EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 23rd day of March,
1998, by and between AVONDALE INDUSTRIES, INC., a Louisiana corporation
maintaining its principal office at 0000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxx
00000 (the "Company") and X. X. Xxxxxxx, Xx. now residing at 00 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxx 00000 (hereinafter called the "Employee").
W I T N E S S E T H
WHEREAS, the Employee is employed by the Company in an executive
capacity, and the Company desires to ensure that the Employee will be
available to provide executive services to the Company in the future, which
services are significant to the Company's long range prospects;
WHEREAS, the Company and Employee desire, among other things, to
prohibit Employee from disclosing or utilizing, outside the scope and term
of his employment, any non-public, confidential or proprietary information,
knowledge and data relating to the business and operations of the Company
or its subsidiaries received by Employee during the course of his
employment, and to restrict the ability of Employee to compete with the
Company or its subsidiaries for a limited period of time; and
WHEREAS, to induce the Employee to agree to provide such services on
the terms provided herein, the Company is offering to provide the Employee
with the compensation, benefits and security provided for in this
Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto agree as follows:
1. EMPLOYMENT/CAPACITY/TERM. The Company agrees to and does hereby
employ the Employee, and the Employee agrees to be employed by the Company
upon the terms and conditions set forth in this Agreement. Such employment
shall be in a managerial and executive capacity in the operation of the
business of the Company and/or a subsidiary, subject to the supervision of
the Board of Directors of the Company. Such employment shall commence on
the date hereof and shall continue through December 31, 2000, and from year
to year thereafter subject to the right of the Employee or the Company to
terminate such employment as of December 31, 2000, or any subsequent
December 31, by written notice given to the other party at least sixty (60)
days prior to such termination date stating an intention to so terminate
such employment. Termination by either party, in accordance with the
provisions of the preceding sentence, shall not require a statement of the
reason or cause for such termination and shall not be deemed a breach or
violation of this Agreement by the party giving such notice. As used in
this Agreement, the phrase "term of this Agreement" shall be deemed to
include the period subsequent to the date hereof and prior to termination
of this Agreement; however, such phrase shall not be construed as limiting
the enforceability by either party of any rights which survive termination
of this Agreement.
2. TIME AND EFFORT/ABSENCES. During the term of this Agreement, the
Employee shall devote his entire time and attention during normal business
hours to the business of the Company, and its subsidiaries, subject to the
supervision of the Board of Directors of the Company, and he shall not
engage in any other business activity whether or not such business activity
is pursued for gain, profit or other pecuniary advantage, but this
restriction shall not be construed to restrict the Employee (i) from
performing services as a member of the Board of Directors, Board of
Trustees or the like for any non-profit or for profit entity whether or not
the Employee receives compensation therefor, provided that, such services
do not unreasonably interfere with the ability of the Employee to perform
the services and discharge the responsibilities required of him under this
Agreement (it generally being agreed and understood that the quantity and
quality of the services heretofore performed by the Employee for non-profit
and for profit entities would not constitute a violation of the aforesaid
restriction), and (ii) from investing his assets in such form or manner as
will not require any services on the part of the Employee in the operation
of the business of the entity in which such investments are made. The
employee shall be excused from rendering his services during reasonable
vacation periods and during other reasonable temporary absences, all as
authorized from time to time by the Board of Directors of the Company. At
the date hereof, the Employee maintains his residence at 00 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxx 00000 and performs services for the Company in New
Orleans, Louisiana; it is understood that, without his consent, the
Employee will not be required to relocate to a different location to
discharge his responsibilities under this Agreement.
3. CORPORATE OFFICES. If elected, the Employee will serve, without
additional compensation, as a director of the Company or as an officer or
director of any subsidiary of the Company.
4. SALARY/BONUS/OTHER BENEFITS. In consideration of the services
and duties to be rendered and performed by the Employee during the term of
this Agreement, including the assumption of the duties and responsibilities
of an executive officer of the Company, the Company agrees to pay and
provide for the Employee the compensation and benefits described below:
(a) An annual salary, payable in equal monthly installments, in
the amount of Six Hundred Ninety Thousand One Hundred Sixty-Eight Dollars
and 00/100 ($690,168) or in such greater amount as may from time to time be
fixed by the Board of Directors or the Compensation Committee of the Board
of Directors of the Company. The Employee's annual salary shall never be
reduced.
(b) An annual incentive bonus in such amount as may from time to
time be fixed by the Board of Directors or the Compensation Committee of
the Board of Directors, provided that, the annual incentive bonus for any
period of less than twelve (12) months (other than for the period from the
date hereof through December 31, 1998) shall be prorated. The annual
incentive bonus shall be paid to the Employee (or to his personal
representative in the event of his death) in a lump sum prior to the
expiration of the period for which such bonus is payable or within 45 days
following the expiration of such period.
(c) OTHER BENEFITS. All other payments and/or benefits
described or provided for in this Agreement, including the Appendices
hereto. It is intended that such payments and/or benefits shall provide
the Employee and/or his personal representative(s) and/or beneficiaries, as
the case may be, with benefits which will be at least as favorable as the
benefits which on December 31, 1997 were provided for the Employee by the
Company. In addition, the Employee shall also be eligible for and shall
participate in any other employee benefit plan, including, any pension,
supplemental pension, retirement, supplemental retirement, profit-sharing,
thrift, bonus, incentive, deferred compensation, stock option or stock
appreciation or other employee benefit plan, including any life insurance,
accident, medical, disability, health or relocation plan or policy (all of
which are included by reference to the term "Plan") maintained by the
Company for its employees, generally, or for its senior executives, in
particular, on the same basis and subject to the same requirements and
limitations as may be made applicable to other senior executive employees
of the Company, provided that participation in and the terms of any
participation in the Avondale Industries, Inc. 1997 Stock Incentive Plan or
any successor plan shall be at the discretion of the Compensation Committee
as provided in such plans. The benefit plan structure and benefits which
shall be provided for the Employee and other senior executive employees of
the Company are described in Appendix A hereto. Nothing herein, however,
shall be construed as limiting the right of the Employee to additional or
other and greater benefits than are described in said Appendix A, if the
provisions of this Agreement obligate the Company to provide such other or
greater benefits, and in particular, but without limitation by the
specification hereof, the benefits described in Paragraphs 6, 7, 8 and 9
hereof and Appendices B, C and D hereto. In addition, the Company agrees
that where credited service of the Employee for the Company is relevant in
determining eligibility for or benefits under any Plan, the Employee's
credited service for the Company shall be determined to include service for
any parent, subsidiary or affiliate of the Company or for a predecessor of
the Company.
5. EXPENSES. The Employee shall be reimbursed for out-of-pocket
expenses incurred from time to time on behalf of the Company or any
subsidiary or in the performance of his duties under this Agreement, upon
the presentation of such supporting documents and forms as the Company
shall reasonably request.
6. DISABILITY/DISABILITY BENEFIT. In the event that the Employee is
incapable because of physical or mental illness of rendering services of
the character contemplated hereby, for a period of six (6) consecutive
months, the Board of Directors of the Company may determine that the
Employee has become disabled. In the event of such a determination of
disability, the Company shall have the continuing right and option while
such disability continues by notice in writing to the Employee to terminate
this Agreement effective thirty (30) days after such notice of termination
is so given, unless within such thirty (30) day period, the Employee
resumes rendering full-time services of the character contemplated hereby.
The incapacity due to physical or mental illness to render the services of
the character contemplated hereby, shall not constitute a breach of this
Agreement by the Employee. If this Agreement is terminated by the Company
as a result of a determination of disability, as aforesaid, the Company
shall be obligated to pay to the Employee the disability benefits described
in Appendix B hereto.
7. DEATH/DEATH BENEFIT. In the event of the death of the Employee
during the term of this Agreement, this Agreement will terminate and the
Employee's then rate of annual salary and an annual incentive bonus,
(prorated in accordance with subparagraph 4(b) hereof) shall be paid to the
Employee's personal representative through the last day of the month in
which such death occurs. In addition, the Company shall be obligated to
provide the Employee, his personal representative(s) and/or his
beneficiaries with the death benefits described in Appendix C hereto.
8. SEVERANCE PAY. If the employment of the Employee is terminated
at any time during the period that this Agreement is in effect (i) by the
Employee for Good Reason (as defined in Paragraph 9 hereof) or (ii) by the
Company for any reason other than for Cause (as hereafter defined) or other
than in accordance with Paragraph 6 hereof on account of the disability of
the Employee, the Company shall be obligated to pay to the Employee the
severance pay and benefits described in Appendix D attached hereto.
Termination of the Employee's employment on account of his death or
Retirement (as hereafter defined) will not be considered a termination of
the Employee's employment by the Company and will not require the Company
to pay and provide any severance pay or benefits pursuant to Appendix D.
Accordingly, the Company acknowledges that if the employment of the
Employee is terminated by it for any reason during the period that this
Agreement is in effect other than for Cause or other than on account of the
disability of the Employee in accordance with Paragraph 6 hereof, the
Company will be obligated to pay and provide the severance pay and benefits
described in Appendix D, in order to reinforce and encourage the continued
loyalty, attention, and dedication of the Employee to the Company's
business and affairs without the concerns which normally arise from the
possibility of a loss of employment security. As used herein, the terms
"Retirement" and "Cause" shall have the following meanings, respectively:
(a) RETIREMENT. Termination of the Employee's employment
"Retirement" shall mean termination on the Employee's normal retirement
date in accordance with the terms of the Avondale Industries, Inc. Pension
Plan (or any successor or substitute plan or plans of the Company or of any
subsidiary of the Company under which the Employee may be a participant);
and
(b) CAUSE. Termination by the Company of the Employee's
employment for "Cause" shall mean termination as a result of (i) the
willful and continued failure by the Employee to perform substantially the
services contemplated by this Agreement (other than any such failure
resulting from the Employee's incapacity due to physical or mental illness)
after a written demand for substantial performance is delivered to the
Employee by a member or representative of the Board of Directors of the
Company which specifically identifies the manner in which it is alleged
that the Employee has not substantially performed such services, or (ii)
the willful engaging by the Employee in gross misconduct which is
materially and demonstrably injurious to the Company; provided that, no
act, or failure to act, on the Employee's part shall be considered
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that such action or omission was in, or not opposed to,
the best interests of the Company. It is also expressly understood that
the Employee's attention to or engagement in matters not directly related
to the business of the Company shall not provide a basis for termination
for Cause if such attention or engagement is authorized by the terms of
this Agreement or has otherwise been approved by the Board of Directors of
the Company. Anything in this Agreement to the contrary notwithstanding,
the Employee's employment may not be terminated for Cause unless and until
there shall have been delivered to the Employee a copy of a resolution duly
adopted by the affirmative vote of not less than three quarters of the
entire membership of the Board at a meeting of the Board called and held
for the purpose (after reasonable notice to the Employee and an opportunity
for the Employee, together with his counsel, to be heard before the Board),
finding that in the good faith opinion of the Board the Employee was guilty
of the conduct set forth in clause (i) or (ii) of this subparagraph (b) and
specifying the particulars thereof in detail.
9. TERMINATION BY THE EMPLOYEE FOR GOOD REASON. The termination by
the Employee of his employment for "Good Reason" shall be deemed a
justifiable termination of his employment and shall excuse the Employee
from the obligation to render services as provided in Paragraph 2 hereof.
In that event (i) the full amount of the Employee's annual salary and
annual incentive bonus, together with all other benefits required to be
provided under this Agreement, shall be continued until the next succeeding
December 31st as of which the Company could have terminated the Employee's
employment pursuant to Paragraph 1 hereof without such termination
constituting a breach or violation of this Agreement; and (ii) the
Employee's employment shall be deemed to terminate on such December 31st.
As used herein, the term "Good Reason" shall mean:
(a) a change in the Employee's status, title or position(s) as
an officer of the Company which, in his reasonable judgment, does not
represent a promotion from or enhancement of his status, title and position
as an executive officer, or the assignment by the Board of Directors of the
Company to the Employee of any duties or responsibilities which, in his
reasonable judgment, are inconsistent with such status, title or position,
or any removal of the Employee from or any failure to reappoint or reelect
him to such position, except in connection with a justifiable termination
by the Company of the Employee's employment for Cause or on account of
disability, the Retirement or death of the Employee or the termination by
the Employee of his employment other than for Good Reason;
(b) a reduction in the Employee's annual salary or a failure by
the Company to pay to the Employee any installment of the annual salary
and/or the annual incentive bonus required pursuant to Paragraph 4 hereof,
which failure continues for a period of 20 days after written notice
thereof is given by the Employee to the Company;
(c) the failure by the Company to adopt, continue or maintain in
effect, any Plan or benefit which is required to be provided by the Company
pursuant to this Agreement (unless the Company provides the Employee with
the equivalent or at least substantially similar benefits under one or more
other Plans) other than as a result of the normal expiration of such Plan;
or the taking of any action or the failure to act by the Company, which
could adversely affect the Employee's continued participation in any such
Plan(s) or the ability of the Employee to enjoy or realize upon any
material benefit intended, or which could materially reduce the Employee's
benefits under any such Plan(s) or deprive him of any material benefit then
enjoyed by the Employee;
(d) the Company's requiring the Employee to be based anywhere
other than the New Orleans, Louisiana metropolitan area, except for
required travel on the Company's business to an extent substantially
consistent with the business travel obligations which the Employee
undertook on behalf of the Company prior to such required change;
(e) the failure by the Company to obtain the assumption of this
Agreement by any successor of the Company (other than by merger or
consolidation); provided, however, that upon a Change of Control of the
Company, as defined in the Change of Control Agreement between the Employee
and the Company (the "Change of Control Agreement"), the obligations of a
successor hereunder shall be limited to the obligations of the Company
hereunder through the date of the Change of Control after which date the
Change of Control Agreement shall govern.
(f) any purported termination by the Company of the Employee's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Paragraph 10 hereof, or which is not
justified as a termination of the Employee's employment based on Cause; and
for purposes of this Agreement, no such purported termination shall be
effective; or
(g) any refusal by the Company to allow the Employee to attend
to matters or engage in activities not directly related to the business of
the Company which is permitted by this Agreement or which, prior thereto,
was permitted by the Board of Directors of the Company.
10. NOTICE OF TERMINATION. Any purported notice of termination of
the Employee's employment (other than a Notice given by either pursuant to
Paragraph 1 hereof) shall be communicated in a writing delivered to the
other party as provided in Paragraph 14 hereof, (hereinafter a "Notice of
Termination"). For purposes of this Agreement a "Notice of Termination"
shall mean a notice which specifies the termination provision relied upon
by the party giving such notice and shall set forth in detail such facts
and circumstances claimed by said party to provide a justified basis for
termination of the Employee's employment under the provision(s) so
indicated.
11. NONDISCLOSURE, NONCOMPETITION AND PROPRIETARY RIGHTS.
(a) CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
(i) "Company Business" means the design, construction and
overhaul of both military and commercial ships.
(ii) "Confidential Information" means any information,
knowledge or data of any nature and in any form (including information that
is electronically transmitted or stored on any form of magnetic or
electronic storage media) relating to the past, current or prospective
business or operations of the Company and its subsidiaries, that at the
time or times concerned is not generally known to persons engaged in
businesses similar to those conducted or contemplated by the Company and
its subsidiaries (other than information known by such persons through a
violation of an obligation of confidentiality to the Company), whether
produced by the Company and its subsidiaries or any of their consultants,
agents or independent contractors or by Employee, and whether or not marked
confidential, including without limitation information relating to the
Company's or its subsidiaries' products and services, business plans,
business acquisitions, processes, product or service research and
development methods or techniques, training methods and other operational
methods or techniques, quality assurance procedures or standards, operating
procedures, files, plans, specifications, proposals, drawings, charts,
graphs, support data, trade secrets, supplier lists, supplier information,
purchasing methods or practices, distribution and selling activities,
consultants' reports, marketing and engineering or other technical studies,
maintenance records, employment or personnel data, marketing data,
strategies or techniques, financial reports, budgets, projections, cost
analyses, price lists, formulae and analyses, employee lists, customer
records, customer lists, customer source lists, proprietary computer
software, and internal notes and memoranda relating to any of the
foregoing.
(b) NONDISCLOSURE OF CONFIDENTIAL INFORMATION. During the term
of this Agreement, Employee shall hold in a fiduciary capacity for the
benefit of the Company all Confidential Information which shall have been
obtained by Employee during Employee's employment (whether prior to or
after the date of this Agreement) and shall use such Confidential
Information solely within the scope of his employment with and for the
exclusive benefit of the Company. For a period of three years after the
date of termination of Employee's employment by the Company, Employee
agrees (i) not to communicate, divulge or make available to any person or
entity (other than the Company) any such Confidential Information, except
upon the prior written authorization of the Company or as may be required
by law or legal process, and (ii) to deliver promptly to the Company any
Confidential Information in his possession, including any duplicates
thereof and any notes or other records Employee has prepared with respect
thereto. In the event that the provisions of any applicable law or the
order of any court would require Employee to disclose or otherwise make
available any Confidential Information, Employee shall give the Company
prompt prior written notice of such required disclosure and an opportunity
to contest the requirement of such disclosure or apply for a protective
order with respect to such Confidential Information by appropriate
proceedings.
(c) LIMITED COVENANT NOT TO COMPETE. During the term of this
Agreement and for a period of two years thereafter, commencing with the
date of termination of employment by the Employee for Good Reason, by the
Company for any reason other than for Cause, or by the Company for Cause if
the Company chooses to extend to Employee upon termination for Cause the
severance benefits provided in Paragraph 8 hereof and Appendix D hereto,
Employee agrees that, with respect to each State of the United States or
other jurisdiction, or specified portions thereof, in which the Employee
regularly (i) makes contact with customers of the Company or any of its
subsidiaries, (ii) conducts the business of the Company or any of its
subsidiaries or (iii) supervises the activities of other employees of the
Company or any of its subsidiaries, which states and jurisdictions or
portions thereof are identified in Appendix E attached hereto and forming a
part of this Agreement, and in which the Company or any of its subsidiaries
engages in the Company Business on the Date of Termination (collectively,
the "Subject Areas"), Employee will restrict his activities within the
Subject Areas as follows:
(i) Employee will not, directly or indirectly, for himself
or others, own, manage, operate, control, be employed in an executive,
managerial or supervisory capacity by, or otherwise engage or participate
in or allow his skill, knowledge, experience or reputation to be used in
connection with, the ownership, management, operation or control of, any
company or other business enterprise engaged in the Company Business within
any of the Subject Areas; provided, however, that nothing contained herein
shall prohibit Employee from making passive investments as long as Employee
does not beneficially own more than 10% of the equity interests of a
business enterprise engaged in the Company Business within any of the
Subject Areas. For purposes of this paragraph, "beneficially own" shall
have the same meaning ascribed to that term in Rule 13d-3 under the
Securities Exchange Act of 1934.
(ii) Employee will not call upon any customer of the Company
or its subsidiaries for the purpose of soliciting, diverting or enticing
away the business of such person or entity, or otherwise disrupting any
previously established relationship existing between such person or entity
and the Company or its subsidiaries;
(iii) Employee will not solicit, induce, influence or
attempt to influence any supplier, lessor, licensor, potential acquiree or
any other person who has a business relationship with the Company or its
subsidiaries, or who on the date of termination of employment of Employee
is engaged in discussions or negotiations to enter into a business
relationship with the Company or its subsidiaries, to discontinue or reduce
the extent of such relationship with the Company or its subsidiaries; and
(iv) Employee will not make contact with any of the
employees of the Company or its subsidiaries with whom he had contact
during the course of his employment with the Company for the purpose of
soliciting such employee for hire, whether as an employee or independent
contractor, or otherwise disrupting such employee's relationship with the
Company or its subsidiaries.
(v) Employee further agrees that, for a period of one year
from and after the date of termination of employment, Employee will not
hire, on behalf of himself or any company engaged in the Company Business
with which Employee is associated, any employee of the Company or its
subsidiaries as an employee or independent contractor, whether or not such
engagement is solicited by Employee; provided, however, that the
restriction contained in this subsection (v) shall not apply to Company
employees who reside in, or are hired by Employee to perform work in any
Subject Areas located within the State of Virginia.
Employee agrees that he will from time to time upon the Company's
request promptly execute any supplement, amendment, restatement or other
modification of Appendix E as may be necessary or appropriate to correctly
reflect the jurisdictions which, at the time of such modification, should
be covered by Appendix E and this Paragraph 11(c). Furthermore, Employee
agrees that all references to Appendix E in this Agreement shall be deemed
to refer to Appendix E as so supplemented, amended, restated or otherwise
modified from time to time. Enforcement of this Paragraph 11(c) is subject
to the provisions of Paragraph 11(e) hereof.
(d) CERTAIN PROPRIETARY RIGHTS. Employee agrees to and hereby
does assign to the Company all his interest in and to all inventions,
whether or not patentable, which are made or conceived solely or jointly by
him:
(i) At any time during the term of his employment by the
Company in an executive, managerial, planning, technical research or
engineering capacity (including development, manufacturing, systems,
applied science and sales), or
(ii) During the course of or in connection with his duties
during the term of this Agreement, or
(iii) With the use of time or materials of the Company.
Employee agrees to communicate to the Company or its representatives
all facts known to him concerning such inventions, to sign all rightful
papers, make all rightful oaths and generally to do everything possible to
aid the Company in obtaining and enforcing proper patent protection for all
such inventions in all countries and in vesting title to such inventions
and patents in the Company. For the purpose of this Agreement, the
subject matter of any application for patent naming Employee as a sole or
joint inventor filed during the course of employment or within one year
subsequent to the termination thereof shall be deemed to be an invention
made or conceived by him during the course of his employment by the Company
and assignable to the Company hereunder, unless the Employee establishes by
a preponderance of the evidence that such invention was made or conceived
by him subsequent to termination of his employment hereunder. At the
Company's request (during or after the term of this Agreement) and expense,
the Employee will promptly execute a specific assignment of title to the
Company, and perform any other acts reasonably necessary to implement the
foregoing assignment.
(e) INJUNCTIVE RELIEF; OTHER REMEDIES. Employee acknowledges
that a breach by Employee of Paragraph 11(b), (c) or (d) would cause
immediate and irreparable harm to the Company for which an adequate
monetary remedy does not exist; hence, Employee agrees that, in the event
of a breach or threatened breach by Employee of the provisions of Paragraph
11(b), (c) or (d) during or after the Employment Term, the Company shall be
entitled to injunctive relief restraining Employee from such violation
without the necessity of proof of actual damage or the posting of any bond,
except as required by non-waivable, applicable law. Nothing herein,
however, shall be construed as prohibiting the Company from pursuing any
other remedy at law or in equity to which the Company may be entitled under
applicable law in the event of a breach or threatened breach of this
Agreement by Employee, including without limitation the recovery of damages
and/or costs and expenses, such as reasonable attorneys' fees, incurred by
the Company as a result of any such breach. It shall be a condition to the
enforceability by the Company of the provisions of this Paragraph 11(c),
however, that the Company pays to and provides for the Employee the full
amount of severance pay and benefits described in Appendix D. Unless the
Company notifies the Employee in the Notice of Termination for Cause that
it intends to enforce the provisions of Paragraph 11(c) and agrees to pay
the Employee the full amount of severance pay and benefits described in
Appendix D, it shall be conclusively presumed for all purposes of this
Agreement that the Company has elected to waive the right to enforce the
provisions of this Paragraph 11(c). Employee acknowledges that the
payments provided under Paragraph 8 and Appendix D are conditioned upon
Employee fulfilling any noncompetition and nondisclosure agreements
contained in Paragraph 11. In the event Employee shall at any time
materially breach any noncompetition or nondisclosure agreements contained
in Paragraph 11, the Company may suspend or eliminate payments under
Paragraph 8 and Appendix D during the period of such breach. Employee
acknowledges that any such suspension or elimination of payments would be
an exercise of the Company's right to suspend or terminate its performance
hereunder upon Employee's breach of this Agreement; such suspension or
elimination of payments would not constitute, and should not be
characterized as, the imposition of liquidated damages.
(f) REQUESTS FOR WAIVER IN CASES OF UNDUE HARDSHIP. In the
event that Employee should find any of the limitations of Paragraph 11(c)
(including without limitation the geographic restrictions of Appendix E) to
impose a severe hardship on Employee's ability to secure other employment,
Employee may make a request to the Company for a waiver of the designated
limitations before accepting employment that otherwise would be a breach of
Employee's promises and obligations under this Agreement. Such request
must be in writing and clearly set forth the name and address of the
organization with that employment is sought and the location, position and
duties that Employee will be performing. The Company will consider the
request and, in its sole discretion, decide whether and on what conditions
to grant such waiver.
(g) GOVERNING LAW OF THIS PARAGRAPH 11; CONSENT TO JURISDICTION.
Any dispute regarding the reasonableness of the covenants and agreements
set forth in this Paragraph 11, or the territorial scope or duration
thereof, or the remedies available to the Company upon any breach of such
covenants and agreements, shall be governed by and interpreted in
accordance with the laws of the State of the United States or other
jurisdiction in which the alleged prohibited competing activity or
disclosure occurs, and, with respect to each such dispute, the Company and
Employee each hereby irrevocably consent to the exclusive jurisdiction of
the state and federal courts sitting in the relevant State for resolution
of such dispute, and agree to be irrevocably bound by any judgment rendered
thereby in connection with such dispute, and further agree that service of
process may be made upon him or it in any legal proceeding relating to this
Paragraph 11 and/or Appendix E by any means allowed under the laws of such
jurisdiction. Each party irrevocably waives any objection he or it may
have as to the venue of any such suit, action or proceeding brought in such
a court or that such a court is an inconvenient forum. It is the desire
and intent of the parties that the provisions of this Agreement be enforced
to the fullest extent permitted under applicable law, whether now or
hereafter in effect and, therefore, to the extent permitted by applicable
law, the parties hereto waive any provision of applicable law that would
render any provision of this Paragraph 11 invalid or unenforceable.
12. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of:
(a) The Company, and any successors or assigns of the Company,
except that in the event of a Change of Control of the Company as defined
in the Change of Control Agreement, this Agreement shall be superseded by
the Change of Control Agreement. In the event of the assignment by the
Company of this Agreement, the Company shall nevertheless remain liable and
obligated to the Employee in accordance with the terms hereof; and
(b) The Employee, his estate, his executors, administrators,
heirs and beneficiaries.
13. EXPENSES RELATING TO ENFORCEMENT OF RIGHTS. If either party
shall successfully seek to enforce any provision of this Agreement or to
collect any amount claimed to be due hereunder, such successful party shall
be entitled to be reimbursed by the other party for any and all out-of-
pocket expenses, including reasonable attorneys' fees, incurred in
connection with such enforcements and/or collection.
14. SEVERABILITY. If any term or provision of this Agreement
(including without limitation those contained in an Appendix hereto), or
the application thereof to any person or circumstance, shall at any time or
to any extent be invalid, illegal or unenforceable in any respect as
written, Employee and the Company intend for any court construing this
Agreement to modify or limit such provision temporally, spatially or
otherwise so as to render it valid and enforceable to the fullest extent
allowed by law. Any such provision that is not susceptible of such
reformation shall be ignored so as to not affect any other term or
provision hereof, and the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as
to which it is held invalid, illegal or unenforceable, shall not be
affected thereby and each term and provision of this Agreement shall be
valid and enforced to the fullest extent permitted by law.
15. NOTICES. Any notice or other communication required under this
Agreement shall be in writing, shall be deemed to have been given and
received when delivered in person, or, if mailed, shall be deemed to have
been given when deposited in the United States mail, first class,
registered and certified, return receipt requested, with proper postage
prepaid, and shall be deemed to have been received on the third business
day thereafter, and shall be addressed as follows:
If to the Company, addressed to:
Avondale Industries, Inc.
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
If to the Employee, addressed to:
X. X. Xxxxxxx, Xx.
00 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
or such other address as to which any party hereto may have notified
the other in writing.
16. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Louisiana without
regard to the principles of conflict of laws, except as expressly provided
in Paragraph 11(g) above with respect to the resolution of disputes arising
under, or the Company's enforcement of Paragraph 11 of this Agreement.
17. ENTIRE AGREEMENT. This document contains or refers to the entire
arrangement or understanding between the parties relating to the employment
of the Employee by the Company prior to a Change of Control of the Company,
as defined in the Change of Control Agreement. This Agreement, including
Appendices A through E, inclusive, all of which are herein incorporated by
reference and made a part hereof, contains or refers to the entire
arrangement or understanding between the Employee and the Company relating
to the employment of the Employee by the Company. No provision of the
Agreement, including the Appendices, may be modified or amended except by
an instrument in writing signed by or for both parties hereto.
AVONDALE INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------
Xxxx X. Xxxxxxxx
Chairman, Compensation Committee
/s/ X. X. Xxxxxxx, Xx.
--------------------------
X. X. Xxxxxxx, Xx.
LIST OF APPENDICES
DESCRIPTION NUMBER OF PAGES
Appendix A Benefit Plan Structure 5
Appendix B Disability Benefits 1
Appendix C Death Benefits 1
Appendix D Severance Benefits 3
Appendix E Subject Areas under Limited 1
Covenant Not to Compete
APPENDIX "A"
AVONDALE INDUSTRIES, INC.
AVONDALE SERVICES CORPORATION
EXECUTIVE GROUP
Effective Date: 1-1-98
COVERAGE DESCRIPTION
EMPLOYEE LIFE Two times base salary and bonus
Optional Coverage - additional one or two times base
salary and bonus
Maximum Coverage - Two million dollars
DEPENDENT LIFE $2,000.00 Spouse - Optional $100,000.00
$1,000.00 Dependent (over six months old)
$100.00 Dependent (less than six months old)
Accidental Death and Death - Same as Life (Employee Only)
DISMEMBERMENT Dismemberment - Benefit Schedule
Business According to rate of pay - Maximum $50,000.00
TRAVEL ACCIDENT
TRAVEL ACCIDENT (SALARIED) 5 Times Annual Salary - Maximum $500,000.00
RETIREE LIFE One-half of Life Insurance in force at time of
retirement
SHORT TERM DISABILITY Schedule based on length of service (see Page 2)
LONG TERM DISABILITY 60% of monthly base salary, after 180 day waiting
period.
Maximum $15,000 per month coordinated with Disability
Social Security Benefit.
HEALTH CARE 100% Hospital - private room rate plus miscellaneous
expenses
100% Hospital Medical Expenses - (doctor's visits to
hospital)
100% Surgical Expenses
100% Laboratory and X-ray Expenses
100% Vision and Hearing Care Expenses
100% Dental and Orthodontia
100% Annual Physicals
100% Psychiatric and Nervous Care - expenses up to
$6,500.00 per year per individual
No Life-Time Maximum
Subject to applicable employee contribution requirement
SHORT TERM DISABILITY
Benefits begin on first day absent due to a non-occupational injury or
illness. Original medical documentation required if absent five or more
consecutive working days.
Benefits will be reduced by any amount received from Social Security.
Successive periods of disability separated by less than two (2) weeks of
full-time work considered as one continuous period of disability, unless
later disability due to a different cause.
Benefits will be paid up to a maximum of twenty-six (26) weeks, based on
the following schedule:
YEARS OF SERVICE FULL SALARY UP TO HALF SALARY UP TO
Less than 1 Year 4 Weeks 0 Weeks
1 Year 4 Weeks 22 Weeks
2 Years 6 Weeks 20 Weeks
3 Years 8 Weeks 18 Weeks
4 Years 10 Weeks 16 Weeks
5 Years 12 Weeks 14 Weeks
6 Years 14 Weeks 12 Weeks
7 Years 16 Weeks 10 Weeks
8 Years 18 Weeks 8 Weeks
9 Years 20 Weeks 6 Weeks
10 Years 22 Weeks 4 Weeks
11 Years 24 Weeks 2 Weeks
12 Years or more 26 Weeks 0 Weeks
JURY DUTY
Pays difference between employee's base pay and jury pay received, not to
exceed eight hours pay per day.
BLOOD BANK
To be eligible, must be a participant in Group Health Insurance Program.
In joining the Blood Bank Program, the employee agrees to donate a unit of
blood as requested at irregular intervals. The Program provides the
employee and insured dependents with blood for as long as the employee
remains in the Program.
HOLIDAYS
Eight Paid Holidays - New Years Day, Mardi Gras, Good Friday, July Fourth,
Labor Day, Thanksgiving Day, Day After Thanksgiving and Christmas.
Eligible upon completion of thirty days service.
VACATION
Vacation year is from January 1 to December 31. Upon completion of one
full year of service, eligible for two weeks of vacation. An employee
joining the Company after January 1 but prior to July 1 will be eligible
for one week's vacation the following January 1. Vacation time may not be
carried over from one vacation period to the next. Vacation time may be
taken in one-hour increments. Beginning with ten full years of service,
eligible for additional days of vacation, up to a maximum of five
additional days, based on the following schedule:
YEARS OF SERVICE ADDITIONAL DAYS OF VACATION
10 Years 1 Day
11 Years 2 Days
12 Years 3 Days
13 Years 4 Days
14 Years 5 Days
SICK/PERSONAL TIME
Eligible for twenty-four hours per calendar year. Time may be taken in
one-hour increments. Unused time may not be carried over to the next year.
FUNERAL LEAVE
None
TUITION ASSISTANCE
Eligible upon completion of one year's service. Only courses directly
related to employee's position and taken at an accredited institution will
be considered. Approval must be obtained prior to the start of the course.
Reimbursement will be made for the cost of tuition only, and will be based
on the following schedule:
COURSE LEVEL FINAL GRADE REIMBURSEMENT PERCENTAGE
Under-Graduate Not Lower Than "C" 100%
Post-Graduate Not Lower Than "B" 100%
AUTOMOBILE ALLOWANCE
$600 per month
RETIREMENT
Formula - 1.5% of final average compensation, multiplied by years of
credited service, less Massachusetts Mutual Annuity and equivalent
actuarial value of any shares in ESOP account.
Early Retirement Benefits available at age 55 with ten years service,
actuarially reduced by years and months early.
SUPPLEMENTAL RETIREMENT PLAN
Vesting: 100% vesting upon completion of ten (10) years service
Formula: 15% of final average compensation.
Early Retirement Benefits available at Age 55 with ten (10) years service,
actuarially reduced by years and months early
EXECUTIVE EXCESS RETIREMENT PLAN
If designated as a participant by the Board of Directors.
Purpose of the plan is to reimburse participants for benefits not payable
under the Pension Plan and ESOP because of limitations in the Internal
Revenue Code and the Pension Plan.
Benefits paid upon attainment of age 75 or upon retirement, if earlier.
Benefit is unfunded.
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
Plan Year - September 1 to August 31
Eligibility - 1st of month following one year of service
Compensation - Total salary, excluding severance pay, moving expenses and
non-cash contribution
Stock Allocation - Each year the Trustees divide the available shares of
stock among eligible participants, based on each participant's
compensation. These allocated shares are held in the participant's ESOP
account. Must be on payroll last pay period of each plan year to receive
allocation.
Distribution - (1) Retirement - Age 55 or later
(2) Total & Permanent Disability with Social Security Award
(3) Death
Vesting - Employees who were eligible to receive Special Shares were 100%
vested.
Vesting for Loan Shares is as follows:
Less than 4 years 0%
4 years but less than 5 40%
5 years but less than 6 50%
6 years but less than 7 60%
7 years but less than 8 70%
8 years but less than 9 80%
9years but less than 10 90%
10 years or more 100%
APPENDIX B
DISABILITY BENEFIT
In the event of termination by the Company of the Employee's
employment on account of disability pursuant to Paragraph 6 of the
Agreement, the disability benefit to be provided to the Employee shall be
determined under this Appendix, unless a greater or more favorable benefit
is required to be provided pursuant to the provisions of Subparagraph 4(c)
of the Agreement and/or Appendix A.
1. CONTINUATION OF FULL ANNUAL SALARY: The full amount of the
Employee's annual salary (pursuant to paragraph 4(a) of this Agreement)
shall be continued according to the following formula:
(i) If the Employee's credited service for the Company totals
(5) five years or less his annual salary shall be continued for twelve (12)
months commencing with the month following such termination of employment;
and
(ii) If the Employee's credited service for the Company totals
more than five (5) years, the payment period referred to in (i) shall be
increased by two-tenths (2/10) of a year for each year of credited service
in excess of five (5) up to a maximum payment period of five (5) years.
Thus, if the Employee's employment is terminated on account of disability
at a time when he has twelve (12) years of credited service, the Employee's
full annual salary would be continued for 2.4 years following such
termination of employment and an Employee with twenty-five (25) or more
years of credited service as of the termination of his employment on
account of disability will receive his full annual salary for five (5)
years.
2. CONTINUATION OF PARTIAL ANNUAL SALARY. Following the expiration
of the period calculated pursuant to the preceding Paragraph 1, the
Employee will receive long term disability benefits equal to sixty percent
(60%) of his full annual salary subject to such limitations as are
contained in Appendix A.
3. LIMITATIONS. The disability benefit will in any event
discontinue and terminate upon the death of the Employee or upon the date
of his Retirement as defined in subparagraph 9(a) of the Agreement would
have occurred.
4. OTHER BENEFITS. Other benefits which may be provided or
continued for the Employee following the termination of his employment on
account of disability depend upon the terms of the Plan under which such
benefits are provided or required to be provided.
APPENDIX C
DEATH BENEFITS
The death benefits to be provided by the Company subsequent to the
death of the Employee shall be determined by reference to the plan or plans
under which such benefits are provided. Reference is made to subparagraph
4(c) of the Agreement and to Appendix A.
APPENDIX D
SEVERANCE BENEFITS
Upon the termination of the Employee's employment under any
circumstance requiring the Company to pay to and provide for the Employee
the severance pay and other benefits set forth in this Appendix D, the
Company shall be obligated to pay to and/or provide for the Employee the
following compensation and other benefits:
(a) PAYMENT IN LIEU OF COMPENSATION: The Company shall pay to the
Employee in cash an amount equal to the product of (i) and (ii); where (i)
shall equal the sum of (A) the Employee's annual salary and (B) the
Employee's annual incentive bonus during the twelve (12) month period
ending with the close of the month in which such termination of employment
occurs (the "Date of Termination") , divided by twelve (12) ; and where
(ii) shall be the lesser of (x) thirty-six (36), (y) six (6), plus two (2)
for each twelve (12) months of credited service of the Employee for the
Company (determined in accordance with subparagraph 4(c) of the Agreement)
through the Date of Termination, or (z) the number of months until the
Employee's normal retirement date, as defined in the Avondale Industries,
Inc. Pension Plan (or any successor, or substitute plan or plans of the
Company or of any subsidiary of the Company under which the Employee may be
a participant, hereinafter the "Pension Plan"). The number determined
under clause (ii) is sometimes herein referred to as the "Measuring
Period".
(b) ACCELERATION OF STOCK OPTIONS: Immediately following such Date
of Termination, all options and stock appreciation rights granted to
Employee under the 1997 Stock Incentive Plan or any other stock option or
similar plan before or after the date hereof (collectively referred to
herein as "Stock Option Plans") shall immediately become fully exercisable
and execution of this Agreement shall constitute an amendment to any stock
option agreement to so provide and an agreement and undertaking by the
Company to take such action as may be required to cause any and all options
or rights granted, or to be granted, to Employee thereunder to make them
consistent herewith.
(c) PAYMENT FOR NON-VESTED RETIREMENT BENEFIT: In addition to the
vested portion of the Employee's interest under any employee benefit plan
maintained by the Company as a qualified plan pursuant to Section 401(a) of
the Internal Revenue Code of 1986, as amended, to which the Company or any
subsidiary has made contributions for the Employee's account which are not
otherwise expressly provided for herein, if the Employee is not fully
vested under any such plan or plans, the Company shall pay to the Employee
in cash an amount equal to the then present value of the actuarial
equivalent (within the meaning of the following Paragraph (d)) of the non-
vested portion of the Employee's account, to the extent that such account
would have become vested based on additional credited service for the
Company, if the Employee had remained in the employ of the Company (or any
subsidiary) for an additional period of months equal to the Measuring
Period.
(d) SUPPLEMENTAL RETIREMENT BENEFIT: In addition to any retirement
or severance benefit to which the Employee is entitled under the Pension
Plan, the Employee shall receive in cash, an amount equivalent of the
excess of (i) over (ii), where (i) equals the aggregate amount of the
retirement pension (calculated as a straight life annuity payable to
Employee on his normal retirement date) to which Employee would have been
entitled under the terms of the Pension Plan and any other qualified or
non-qualified defined benefit plan maintained by the Company and covering
the Employee, if Employee were fully vested thereunder (without regard to
(w) whether the Employee shall actually have completed the number of years
of credited service required to qualify for full vesting under such plans,
(x) any limitation on the amount of compensation used in the calculation of
the regular pension thereunder, (y) any offset thereunder for severance
allowances payable hereunder or (z) any amendment to such plans made prior
to the Employee's Date of Termination, which amendment adversely affects in
any manner the computation of retirement benefits under such plans) and had
accumulated an additional period of months of credited service after the
Date of Termination equal to the Measuring Period (but in no event shall
Employee be deemed to have accumulated an additional period of credited
service subsequent to Employee's sixty-fifth (65th) birthday), and, where
(ii) equals the amount of the retirement pension (calculated as a straight
1ife annuity payable to Employee on his normal retirement date),if any, to
which Employee is entitled pursuant to the provisions of the Pension Plan
and such other plans. For purposes of Clause (i) of this Paragraph (d),
the amount payable pursuant to Paragraph (a) of this Appendix D, shall be
deemed to represent the Employee's earnings for the period of months equal
to the Measuring Period, and for purposes of this Paragraph (d), "actuarial
equivalent" shall be determined using the same methods and assumptions
utilized under the Pension Plan immediately prior to the Date of
Termination. All other terms used in this Paragraph (d) shall have the
same meanings, respectively, as such terms have in the Pension Plan, unless
otherwise required by the context.
(e) OTHER BENEFITS: The Company shall also maintain in full force
and effect, for the continued benefit of the Employee and his dependents,
for a period terminating on the earliest of (i) a period of months after
the Date of Termination equal to the Measuring Period; (ii) the
commencement date of equivalent benefits for the Employee from a new
employer; or (iii) the Employee's normal retirement date under the
Company's Pension Plan, after which the terms of the Pension Plan shall
govern; all insured and self-insured employee benefit plans in which the
Employee is entitled to participate immediately prior to the Date of
Termination; provided that the Employee's continued participation is
possible under the general terms and provisions of such Plans (and any
applicable funding media) and the Employee continues to pay an amount equal
to Employee's regular contribution for such participation. In the event
that the Employee participation in any such Plan is barred, the Company, at
its sole cost and expense, shall arrange to have issued for the benefit of
Employee and his dependents individual policies of insurance providing
benefits substantially similar (on an after-tax basis) to those which the
Employee would have been entitled to receive under such Plan or Plans
pursuant to this Paragraph (e) if such participation were not barred or, if
such insurance is not available at a reasonable cost to the Company, the
Company shall otherwise provide the Employee and his dependents with
equivalent benefits (on an after-tax basis) and the Employee shall not be
required to pay any premiums or other charges in an amount greater than
that which the Employee would have paid in order to participate in such
Plans. If, at the end of a period of months after the Date of Termination
equal to the Measuring Period, the Employee is not receiving equivalent
benefits from a new employer, the Company shall arrange, at its sole cost
and expense, to enable Employee to convert the Employee's and his
dependents' coverage under such Plans to individual policies or programs
upon the same terms as employees of the Company may apply for until the
Employee is able to receive equivalent benefits from a source other than
the Company.
(f) MITIGATION: The Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Appendix D by seeking
other employment or otherwise, nor (except as specifically provided in
Paragraph (e) above) shall the amount of any payment or benefit provided
for in this Appendix D be reduced by any compensation or benefit earned by
Employee as a result of employment by another employer after the Date of
Termination, or otherwise.
(g) MANNER OF PAYMENT: All payments which are required to be made in
cash under Paragraphs (a), (c) or (d), above, shall be paid on the Date of
Termination, or within five (5) business days thereafter, unless the
Employee has made a Deferred Payment Election with respect to such
payment(s) pursuant to the succeeding Paragraph (h).
(h) ELECTION TO DEFER PAYMENT: Upon entering into this Agreement and
for a period of fourteen (14) days following each anniversary of the date
hereof (the "Election Period"), the Employee may, in writing, direct the
Company that any amounts which become payable to the Employee pursuant to
Paragraphs (a), (c) and (d), above, shall be paid to the Employee in three
(3) equal annual installments, with the first of such installments to be
paid not later than five (5) business days after the Date of Termination
and successive installments paid on the next two (2) succeeding
anniversaries of the Date of Termination or the next following business day
if such date is not a business day (the "Deferred Payment Election"). A
Deferred Payment election, once made, shall be irrevocable except during an
Election Period.
(i) EFFECT ON OTHER BENEFITS: Nothing contained in this Appendix D
shall be construed or interpreted as limiting any rights or benefits
payable to or for the Employee under any other provision of this Agreement.
APPENDIX E
TO EMPLOYMENT AGREEMENT
BETWEEN AVONDALE INDUSTRIES, INC.
AND
X. X. XXXXXXX, XX.
Jurisdictions In Which Competition
Is Restricted As Provided
In Paragraph 11(c)
A. STATES
1. LOUISIANA -- The following parishes in the State of Louisiana:
Orleans and Jefferson
2. MISSISSIPPI -- The following counties in the State of
Mississippi:
Xxxxxxxx
as well as any other counties in the State of Mississippi in
which the Employee regularly (a) makes contact with customers of
the Company or any of its subsidiaries, (b) conducts the business
of the Company or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of its
subsidiaries as of the date of termination of employment.
3. VIRGINIA-- The following counties in the State of Virginia:
Arlington
as well as any other counties in the State of Virginia in which
the Employee regularly (a) makes contact with customers of the
Company or any of its subsidiaries, (b) conducts the business of
the Company or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of its
subsidiaries as of the date of termination of employment.
Agreed to and Accepted:
Avondale Industries, Inc. Employee
By: /s/ XXXX X. XXXXXXXX /s/ X. X. XXXXXXX, XX.
-------------------- ------------------
Its: Compensation Committee Chairman X. X. Xxxxxxx, Xx.
Date: MARCH 23, 1998 Date: MARCH 23, 1998
