsidiary of the Company (collectively, the "Companies") in
any State of the United States or other jurisdiction, or specified portions
thereof, in which the Executive regularly (a) makes contact with customers
of the Company or any of its subsidiaries, (b) conducts the business of the
Company or any of its subsidiaries or (c) supervises the activities of
other employees of the Company or its subsidiaries, as identified in
Appendix "A" attached hereto and forming a part of this Agreement, so long
as the Company or any of its subsidiaries carries on any of the Businesses
therein (collectively the "Territory");
(ii) call upon any person who is, at that time, an employee of any of
the Companies for the purpose or with the intent of enticing such employee
away from or out of the employ of any of the Companies;
(iii) call upon any customer of any of the Companies within the
Territory for the purpose of soliciting or selling products or services in
direct competition with any of the Companies within the Territory;
(iv) call upon any prospective acquisition candidate, on Executive's
own behalf or on behalf of any competitor, which candidate was, to
Executive's knowledge after due inquiry, either called upon by any of the
Companies or for which any of the Companies made an acquisition analysis,
for the purpose of acquiring such entity; or
(v) disclose customers, whether in existence or proposed, of any of
the Companies to any person, firm, partnership, corporation or business for
any reason or purpose whatsoever except to the extent that any of the
Companies has in the past disclosed such information to the public for
valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Executive from acquiring as in investment (i) not more than 1% of the
capital stock of a competing business, whose stock is traded on a national
securities exchange, the Nasdaq Stock Market or similar market or (ii) not more
than 5% of the capital stock of a competing business whose stock is not publicly
traded unless the Board consents to such acquisition.
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Executive agrees that he will from time to time upon the Company's request
promptly execute any supplement, amendment, restatement or modification of
Appendix "A" as may be necessary or appropriate to correctly reflect the
jurisdictions which, at the time of such modification, should be covered by
Appendix "A" and this Paragraph 3. Furthermore, Executive agrees that all
references to Appendix "A" in this Agreement shall be deemed to refer to
Appendix "A" as so supplemented, amended, restated or otherwise modified from
time to time.
(b) Because of the difficulty of measuring economic losses to the Company
as a result of a breach of the foregoing covenant, and because of the immediate
and irreparable damage that could be caused to the Company for which it would
have no other adequate remedy, Executive agrees that the foregoing covenant may
be enforced by the Company, in the event of breach by him, by injunctions and
restraining orders. Executive further agrees to waive any requirement for the
Company's securing or posting of any bond in connection with such remedies.
(c) It is agreed by the parties that the foregoing covenants in this
Paragraph 3 impose a reasonable restraint on Executive in light of the
activities and business of the Companies on the date of the execution of this
Agreement and the current plans of the Companies.
(d) It is further agreed by the parties hereto that, in the event that
Executive shall cease to be employed by the Company and shall enter into a
business or pursue other activities not in competition with the Businesses of
the Companies or similar activities or businesses in locations the operation of
which, under such circumstances, does not violate clause (a)(i) of this
paragraph 3, and in any event such new business, activities or location are not
in violation of this paragraph 3 or of Executive's obligations under this
paragraph 3, if any, Executive shall not be chargeable with a violation of this
paragraph 3 if the Companies shall thereafter enter the same, similar or a
competitive (i) business, (ii) course of activities or (iii) location, as
applicable.
(e) The covenants in this paragraph 3 are severable and separate, and the
enforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unenforceable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent permitted by law, and the Agreement shall thereby
be reformed.
(f) All of the covenants in this Paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Executive against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants.
(g) The Company and Executive hereby agree that this covenant is a material
and substantial part of this Agreement.
(h) Executive acknowledges that the payments provided under paragraph 4(d),
(relating to termination without Cause or termination for Good Reason) are
conditioned upon Executive fulfilling the noncompetition and nondisclosure
provisions of this Agreement. In addition, such payments are conditioned upon
Executive refraining, for a two-year period after
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termination of employment, from carrying on or engaging in, as an employee,
officer, director, shareholder, owner, partner, joint venturer, or in a
managerial capacity, whether as an executive, independent contractor, consultant
or advisor, or as a sales representative or otherwise, any business in direct
competition with the Businesses of the Companies in the Territory, to the extent
such activity is not prohibited by paragraph 3(a). In the event Executive shall
at any time materially breach any noncompetition or nondisclosure agreements
contained in this Agreement, including the agreements in this paragraph 3(h),
the Company may cancel payments otherwise due under paragraph 4(d) during the
period of such breach. Executive acknowledges that any such elimination of
payments would be an exercise of the Company's right to terminate its
performance hereunder upon Executive's breach of this Agreement and such
elimination of payments would not constitute and shall not be characterized as
the imposition of liquidated damages.
(i) Any dispute regarding the reasonableness of the covenants and
agreements set forth in this paragraph 3 or the territorial scope or duration
thereof or the remedies available to the Company upon any breach of such
covenants and agreements, shall be governed by and interpreted in accordance
with the laws of the State of United States or other jurisdiction in which the
alleged prohibited competing activity or disclosure occurs, and with respect to
each such dispute, the Company and Executive each hereby irrevocably consent to
the exclusive jurisdiction of the state and federal courts sitting in the
relevant State (or, in the case of any jurisdiction outside the United States,
the relevant courts of such jurisdiction) for resolution of such dispute, and
agree to be irrevocably bound by any judgment rendered thereby in connection
with such dispute, and further agree that service of process may be made upon
him or it in any legal proceeding related to this paragraph 3 and/or Appendix
"A" by any means allowed under the laws of such jurisdiction. Each party
irrevocably waives any objection he or it may have as to the venue of such suit,
action or proceeding brought in such a court or that such a court is an
inconvenient forum. The parties agree that it is their intent and desire that
the provisions of this Agreement be enforced to the fullest extent permitted
under applicable law, whether now or hereafter in effect, and therefore, to the
extent permitted by applicable law, the parties hereto waive any provision of
applicable law that would render any provision of this paragraph 3 invalid or
unenforceable."
Section 4. The first two sentences of paragraph 4 of the Employment
Agreement are hereby amended to read in their entirety as follows:
"4. Term; Termination; Rights on Termination. The term of this Agreement
shall begin on the Effective Date and shall continue for a period of three years
(the "Initial Term") and, unless terminated sooner as herein provided, shall
continue thereafter for such additional period as Company and Executive may
mutually agree (the "Extended Term") with such modifications, if any, as the
Company and Executive may mutually agree; provided, however, that upon a Change
in Control of the Company, the term of this Agreement shall automatically
continue following such Change in Control for a period equal to the then
remaining term or two years, whichever period is longer, unless earlier
terminated as provided in paragraph 11. This Agreement and Executive's
employment hereunder may be terminated in any one of the following ways:"
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Section 5. The fourth sentence of paragraph 4(d) of the Employment
Agreement is hereby amended to read in its entirety as follows:
"Should Executive be terminated by the Company without Cause during the
Extended Term or should Executive terminate with Good Reason during the Extended
Term, Executive shall receive from the Company the equivalent of one year of
Executive's base salary then in effect, which amount shall be paid in
substantially equal monthly installments during the first twelve full calendar
months immediately following the date of such termination."
Section 6. Paragraph 19 of the Employment Agreement is hereby amended to
read in its entirety as follows:
"19. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Louisiana without regard to its conflicts
of law provisions, except as expressly provided in paragraph 3(i) above with
respect to the resolution of disputes arising under, or the Company's
enforcement of, paragraph 3 of this Agreement.
Section 7. Pursuant to the provisions of Section 4 of the Employment
Agreement, as amended hereby, the Company and Executive hereby mutually agree to
extend the term of the Employment Agreement from the date hereof until December
31, 2004, such extended term to constitute an "Extended Term" as defined in the
Employment Agreement, as amended hereby.
[signatures appear on the following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be duly executed and signed as of the date indicated above.
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
Chairman, Compensation Committee of
the Board of Directors of
Xxxxxx Industries, Inc.
Xxxxxx Shipyard, L.L.C.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
------------------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: President
EXECUTIVE
/s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
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