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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into and
effective as of October 4, 1999, by and between Xxxxxxxxxxx International, Inc.,
a Delaware corporation (the "Company"), and Xxxx X. Xxxxxxx (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee on the terms set
forth below to provide services to the Company, and the Employee is willing to
accept such employment and provide such services on the terms set forth in this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the parties hereto do hereby agree:
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) "Cause" shall mean:
(i) the willful and continued failure of the Employee to
perform substantially the Employee's duties with the Company or one of
its affiliates (other than any such failure resulting from incapacity
due to physical or mental illness), after a written demand for
substantial performance is delivered to the Employee by the Company
which specifically identifies the manner in which the Employee has not
substantially performed the Employee's duties, or
(ii) the willful engaging by the Employee in illegal conduct
or gross misconduct which is materially and demonstrably injurious to
the Company.
No act, or failure to act, on the part of the Employee shall be
considered "willful" unless it is done, or omitted to be done, by the
Employee in bad faith or without reasonable belief that the Employee's
action or omission was in the best interests of the Company. Any act,
or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief
Executive Officer or of a senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively presumed to
be done, or omitted to be done, by the Employee in good faith and in
the best interests of the Company.
(b) "Change of Control" shall mean:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20 percent or more of either (A) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection
(i), the following acquisitions shall not constitute a Change of
Control:
(A) any acquisition directly from the Company,
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(B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or
(D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this Section 1(b); or
(ii) Individuals, who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual was a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of the Company (a "Corporate Transaction") in each case,
unless, following such Corporate Transaction, (A) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Corporate
Transaction beneficially own, directly or indirectly, more than 60
percent of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities, as the case may
be, (B) no Person (excluding any corporation resulting from such
Corporate Transaction or any employee benefit plan (or related trust)
of the Company or such corporation resulting from such Corporate
Transaction) beneficially owns, directly or indirectly, 20 percent or
more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Corporate Transaction or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Corporate Transaction and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Corporate
Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Corporate Transaction; or
(iv) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(c) "Good Reason" shall mean the occurrence of any of the following
after a Change of Control of the Company:
(i) the assignment to the Employee of any duties inconsistent
in any material respect with the Employee's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3(a) of this Agreement, or
any other
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action by the Company 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;
(ii) any failure by the Company to comply with any of the
provisions of Section 3(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 as provided in Section 3(a) hereof or the
Company's requiring the Employee to travel on Company business to a
substantially greater extent than required to perform the Employee's
duties hereunder;
(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 10(c) of this Agreement.
(d) "Board" shall mean the Board of Directors of the Company.
2. Employment Period. The Company hereby agrees that the Company or an
affiliated company will continue the Employee in its employ, and the Employee
hereby agrees to remain in the employ of the Company or an affiliate subject to
the terms and conditions of this Agreement, for the period commencing on the
date hereof and ending on October 31, 2001 (the "Employment Period"); provided,
however, if there is a Change of Control prior to October 31, 2001, the
Employment Period shall be extended for two years after the Change of Control.
3. Terms of Employment.
(a) Position and Duties. The Employee shall serve as President of the
Company's Completion Division or such other principal division of the Company to
which the Employee may be assigned. During the Employment Period, the Employee's
services shall be performed principally at the Company's principal executive
offices in Houston, Texas or other locations less than 35 miles from such
principal executive offices; provided, however, the Employee may be required to
travel on a reasonable basis in a manner consistent with the duties of the
Employee.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Employee
shall receive an annual base salary of $200,004 ("Annual Base Salary"),
which shall be paid at a monthly rate. During the Employment Period, the
Annual Base Salary shall be reviewed from time to time on the same basis as
similarly situated employees; provided, however, that a salary increase
shall not necessarily be awarded as a result of such review. Any increase
in Annual Base Salary may not serve to limit or reduce any other obligation
to the Employee under this Agreement. Annual Base Salary shall not be
reduced after any such increase. The term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased.
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(ii) Annual Bonus. The Employee shall be eligible for an annual
bonus for each fiscal year ending during the Employment Period on the same
basis as other similarly situated employees under the Company's annual
incentive programs.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Employee shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to similarly situated employees of the Company and its
affiliated companies. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under
common control with the Company.
(iv) Welfare Benefit Plans. During the Employment Period, the
Employee and/or the Employee's family, as the case may be, shall be
eligible to participate in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group
life, accidental death and travel accident insurance plans and programs) to
the extent applicable generally to similarly situated employees of the
Company and its affiliated companies. The Employee understands and agrees
that he will be responsible for all applicable employee contributions under
such plans, practices, policies and programs.
(v) Fringe Benefits. During the Employment Period, the Employee
shall be entitled to (A) a $600 per month car allowance and (B) such other
fringe benefits as in effect generally at any time thereafter with respect
to similarly situated employees of the Company and its affiliated
companies.
(vi) Vacation. During the Employment Period, the Employee shall
be entitled to at least 3 weeks paid vacation.
(vii) Deferred Compensation Plan. During the Employment Period,
the Employee shall be entitled to continue to participate in any deferred
compensation or similar plans in which similarly situated employees
participate.
4. Termination of Employment.
(a) Death or Disability. The Employee's employment shall terminate
automatically upon the Employee's death during the Employment Period. If the
Company determines in good faith that the Disability of the Employee has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Employee written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the Employee's
employment. In such event, the Employee's employment with the Company shall
terminate effective 30 days after receipt of such notice by the Employee (the
"Disability Effective Date"), provided that within the 30-day period 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 Company or its insurers and acceptable to the Employee or the
Employee's legal representative.
(b) Cause. The Company may terminate the Employee's employment during
the Employment Period for Cause.
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(c) Good Reason. Following a Change of Control during the Employment
Period, the Employee's employment may be terminated by the Employee during the
Employment Period for Good Reason upon 30 days prior written notice as long as
the cause of such Good Reason is not remedied.
(d) Without Cause. The Company may terminate the Employee's employment
during the Employment Period at any time without Cause subject to the Company's
obligation to pay to the Employee the compensation provided for in Section 5(e),
if such termination was not preceded by a Change of Control of the Company, or
Section 5(f), if such termination was preceded by a Change of Control of the
Company.
(e) By Employee other than Good Reason. The Employee may terminate the
Employee's employment with the Company for any reason other than for Good Reason
upon 30 days prior written notice to the Company.
(f) Notice of Termination. Any termination during the Employment Period
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 11(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) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date, in the case of a notice by the Company, shall be not more than 30
days after the giving of such notice). The failure by the 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, respectively, from asserting such fact or
circumstance in enforcing the Employee's or the Company's rights hereunder.
(g) Date of Termination. "Date of Termination" shall mean:
(i) if the Employee's employment is terminated by the Company for
Cause, or by the Employee for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may
be;
(ii) if the Employee's employment is terminated by the Company
other than for Cause, death or Disability, the Date of Termination shall be
the date on which the Company notifies the Employee of such termination;
(iii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of
the Employee or the Disability Effective Date, as the case may be; and
(iv) if the Employee's employment is terminated by the Employee,
the Date of Termination shall be the earlier to occur of (A) the last day
that the Employee reports to work for the Company and (B) the date which is
30 days from the Employee's notice of termination.
5. Obligations of the Company Upon Termination.
(a) Death. If the Employee's employment is terminated by reason of the
Employee's death during the Employment Period, the Employee's employment shall
terminate automatically without further obligations to the Employee's legal
representatives under this Agreement, other than for payment of Accrued
Obligations (as defined below) and the rights provided in Section 6. Accrued
Obligations shall be paid to the
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Employee's estate or beneficiaries, as applicable, in a lump sum in cash within
30 days after the Date of Termination.
(b) Disability. If the Employee's employment is terminated by reason of
the Employee's Disability during the Employment Period, the Employee's
employment shall terminate without further obligations to the Employee under
this Agreement, other than for payment of Accrued Obligations and the rights
provided in Section 6. Accrued Obligations shall be paid to the Employee in a
lump sum in cash within 30 days after the Date of Termination.
(c) Cause. If the Employee's employment is terminated for Cause during
the Employment Period, the Employee's employment shall terminate without further
obligations to the Employee, other than the obligation to pay to the Employee
his Annual Base Salary through the Date of Termination and the rights provided
in Section 6.
(d) Termination by Employee. If the Employee voluntarily terminates his
employment during the Employment Period for any reason other than for Good
Reason, the Employee's employment shall terminate without further obligations to
the Employee, other than for payment of Accrued Obligations and the rights
provided in Section 6. In such case, all Accrued Obligations shall be paid to
the Employee in a lump sum in cash within 30 days after the Date of Termination
subject to such other options or restrictions as provided by law.
(e) Other than For Cause, Death or Disability Not Preceded by Change of
Control. If, during the Employment Period, the Company terminates the Employee's
employment other than for Cause, death or Disability and such termination was
not preceded by a Change of Control of the Company during the Employment Period:
(i) The Company shall pay to the Employee in a lump sum in cash
within 30 days after the Date of Termination the sum of the Employee's
Annual Base Salary through the Date of Termination to the extent not
theretofore paid plus any expense reimbursements payable in accordance with
the Company's policies (the sum of the amounts described in this clause (i)
shall be hereinafter referred to as the "Accrued Obligations");
(ii) The Company shall continue to pay to the Employee the then
current Annual Base Salary of the Employee through the longer of (A)
October 31, 2001 and (B) one year following the Date of Termination, on the
same basis that such Annual Base Salary was paid prior to the termination
of employment; and
(iii) Each stock option granted to Employee under the Xxxxxxxxxxx
International, Inc. 1998 Employee Stock Option Plan that is not fully
vested on the Date of Termination will be exercisable for a number of
shares equal to (A) the number of shares subject to such option multiplied
by (B) a fraction, the numerator of which is the number of full months in
the period commencing on the date of grant of the option and ending on the
Date of Termination, and the denominator of which is 36.
(f) Good Reason or Other than For Cause, Death or Disability in the
Event of a Change of Control. If, during the Employment Period, the Company
terminates the Employee's employment other than for Cause, death or Disability,
or the Employee terminates employment for Good Reason, and such termination was
preceded by a Change of Control of the Company during the Employment Period:
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(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) the sum of (1) the Employee's Annual Base Salary
through the Date of Termination to the extent not theretofore paid,
(2) the product of (x) the higher of (I) the highest Annual Bonus
received by the Employee over the preceding three year period and (II)
the Annual Bonus that would be payable in respect of the current
fiscal year, if any (such higher amount being referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of which is
the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Employee under a plan
sponsored by the Company (together with any accrued interest or
earnings thereon), and any accrued vacation pay, in each case to the
extent not theretofore paid;
(B) an amount equal to two times the sum of (i) the
then current Annual Base Salary of the Employee and (ii) the Highest
Annual Bonus;
(C) an amount equal to (1) the total of the employer
basic and matching contributions credited to the Employee under the
Company's 401(k) Savings Plan (the "401(k) Plan") and any other
deferred compensation plan during the 12-month period immediately
preceding the month of the Employee's Date of Termination multiplied
by (2) a fraction, the numerator of which is the number of days from
the Date of Termination through the then scheduled expiration of the
Employment Period, and the denominator of which is 365, such amount to
be grossed up so that the amount the Employee actually receives after
payment of any federal or state taxes payable thereon equals the
amount first described above; and
(D) the total amount of all other fringe benefits
received by Employee on an annualized basis multiplied by a fraction,
the numerator of which is the number of days from the Date of
Termination through the then scheduled expiration of the Employment
Period, and the denominator of which is 365.
(ii) From the Employee's Date of Termination through the
then scheduled expiration of the Employment Period, or such longer period
as may be provided by the terms of the appropriate plan, program, practice
or policy, the Company shall continue benefits to the Employee and/or the
Employee's family equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Section 3(b)(iv) of this Agreement if the Employee's employment had not
been terminated; provided, however, that with respect to any of such plans,
programs, practices or policies requiring an employee contribution, the
Employee shall continue to pay the monthly employee contribution for same,
and provided further, that if the Employee becomes re-employed by another
employer and is eligible to receive medical or other welfare benefits under
another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility.
(iii) All benefits and amounts under the Company's deferred
compensation plan and the 401(k) Plan and any other similar plans,
including any stock options held by the Employee, not already vested shall
be 100% vested.
(iv) To the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Employee any other amounts or
benefits required to be paid or provided or which
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the Employee is eligible to receive under any plan, program, policy or
practice or contract or agreement of the Company and its affiliated
companies.
6. Other Rights. Except as provided herein, nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Employee may qualify, nor shall anything herein
limit or otherwise affect such rights as the Employee may have under any
contract or agreement with the Company or any of its affiliated companies.
Except as provided hereinafter, amounts which are vested benefits or which the
Employee is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement. It is expressly agreed by the Employee that the Employee shall have
no right to receive, and hereby waives any entitlement to, any severance pay or
similar benefit under any other plan, policy, practice or program of the
Company. In addition, if the Employee has any other employment or similar
agreement with the Company at the Date of Termination, the Employee agrees that
he shall have the right to receive all of the benefits provided under this
Agreement or such other agreement, whichever one, in its entirety, the Employee
chooses, but not both agreements, and when the Employee has made such election,
the other agreement shall be superseded in its entirety and shall be of no
further force and effect. The Employee also agrees that to the extent he may be
eligible for any severance pay or similar benefit under any laws providing for
severance or termination benefits, such other severance pay or similar benefit
shall be coordinated with the benefits owed hereunder, such that the Employee
shall not receive duplicate benefits.
7. Full Settlement.
(a) No Rights of Offset. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Employee or others.
(b) No Mitigation Required. 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
and such amounts shall not be reduced whether or not the Employee obtains other
employment.
(c) Legal Fees. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Employee may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company or the Employee of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereto (including as a result of any contest by the Employee about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
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8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, 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
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 8) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the 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 interest or penalties imposed with respect
to such taxes), including without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 8(a), if it shall be determined that the Employee is
entitled to a Gross-Up Payment, but that the Employee, after taking into account
the Payments and the Gross-Up Payment, would not receive a net after-tax benefit
of at least $1,000 (taking into account both income taxes and any Excise Tax) as
compared to the net after-tax proceeds to the Employee resulting from an
elimination of the Gross-Up Payment and a reduction of the Payments, in the
aggregate, to an amount (the "Reduced Amount") such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
the Employee and the Payments, in the aggregate, shall be reduced to the Reduced
Amount.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination shall be made by Xxxxxx
Xxxxxxxx LLP or, as provided below, such other certified public accounting firm
as may be designated by the Employee (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Employee within 15
business days after the receipt of notice from the Employee that there has been
a Payment, or such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Employee shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 8, shall be paid by the Company to the Employee within five days
after the receipt of the Accounting Firm's determination. 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 Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the 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 (the "IRS") that, if successful, would require the
payment by the Company of the Gross-Up Payment (or an additional Gross-Up
Payment) in the event the IRS seeks higher payment. Such notification shall be
given as soon as practicable, but no later than ten business days after the
Employee is informed in writing of such claim, and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Employee shall not pay such claim prior to the expiration of the
30-day period following the date on which he gives such notice to the Company
(or such shorter period ending on the
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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 limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order to
effectively contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claims; provided, however, that the Company shall bear and
pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such costs and shall indemnify and
hold the 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 8(c), the
Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Employee to pay the tax claimed and xxx for a refund or contest the claim
in any permissible manner, and the Employee agrees to prosecute such
contest to determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs the
Employee to pay such claim and xxx 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 harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the 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 issues raised by the IRS or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to Section 8(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 8(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 8(c), a determination is made that
the Employee shall not be entitled to any refund with respect to such claim and
the Company does not notify the Employee in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
9. 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 affiliated companies,
and their respective businesses, which shall have been obtained by the Employee
during
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the Employee's employment by the Company or any of its affiliated companies,
provided that it shall not apply to information which is or shall become public
knowledge (other than by acts by the Employee or representatives of the Employee
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 or as may otherwise be required by law or legal process, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. The Employee shall assign to the Company all
patents and intellectual property developed, conceived or invented alone by him
or with others at any time during which the Employee was employed by the Company
or any of its affiliates.
10. Successors.
(a) This Agreement is personal to the Employee and 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 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 as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
11. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT
OF LAWS. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Employee: Xxxx X. Xxxxxxx
Xx. 0, Xxx 000
Xxxxx, Xxxxx 00000
If to the Company: Xxxxxxxxxxx International, Inc.
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
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(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Employee's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Employee or the Company may have hereunder shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
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IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
/s/ Xxxx X. Xxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxx
XXXXXXXXXXX INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Xxxxxx X. Xxxx
Senior Vice President and General Counsel
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EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into and effective
as of October 4, 1999, by and between Xxxxxxxxxxx International, Inc., a
Delaware corporation (the "Company"), and Xxxx X. Xxxxxx (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee on the terms set forth
below to provide services to the Company, and the Employee is willing to accept
such employment and provide such services on the terms set forth in this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereto do hereby agree:
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) "Cause" shall mean:
(i) the willful and continued failure of the Employee to perform
substantially the Employee's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Employee by the Company which specifically identifies the manner in which the
Employee has not substantially performed the Employee's duties, or
(ii) the willful engaging by the Employee in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the Company.
No act, or failure to act, on the part of the Employee shall be
considered "willful" unless it is done, or omitted to be done, by the Employee
in bad faith or without reasonable belief that the Employee's action or omission
was in the best interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or of a senior officer of the
Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Employee in good
faith and in the best interests of the Company.
(b) "Change of Control" shall mean:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20 percent or more of either (A) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or (B)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control:
(A) any acquisition directly from the Company,
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(B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or
(D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 1(b); or
(ii) Individuals, who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual was a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
(iii) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of
the Company (a "Corporate Transaction") in each case, unless, following
such Corporate Transaction, (A) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction beneficially own, directly
or indirectly, more than 60 percent of, respectively, the then outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
Corporate Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may
be, (B) no Person (excluding any corporation resulting from such Corporate
Transaction or any employee benefit plan (or related trust) of the Company
or such corporation resulting from such Corporate Transaction) beneficially
owns, directly or indirectly, 20 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed prior to the Corporate Transaction and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such Corporate Transaction were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Corporate Transaction; or
(iv) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(c) "Good Reason" shall mean the occurrence of any of the following
after a Change of Control of the Company:
(i) the assignment to the Employee of any duties inconsistent in
any material respect with the Employee's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3(a) of this Agreement, or any
other
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action by the Company 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;
(ii) any failure by the Company to comply with any of the
provisions of Section 3(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 as provided in Section 3(a) hereof or the
Company's requiring the Employee to travel on Company business to a
substantially greater extent than required to perform the Employee's duties
hereunder;
(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 10(c) of this Agreement.
(d) "Board" shall mean the Board of Directors of the Company.
2. Employment Period. The Company hereby agrees that the Company or an
affiliated company will continue the Employee in its employ, and the Employee
hereby agrees to remain in the employ of the Company or an affiliate subject to
the terms and conditions of this Agreement, for the period commencing on the
date hereof and ending on October 31, 2001 (the "Employment Period"); provided,
however, if there is a Change of Control prior to October 31, 2001, the
Employment Period shall be extended for two years after the Change of Control.
3. Terms of Employment.
(a) Position and Duties. The Employee shall serve as President of the
Company's Drilling and Intervention Services Division or such other principal
division of the Company to which the Employee may be assigned. During the
Employment Period, the Employee's services shall be performed principally at the
Company's principal executive offices in Houston, Texas or other locations less
than 35 miles from such principal executive offices; provided, however, the
Employee may be required to travel on a reasonable basis in a manner consistent
with the duties of the Employee.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Employee
shall receive an annual base salary of $225,000 ("Annual Base Salary"),
which shall be paid at a monthly rate. During the Employment Period, the
Annual Base Salary shall be reviewed from time to time on the same basis as
similarly situated employees; provided, however, that a salary increase
shall not necessarily be awarded as a result of such review. Any increase
in Annual Base Salary may not serve to limit or reduce any other obligation
to the Employee under this Agreement. Annual Base Salary shall not be
reduced after any such increase. The term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased.
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(ii) Annual Bonus. The Employee shall be eligible for an annual
bonus for each fiscal year ending during the Employment Period on the same
basis as other similarly situated employees under the Company's annual
incentive programs.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Employee shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to similarly situated employees of the Company and its
affiliated companies. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under
common control with the Company.
(iv) Welfare Benefit Plans. During the Employment Period, the
Employee and/or the Employee's family, as the case may be, shall be
eligible to participate in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group
life, accidental death and travel accident insurance plans and programs) to
the extent applicable generally to similarly situated employees of the
Company and its affiliated companies. The Employee understands and agrees
that he will be responsible for all applicable employee contributions under
such plans, practices, policies and programs.
(v) Fringe Benefits. During the Employment Period, the Employee
shall be entitled to (A) a $600 per month car allowance and (B) such other
fringe benefits as in effect generally at any time thereafter with respect
to similarly situated employees of the Company and its affiliated
companies.
(vi) Vacation. During the Employment Period, the Employee shall
be entitled to at least 3 weeks paid vacation.
(vii) Deferred Compensation Plan. During the Employment Period,
the Employee shall be entitled to continue to participate in any deferred
compensation or similar plans in which similarly situated employees
participate.
(c) Termination of Prior Agreement. The Employee acknowledges and
agrees that this Agreement is being executed in replacement of the Employee's
existing Change of Control Agreement. As a result, the Employee and the Company
agree that the Change of Control Agreement dated as of August 16, 1996, between
the Employee and Xxxxxxxxxxx Enterra, Inc., is hereby terminated and of no
further force and effect.
4. Termination of Employment.
(a) Death or Disability. The Employee's employment shall terminate
automatically upon the Employee's death during the Employment Period. If the
Company determines in good faith that the Disability of the Employee has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Employee written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the Employee's
employment. In such event, the Employee's employment with the Company shall
terminate effective 30 days after receipt of such notice by the Employee (the
"Disability Effective Date"), provided that within the 30-day period 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
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to be total and permanent by a physician selected by the Company or its insurers
and acceptable to the Employee or the Employee's legal representative.
(b) Cause. The Company may terminate the Employee's employment during
the Employment Period for Cause.
(c) Good Reason. Following a Change of Control during the Employment
Period, the Employee's employment may be terminated by the Employee during the
Employment Period for Good Reason upon 30 days prior written notice as long as
the cause of such Good Reason is not remedied.
(d) Without Cause. The Company may terminate the Employee's
employment during the Employment Period at any time without Cause subject to the
Company's obligation to pay the Employee the compensation provided for in
Section 5(e), if such termination was not preceded by a Change of Control of the
Company, or Section 5(f), if such termination was preceded by a Change of
Control of the Company.
(e) By Employee other than for Good Reason. The Employee may
terminate the Employee's employment with the Company for any reason other than
for Good Reason upon 30 days prior written notice to the Company.
(f) Notice of Termination. Any termination during the Employment
Period 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 11(b) of the Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date, in the case of a notice by the Company, shall be not more than 30
days after the giving of such notice). The failure by the 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, respectively, from asserting such fact or
circumstance in enforcing the Employee's or the Company's rights hereunder.
(g) Date of Termination. "Date of Termination" shall mean:
(i) if the Employee's employment is terminated by the Company
for Cause, the date of receipt of the Notice of Termination or any later
date specified therein, as the case may be;
(ii) if the Employee's employment is terminated by the Company
other than for Cause, death or Disability, the Date of Termination shall be
the date on which the Company notifies the Employee of such termination;
(iii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of
the Employee or the Disability Effective Date, as the case may be; and
(iv) if the Employee's employment is terminated by the Employee,
the Date of Termination shall be the earlier to occur of (A) the last day
that the Employee reports to work for the Company and (B) the date which is
30 days from the Employee's notice of termination.
5. Obligations of the Company Upon Termination.
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(a) Death. If the Employee's employment is terminated by reason of
the Employee's death during the Employment Period, the Employee's employment
shall terminate automatically without further obligations to the Employee's
legal representatives under this Agreement, other than for payment of Accrued
Obligations (as defined below) and the rights provided in Section 6. Accrued
Obligations shall be paid to the Employee's estate or beneficiaries, as
applicable, in a lump sum in cash within 30 days after the Date of Termination.
(b) Disability. If the Employee's employment is terminated by reason
of the Employee's Disability during the Employment Period, the Employee's
employment shall terminate without further obligations to the Employee under
this Agreement, other than for payment of Accrued Obligations and the rights
provided in Section 6. Accrued Obligations shall be paid to the Employee in a
lump sum in cash within 30 days after the Date of Termination.
(c) Cause. If the Employee's employment is terminated for Cause
during the Employment Period, the Employee's employment shall terminate without
further obligations to the Employee, other than the obligation to pay to the
Employee his Annual Base Salary through the Date of Termination and the rights
provided in Section 6.
(d) Termination by Employee. If the Employee voluntarily terminates
his employment during the Employment Period for any reason other than for Good
Reason, the Employee's employment shall terminate without further obligations to
the Employee, other than for payment of Accrued Obligations and the rights
provided in Section 6. In such case, all Accrued Obligations shall be paid to
the Employee in a lump sum in cash within 30 days after the Date of Termination
subject to such other options or restrictions as provided by law.
(e) Other than For Cause, Death or Disability Not Preceded by a
Change of Control. If, during the Employment Period, the Company terminates the
Employee's employment other than for Cause, death or Disability and such
termination was not preceded by a Change of Control of the company during the
Employment Period:
(i) The Company shall pay to the Employee in a lump sum in cash
within 30 days after the Date of Termination the sum of the Employee's
Annual Base Salary through the Date of Termination to the extent not
theretofore paid plus any expense reimbursements payable in accordance with
the Company's policies (the sum of the amounts described in this clause (i)
shall be hereinafter referred to as the "Accrued Obligations");
(ii) The Company shall continue to pay to the Employee the then
current Annual Base Salary of the Employee through the longer of (A)
October 31, 2001 and (B) one year following the Date of Termination, on the
same basis that such Annual Base Salary was paid prior to the termination
of employment; and
(iii) Each stock option granted to Employee under the Xxxxxxxxxxx
International, Inc. 1998 Employee Stock Option Plan that is not fully
vested on the Date of Termination will be exercisable for a number of
shares equal to (A) the number of shares subject to such option multiplied
by (B) a fraction, the numerator of which is the number of full months in
the period commencing on the date of grant of the option and ending on the
Date of Termination, and the denominator of which is 36.
(f) Good Reason or Other than For Cause, Death or Disability in the
Event of a Change of Control. If, during the Employment Period, the Company
terminates the Employee's employment other than
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for Cause, death or Disability, or the Employee terminates employment for Good
Reason, and such termination was preceded by a Change of Control of the Company
during the Employment Period:
(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) the sum of (1) the Employee's Annual Base Salary
through the Date of Termination to the extent not theretofore paid,
(2) the product of (x) the higher of (I) the highest Annual Bonus
received by the Employee over the preceding three year period and (II)
the Annual Bonus that would be payable in respect of the current
fiscal year, if any (such higher amount being referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of which is
the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Employee under a plan
sponsored by the Company (together with any accrued interest or
earnings thereon), and any accrued vacation pay, in each case to the
extent not theretofore paid;
(B) an amount equal to two times the sum of (i) the then
current Annual Base Salary of the Employee and (ii) the Highest Annual
Bonus;
(C) an amount equal to (1) the total of the employer basic
and matching contributions credited to the Employee under the
Company's 401(k) Savings Plan (the "401(k) Plan") and any other
deferred compensation plan during the 12-month period immediately
preceding the month of the Employee's Date of Termination multiplied
by (2) a fraction, the numerator of which is the number of days from
the Date of Termination through the then scheduled expiration of the
Employment Period, and the denominator of which is 365, such amount to
be grossed up so that the amount the Employee actually receives after
payment of any federal or state taxes payable thereon equals the
amount first described above; and
(D) the total amount of all other fringe benefits received
by Employee on an annualized basis multiplied by a fraction, the
numerator of which is the number of days from the Date of Termination
through the then scheduled expiration of the Employment Period, and
the denominator of which is 365.
(ii) From the Employee's Date of Termination through the then
scheduled expiration of the Employment Period, or such longer period as may
be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue benefits to the Employee and/or the
Employee's family equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Section 3(b)(iv) of this Agreement if the Employee's employment had not
been terminated; provided, however, that with respect to any of such plans,
programs, practices or policies requiring an employee contribution, the
Employee shall continue to pay the monthly employee contribution for same,
and provided further, that if the Employee becomes re-employed by another
employer and is eligible to receive medical or other welfare benefits under
another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility.
(iii) All benefits and amounts under the Company's deferred
compensation plan and the 401(k) Plan and any other similar plans,
including any stock options held by the Employee, not already vested shall
be 100% vested.
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(iv) To the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Employee any other amounts or benefits
required to be paid or provided or which the Employee is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies.
6. Other Rights. Except as provided herein, nothing in this Agreement
shall prevent or limit the Employee's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Employee may qualify, nor shall anything
herein limit or otherwise affect such rights as the Employee may have under any
contract or agreement with the Company or any of its affiliated companies.
Except as provided hereinafter, amounts which are vested benefits or which the
Employee is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement. It is expressly agreed by the Employee that the Employee shall have
no right to receive, and hereby waives any entitlement to, any severance pay or
similar benefit under any other plan, policy, practice or program of the
Company. In addition, if the Employee has any other employment or similar
agreement with the Company at the Date of Termination, the Employee agrees that
he shall have the right to receive all of the benefits provided under this
Agreement or such other agreement, whichever one, in its entirety, the Employee
chooses, but not both agreements, and when the Employee has made such election,
the other agreement shall be superseded in its entirety and shall be of no
further force and effect. The Employee also agrees that to the extent he may be
eligible for any severance pay or similar benefit under any laws providing for
severance or termination benefits, such other severance pay or similar benefit
shall be coordinated with the benefits owed hereunder, such that the Employee
shall not receive duplicate benefits.
7. Full Settlement.
(a) No Rights of Offset. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Employee or others.
(b) No Mitigation Required. 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 and such amounts shall not be reduced whether or not the Employee
obtains other employment.
(c) Legal Fees. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Employee may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company or the Employee of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereto (including as a result of any contest by the Employee about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
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8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, 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
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 8) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the 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 interest or penalties imposed with respect
to such taxes), including without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 8(a), if it shall be determined that the Employee is
entitled to a Gross-Up Payment, but that the Employee, after taking into account
the Payments and the Gross-Up Payment, would not receive a net after-tax benefit
of at least $1,000 (taking into account both income taxes and any Excise Tax) as
compared to the net after-tax proceeds to the Employee resulting from an
elimination of the Gross-Up Payment and a reduction of the Payments, in the
aggregate, to an amount (the "Reduced Amount") such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
the Employee and the Payments, in the aggregate, shall be reduced to the Reduced
Amount.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination shall be made by Xxxxxx
Xxxxxxxx LLP or, as provided below, such other certified public accounting firm
as may be designated by the Employee (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Employee within 15
business days after the receipt of notice from the Employee that there has been
a Payment, or such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Employee shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 8, shall be paid by the Company to the Employee within five days
after the receipt of the Accounting Firm's determination. 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 Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the 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 (the "IRS") that, if successful, would require the
payment by the Company of the Gross-Up Payment (or an additional Gross-Up
Payment) in the event the IRS seeks higher payment. Such notification shall be
given as soon as practicable, but no later than ten business days after the
Employee is informed in writing of such claim, and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Employee shall not pay such claim prior to the expiration of the
30-day period following the date on which he gives such notice to the Company
(or such shorter period ending on the
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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 limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order to
effectively contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claims; provided, however, that the Company shall bear and
pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such costs and shall indemnify and
hold the 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 8(c), the
Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Employee to pay the tax claimed and xxx for a refund or contest the claim
in any permissible manner, and the Employee agrees to prosecute such
contest to determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs the
Employee to pay such claim and xxx 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 harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the 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 issues raised by the IRS or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by
the Company pursuant to Section 8(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 8(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Employee
of an amount advanced by the Company pursuant to Section 8(c), a determination
is made that the Employee shall not be entitled to any refund with respect to
such claim and the Company does not notify the Employee in writing of its intent
to contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
9. 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 affiliated companies,
and their respective businesses, which shall have been obtained by the Employee
during
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the Employee's employment by the Company or any of its affiliated companies,
provided that it shall not apply to information which is or shall become public
knowledge (other than by acts by the Employee or representatives of the Employee
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 or as may otherwise be required by law or legal process, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. The Employee shall assign to the Company all
patents and intellectual property developed, conceived or invented alone by him
or with others at any time during which the Employee was employed by the Company
or any of its affiliates.
10. Successors.
(a) This Agreement is personal to the Employee and 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 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 as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. Miscellaneous.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT
OF LAWS. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee: Xxxx X. Xxxxxx
0000 Xxxxxxxx Xx.
Xxxxx Xxxx, XX 00000
If to the Company: Xxxxxxxxxxx International, Inc.
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
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(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Employee's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Employee or the Company may have hereunder shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
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IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
/s/ Xxxx X. Xxxxxx
---------------------------------------------
Xxxx X. Xxxxxx
XXXXXXXXXXX INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Xxxxxx X. Xxxx
Senior Vice President and General Counsel
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