Exhibit 10-9
August 28, 2002
Xx. Xxxxxx X. Xxxx
President and Chief Operating Officer
Xxxx Pacific Shipyards Corporation
0000 00xx Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxx:
This letter, when countersigned by you, shall serve as an employment
agreement ("Agreement") between you and Xxxx Pacific Shipyards
Corporation ("Xxxx"), wherein the parties agree as follows:
1. You shall continue to hold the position of President and Chief
Operating Officer of Xxxx and perform the duties associated with that
job through the term of your employment pursuant to this Agreement.
2. Subject to the provisions of this Agreement, Xxxx shall employ you
for a period of one year ("Term") commencing the 28th day of August,
2002 (the "Effective Date").
3. You will at all times conduct yourself in Todd's best interests and
will perform on a full-time basis, competently, diligently and to the
best of your abilities, the duties and services commonly associated with
your position, and such other duties appropriate to a senior executive
position as may be assigned. Xxxx reserves the right to change such job
description responsibilities assigned to you at any time and from time
to time during the term of your employment with Xxxx. You shall report
directly to the Chief Executive Officer of Todd's parent corporation
("Todd's Parent") and your principal place of employment shall be Todd's
headquarters in Seattle, Washington, located at 0000 00xx Xxx. XX,
Xxxxxxx, Xxxxxxxxxx 00000, subject to travel incident to your duties on
behalf of Xxxx. Except as otherwise authorized by Xxxx, you agree to be
present in the Greater Seattle Area at all times during the five-day
work week.
4. In exchange for your services, Xxxx shall pay to you during the Term
an annual gross salary at the rate of One Hundred Seventy-eight Thousand
and 00/100 Dollars ($178,000) per year in installments in accordance
with Todd's usual payroll practices ("Base Salary"). In addition,
during the Term, you shall be entitled to participate in such major
medical, hospital, life insurance and other benefit programs, to the
extent you are eligible under those plans, as Xxxx from time to time
shall keep in effect for its senior executives (the "Benefits"). Xxxx
reserves the right to change any one or more of such Benefits as it
determines to be necessary or appropriate. You shall be entitled to
reimbursement of the ordinary and necessary expenses incurred in
connection with your performance of the services contemplated by this
Agreement, subject to such reporting requirements as are in effect at
Xxxx.
5. In addition to the Base Salary and the Benefits, you shall be
entitled to receive additional incentive compensation for which you
qualify as the Board of Directors of Xxxx xxx determine to be
appropriate from time to time. The Board of Directors has adopted the
incentive compensation plan set forth on the attachment to this
Agreement for you for fiscal year 2003.
6. For purposes of this Agreement, a "Change of Control" means either of
the following events:
(a) A sale or other transfer of all or substantially all of the assets
of Xxxx or Xxxx'x Parent to a Person which is not an Affiliate of Xxxx
or Todd's Parent;
(b) A merger or other consolidation of Xxxx or Xxxx'x Parent into
another entity which is not an Affiliate of Xxxx or Todd's Parent;
(c) A Person acquires more than fifty percent (50%) of the combined
voting power of the outstanding securities of Xxxx or Xxxx'x Parent
having a right to vote at elections of directors; or
(d) The individuals who at the Effective Date constitute the Board of
Directors of Xxxx or Todd's Parent (the "Incumbent Board") cease for any
reason to constitute a majority thereof; provided, that any person
becoming a director subsequent to the Effective Date whose election, or
nomination for election, by the shareholders of Xxxx or Xxxx'x Parent,
as the case may be, was approved by a vote of at least a majority of the
directors comprising the Incumbent Board shall be, for purposes of this
paragraph, considered as though he or she were a member of the Incumbent
Board.
As used herein, (i) an entity is an "Affiliate" of Xxxx or Todd's Parent
if it controls, is controlled by, or is under common control with, Xxxx
or Xxxx'x Parent, as the case may be; and (ii) a "Person" means an
individual, a partnership, or other group or association as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934.
7. In the event (i) you are not offered employment by an entity assuming
control of Xxxx through a Change of Control (the "Successor"), (ii) Xxxx
terminates your employment without cause during the Term, or (iii) you
terminate your employment with Xxxx or the Successor during the Term for
Good Reason (defined below), you shall receive from Xxxx (a) xxxxxxxxx
compensation at the rate of your Base Salary over the duration of the
one year period commencing on the effective date of termination; (b)
reimbursement for the COBRA costs you incur for health insurance with
coverage substantially similar to the coverage offered to senior
executives of Xxxx, commencing on the effective date of termination and
continuing through the earlier of one year from such date or the date
you become eligible for health insurance coverage under any plan offered
by a subsequent employer; and (c) provided that Xxxx is then matching
employee contributions to its 401(k) profit-sharing plan, a gross amount
equal to the then current annual limit applicable to employee
contributions to 401(k) profit-sharing plans (which is $11,000 for
calendar year 2002) multiplied by 40%, payable in a lump sum on the
first regular pay date following the effective date of termination.
Payments to be made under this paragraph will be subject to all
applicable withholdings and, except for the amount paid pursuant to (c)
above, will be paid at intervals and in the same manner as salaries are
paid to other employees of Xxxx. "Good Reason" means a material adverse
change in your position causing such position to be of materially
reduced stature, authority or responsibility or you are required to
relocate to a facility or location outside of a sixty (60) mile radius
of the Greater Seattle Area, provided that you must terminate your
employment voluntarily within the 60-day period immediately following
the effective date of such change or requirement.
8. In the event of a Change of Control during your employment with Xxxx,
and should you be offered employment by the Successor with annual
compensation at least equal to your Base Salary, and you retain such
employment for a period of at least one year commencing from the
effective date of such Change of Control, all rights provided to you
under this Agreement shall terminate as of the expiration of such one
year period.
9. In the event of a Change of Control during your employment with Xxxx,
and should you be offered employment by the Successor with annual
compensation at least equal to your Base Salary, and such employment is
terminated prior to the expiration of the one year period commencing on
the effective date of such Change of Control, and such termination of
employment is not by your voluntary action (except as provided in
Paragraph 7 for Good Reason), or by the Successor for cause, you shall
receive from Xxxx (a) severance compensation at the rate of your Base
Salary, minus any and all amounts received as compensation from the
Successor during the time in which you were employed by the Successor;
and (b) reimbursement for the COBRA costs you incur for health insurance
with coverage substantially similar to the coverage offered to senior
executives of Successor. Payments to be made under this paragraph will
be subject to all applicable withholdings and will be paid at intervals
and in the same manner as salaries are paid to other employees of Xxxx.
Such payments will commence upon the termination of your employment with
the Successor and will cease upon the expiration of the one year period
following the effective date of the Change of Control or, in the case of
payments pursuant to (b) above, the date you become eligible for health
insurance coverage under any plan offered by a subsequent employer, if
earlier.
10. In the event of a Change of Control during your employment with
Xxxx, and should you be offered employment by the Successor with annual
compensation less than your Base Salary, you shall receive from Xxxx
additional compensation at the rate of your Base Salary, minus any and
all amounts received as compensation from the Successor, over the
duration of the one year period commencing on the effective date of the
Change of Control. Payments to be made under this paragraph will be
subject to all applicable withholdings and will be paid at intervals and
in the same manner as salaries are paid to other employees of Xxxx.
11. In the event Xxxx or the Successor terminates your employment for
cause or as a result of your death or disability, or if you should
voluntarily terminate your employment with Xxxx or the Successor (except
as provided in Paragraph 7 for Good Reason), all rights provided to you
under this Agreement shall terminate immediately upon the termination of
your employment.
12. Notwithstanding any termination of your employment with Xxxx,
whether such termination was with or without cause and regardless of
whether such termination was voluntary or involuntary, the restrictive
covenants contained in Paragraphs 13 and 14 of this Agreement shall
remain in full force and effect, together with Todd's right to enforce
such restrictive covenants and receive damages in the event of a breach
of such restrictive covenants.
13. For the duration of your employment with Xxxx and following the
termination of such employment, you shall not, directly or indirectly,
divulge, communicate or otherwise make available to any person,
corporation or government entity (except in performing your duties as an
employee of Xxxx), or use for your own or any other person's or entity's
benefit, any trade secret, confidential business information, or any
other information of a confidential nature of Xxxx or a related entity
of Xxxx. While you are in the employ of Xxxx, all documents or
information compiled, held, used or received by you in connection with
such employment shall remain the sole property of Xxxx and shall be
delivered to Xxxx upon your termination or at any earlier time so
requested by Xxxx. Xxxx shall have the right without the necessity of
posting a bond or proving special damages to enjoin any breach of this
provision by you.
14. For the duration of your employment with Xxxx and/or the Successor,
and for a period of one (1) year following the later of (i) the
termination of your employment with Xxxx or the Successor whether during
the Term or thereafter, or (ii) the expiration of the Term, you agree
not to:
(a) solicit or assist in the solicitation of the employment of any
person who was employed by Xxxx or the Successor during any part of the
twelve (12) months preceding your termination of employment with Xxxx or
the Successor, on your own behalf or on behalf of any other person;
(b) be employed by, contract to, consult with, own or otherwise
associate with any Competitor of Xxxx, other than the Successor; or
(c) be employed by, contract to, consult with, own or otherwise
associate with any significant subcontractor or significant supplier of
Xxxx or the Successor. A significant subcontractor or significant
supplier of Xxxx or the Successor shall be defined as a subcontractor
who performed services for Xxxx or the Successor, as the case may be,
with an aggregate invoice price of at least $100,000 or supplier who
provided tangible personal property to Xxxx or the Successor, as the
case may be, with an aggregate invoice price of at least $100,000, in
either case in any one of the two twelve month periods immediately
preceding the termination of your employment with Xxxx or the Successor.
This paragraph shall terminate upon the withdrawal by Xxxx and the
Successor from the shipbuilding and repair business in the State of
Washington. "Competitor" shall mean any entity engaged in the business
of building, repairing, converting or overhauling of marine vessels on
the West Coast of North America, other than repairing marine vessels of
less than 200 feet overall in length and building new marine vessels,
both solely within the geographic territory of British Columbia, Canada.
15. This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, between the parties
hereto with respect to the subject matter hereof. This Agreement may
not be amended orally but only by an agreement in writing signed by each
of the parties to this letter.
16. This Agreement and your rights and obligations under this Agreement
are personal to you and shall not be transferred or assigned by you.
Xxxx xxx assign this Agreement and the rights granted herein, including
but not limited to the provisions of Paragraphs 13 and 14, to any
purchaser of a substantial portion of its business assets or an
Affiliate of Xxxx. Xxxx shall cause any such purchaser or Affiliate to
assume and agree to perform Todd's obligations pursuant to this
Agreement. This Agreement shall be binding on and inure to the benefit
of Todd's successors and assigns.
17. This Agreement shall be governed and construed in accordance with
the laws of the State of Washington without giving effect to any choice
or conflict of law provision or rule (whether of the State of Washington
or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Washington.
If you are in agreement with the foregoing, please sign this letter and
return the executed copy to the undersigned, whereupon the provisions
hereof shall constitute a binding agreement between you and Xxxx Pacific
Shipyards Corporation as of the Effective Date.
Very Truly Yours,
XXXX PACIFIC SHIPYARDS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Chief Executive Officer
Accepted and Agreed to:
By: /s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
ATTACHMENT
For Fiscal Year 2003, you will be paid incentive compensation based on a
percentage of your Base Salary, the percentage to be determined using
the Pre-Tax Profit of Xxxx Pacific Shipyards for Fiscal Year 2003 as the
financial benchmark according to the chart below. The minimum level of
Pre-Tax Profit at which incentive compensation will be paid will be
$6,000,000, and the maximum level will be $9,650,000. You must be
employed by Xxxx at all times during Fiscal Year 2003 and through the
date Todd's Pre-Tax Profit for Fiscal Year 2003 is finally determined to
be eligible for any incentive compensation. Notwithstanding the
foregoing, partial year results shall be prorated based on the number of
days of Fiscal Year 2003 you are employed by Xxxx, but only in the event
of a Change of Control as defined in Section 6(a) and (b) of the
Agreement. Any incentive compensation to be paid to you will be paid
within a reasonable time after the determination of Todd's Pre-Tax
Profit for Fiscal Year 2003.
Todd's Pre-Tax Profit Percentage of
From To Base Salary
$ 9,650,000 --- 60.00%
9,500,000 $9,649,000 56.70%
9,325,000 9,499,000 53.30%
9,150,000 9,324,000 50.00%
8,975,000 9,149,000 46.70%
8,700,000 8,974,000 43.30%
8,425,000 8,699,000 40.00%
8,150,000 8,424,000 36.70%
7,875,000 8,149,000 33.30%
7,500,000 7,874,000 30.00%
7,125,000 7,499,000 26.70%
6,750,000 7,124,000 23.30%
6,000,000 6,749,000 20.00%
