Exhibit 10.5
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Second Amended and Restated Employment Agreement
("Agreement") made as of the 1st day of May, 1998, between Xxxxx
X. Xxxxxxx ("Executive") and Lone Star Industries, Inc., a
Delaware corporation having its principal office at 000 Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 and its successors
and assigns ("Lone Star" or the "Company").
W I T N E S S E T H :
WHEREAS, the Company and the Executive are parties to
an Amended and Restated Employment Agreement dated as of February
1, 1996 (the "Superseded Employment Agreement"), and desire to
amend and restate the Superseded Employment Agreement in its
entirety.
NOW, THEREFORE, in consideration of the mutual
promises, agreements and covenants hereby made, the mutual
benefits to be derived from this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree to amend and
restate the Superseded Employment Agreement as follows:
1. Lone Star hereby employs Executive, and Executive
hereby accepts employment by Lone Star, on the terms and
conditions set forth in this Agreement for an initial term of
twenty-six (26) consecutive months commencing as of the date
hereof and ending on June 30, 2000 (the "Initial Term"), as
Chairman of the Board, with such duties as are specified in the
By-Laws of Lone Star and such other duties customary to the
position as may be assigned to Executive from time to time by the
Board of Directors of Lone Star. Unless terminated pursuant to
the other terms hereof, this Agreement shall continue in full
force and effect after the Initial Term for successive terms of
two years (each such term, and the Initial Term, a "Term").
2. Lone Star shall pay Executive a salary ("Salary")
at the rate of $210,000 per annum until the effective date of
termination of this Agreement. Salary shall continue to be paid
to Executive on the currently established pay periods of Lone
Star. The Compensation and Stock Option Committee (or such other
Board committee as shall then be responsible for making such
decisions or, if none, the full Board of Directors) may in its
discretion consider increases in the Executive's Salary from time
to time, and upon any such increase "Salary" for purposes hereof
shall thereafter mean the Executive's salary as so increased
notwithstanding any purported subsequent reduction thereof by any
such committee or the Board. In addition, the Compensation and
Stock Option Committee (or such other Board committee as shall
then be responsible for making such decisions, or if none, the
full Board of Directors) may in its discretion consider granting
to the Executive from time to time such bonuses, stock options or
other incentive compensation as it deems appropriate.
3. (a) (i) Either party, by written notice to the
other at least six months prior to the expiration of the then
current Term, may terminate this Agreement effective at the
expiration of such Term. (ii) Lone Star, by written notice which
sets forth the effective date of termination (which shall not be
earlier than six (6) months after receipt of the written notice),
may terminate this Agreement at any time for reasons (including
without limitation disability of the Executive) other than Cause
(as hereinafter defined).
(b) In the event that this Agreement is
terminated by the Executive pursuant to Section 4 below or Lone
Star terminates this Agreement pursuant to Section 3(a) above,
Executive shall be entitled to a severance payment in an amount
equal to the Executive's Salary for the period from the effective
date of the termination through the date one year (18 months, in
the case of a termination pursuant to Section 4) after the
effective date of the termination (such period, the "Severance
Period"). Severance shall be paid in lump sum on the effective
date of the termination. In addition, the Executive shall
continue to receive life insurance and medical insurance under
the Company's Executive Medical Plan for Active Employees (as in
effect as of the date of this Agreement) provided pursuant to
Sections 5 and 6 hereof during the Severance Period (which is in
addition to, and not in lieu of, benefit continuation under the
Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA")). In furtherance and not in limitation of the
immediately preceding sentence, the Executive shall be deemed to
have continued his employment at his Salary during the Severance
Period for purposes of vesting, eligibility and benefit accrual
under any applicable Company employee pension plan (subject to
the requirements of the Internal Revenue Code of 1986, as amended
(the "Code")). In the event the Executive cannot receive any
such credit under any Company employee pension plan because of
limitations under the Code, within ninety days after the
expiration of the Severance Period, the Executive shall receive a
lump sum payment from the Company equal to the present value of
any additional benefits to which the Executive would have been
entitled under any Company employee pension plan had the
Severance Period counted for purposes of vesting, eligibility and
benefit accrual (discounted at 5% per annum). Severance pay
pursuant to this Section shall be in lieu of severance pay
pursuant to any Lone Star policy, except severance in respect of
service as a director.
(c) Lone Star shall have the right to terminate
this Agreement for Cause during the Initial Term and thereafter
and (subject to Section 7 below) Executive shall not be entitled
to receive severance pay pursuant to this Section or any other
policy or agreement of Lone Star except severance in respect of
service as a director. Cause shall be construed to mean:
(1) The willful and continued failure
by the Executive to substantially perform his duties with Lone
Star (other than any such failure resulting from his disability
due to physical or mental illness) after a written demand for
performance is delivered which specifically identifies the manner
in which he has not substantially performed his duties, or
(2) the willful engaging by Executive
in gross misconduct materially and demonstrably injurious to the
Company, monetarily or otherwise, or
(3) conviction of fraud, theft or
embezzlement.
For purposes of this Section, no act, or failure
to act, shall be considered "willful" unless done, or omitted to
be done, not in good faith or without reasonable belief that the
action or omission was in the best interest of the Company.
The written demand in Section (c)(1) shall be
delivered to the Executive by the Board of Directors and shall
set forth a reasonable period (not shorter than 30 business days)
in which Executive is expected to comply with said demand. If
Executive does not comply thereafter, Lone Star shall have the
right to terminate this Agreement upon seven (7) days' written
notice to Executive.
4. (a) Lone Star hereby agrees not to: (i) change
the Executive's duties so that a reasonable man would interpret
the change to be a demotion; or (ii) direct the Executive to
relocate his office to a new location which is either in a State
other than Connecticut or more than twenty-five (25) miles from
Stamford, Connecticut (excluding any relocation occurring prior
to a Change in Control, as defined below, of the Executive's
office (A) as a result of a relocation of Lone Star's operations
presently located in Stamford, Connecticut, and (B) applicable to
substantially all officers of Lone Star operating out of such
location). In the event Lone Star breaches its obligations in
the immediately preceding sentence, Executive, at his option (and
without limiting his remedies), can (if such demotion or
direction to relocate is not rescinded or corrected by the
Company within 30 days after written notice by Executive to the
Company, reasonably identifying, in the case of a demotion, the
change in duties complained of) declare himself terminated for
"Good Reason" by giving written notice to Lone Star, Lone Star
shall pay Executive severance pay and benefits as provided in
Section 3(b) of this Agreement. In no event shall Executive be
required to perform duties or to suffer relocation prohibited by
this Section 4.
(b) In the event of the Executive's physical or
mental incapacity, the Executive may declare himself terminated
for "Incapacity" by giving written notice to Lone Star, Lone Star
shall pay Executive severance pay and benefits as provided in
Section 3(b) of this Agreement. "Physical or mental incapacity"
shall mean the inability of Executive by reason of a physical or
mental illness to perform his duties hereunder for a period of 90
consecutive days or a total of 120 days in any twelve month
period and such incapacity is determined by a physician selected
by Executive (or his legal representatives) and reasonably
acceptable to the Company to be such as prevents Executive from
performing adequately his normal duties to the Company. During
any period that the Executive is unable to perform his duties by
reason of physical or mental incapacity, Executive shall continue
to receive his full compensation and benefits hereunder.
5. Executive shall participate in Lone Star's
employee benefit programs and plans in the same manner as other
executive salaried employees of Lone Star and in accordance with
the terms thereof. Benefit programs and plans include, but are
not limited to, life insurance, accidental death and
dismemberment insurance, hospital, medical, surgical and major
medical insurance, dental insurance, short and long-term
disability insurance, 401(k) savings plan and pension plan for
salaried employees and directors' and officers' liability
insurance ("Employee Benefit Plans"). Executive shall also
participate in Lone Star's vacation and holiday programs. In
addition to and not in limitation of the foregoing, and
notwithstanding the Company's policy with respect to other
employees, the Company shall, during their lives and whether or
not the Executive's employment or this Agreement terminates (for
Cause or otherwise), provide the Executive with life and medical
insurance and the Executive's spouse with medical insurance at no
cost to the Executive or his spouse at least equal to the life
and medical insurance provided to senior executive officers of
the Company; provided however, the medical benefits provided to
the Executive and his spouse shall be at least equal to the
medical benefits described in Exhibit A; provided further, the
annual deductible for medical coverage described in Exhibit A is
$750 for each individual. The Executive and his spouse are each
entitled to receive monthly reimbursement of Medicare Part B
premiums.
The Company agrees to use its best efforts to provide
the benefits listed on Exhibit A to the Executive and his spouse
in a manner that will not result in any income inclusion under
federal, state or local tax law. To the extent any such income
inclusion results to either the Executive or his spouse, the
Executive and his spouse (as the case may be) shall receive an
annual payment from the Company to fully pay for the federal,
state and local tax on such income inclusion (a "Gross-up
Payment") as well as any income inclusion from the Gross-up
Payment based on the highest marginal tax rate on the payment, so
that neither the Executive nor his spouse have any tax liability
as a result of participation in the Executive Medical Plan on
Exhibit A. For each year, such payment shall be made no later
than January 31st of the following year.
The Company shall maintain an insurance policy covering
the Executive Medical Plan to insure non-payment by the Company
in accordance with the terms on Exhibit B.
This section shall survive any termination of this
Agreement.
6. To the extent Executive voluntarily terminates his
employment at the end of any Term, he shall be entitled to
participate in Lone Star's employee benefit plans to the full
extent that they may be provided to other retirees (and spouses,
if applicable) including but not limited to the Pension Plan for
Salaried Employees, in the same manner as other salaried retirees
of Lone Star and in accordance with the terms thereof.
7. Following a Change in Control, as defined below,
the Executive, on thirty days written notice (which notice must
be delivered within twelve months after the Company gives the
Executive notice of the Change in Control or the Executive has
actual knowledge of such Change in Control), may terminate his
employment with the Company. Upon any such termination, the
Executive shall be entitled to lump sum severance pay in an
amount equal to thirty months' Salary. In addition, the
Executive shall continue to receive life insurance and medical
insurance under the Company's Executive Medical Plan for Active
Employees (as in effect as of the date of this Agreement)
provided pursuant to Sections 5 and 6 hereof during the Severance
Period (which is in addition to, and not in lieu of, benefit
continuation under COBRA). In furtherance and not in limitation
of the immediately preceding sentence, the Executive shall be
deemed to have continued his employment at his Salary during the
Severance Period for purposes of vesting, eligibility and benefit
accrual under any applicable employee pension plan (subject to
the requirements of the Code). In the event the Executive cannot
receive any such credit under any employee pension plan because
of limitations under the Internal Revenue Code, within ninety
days after the expiration of the Severance Period, the Executive
shall receive a lump sum payment from the Company equal to the
present value of any additional benefits to which the Executive
would have been entitled under any Company employee pension plan
had the Severance Period counted for purposes of vesting,
eligibility and benefit accrual (discounted at 5% per annum).
Severance hereunder shall be paid in lump sum on the effective
date of the termination. Severance pay pursuant to this Section
shall be in lieu of severance pay pursuant to any Lone Star
policy or other agreement (except that nothing contained in this
Agreement shall affect the Executive's rights to severance in
respect of service as a director and rights to bonuses under the
Company's Executive Incentive Plan, as may be in effect from time
to time, whether as a result of a Change in Control or otherwise)
and all other obligations of the Company for severance pay under
this Agreement. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred upon the occurrence of
any of the following events:
(i) Any 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 (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of shares of common
stock of the Company (the "Common Stock") and/or other voting
securities of the Company entitled to vote generally in the
election of directors ("Outstanding Company Voting Securities")
after which acquisition such individual, entity or group is the
beneficial owner of twenty percent (20%) or more of either (A)
(1) the then outstanding shares of Common Stock or (2) the
Outstanding Company Voting Securities; excluding, however, the
following: (1) any acquisition by the Company, (2) any
acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or (3) any acquisition by
any corporation pursuant to a reorganization, merger,
consolidation or similar corporate transaction (in each case, a
"Corporate Transaction"), if, pursuant to such Corporate
Transaction, the conditions described in clauses (1), (2) and (3)
of paragraph (iii) of this Section 7 are satisfied; or (B) any
transaction in which the Executive and the Chief Executive
Officer of the Company (both as of the date of this Agreement and
subject to health related availability) (1) retain their current
positions with the Company immediately after such transaction and
(2) will immediately after such transaction beneficially own an
aggregate (for both such executives), directly or indirectly
(including, without limitation, ownership by family members,
trusts or foundations for or controlled by family members), more
than 5% of either (a) the then outstanding shares of common stock
of the Company and/or (b) the other voting securities of the
Company entitled to vote generally in the election of directors
(any transaction under this clause (B) hereinafter referred to as
a "Management Event").
(ii) A change in the composition of the Board of
Directors of the Company (other than in connection with a
Management Event) such that the individuals who, as of the date
hereof, comprise a class of directors of the Board (the members
of each class of directors of the Board as of the date hereof
shall be hereinafter referred to as an "Incumbent Class" and the
members of all of the Incumbent Classes shall be hereinafter
collectively referred to as the "Incumbent Board") cease for any
reason to constitute at least a majority of the class; provided,
however, for purposes of this subsection that any individual who
becomes a member of an Incumbent Class subsequent to the date
hereof whose election, or nomination for election by the
Company's stockholders, was approved in advance or
contemporaneously with such election by a vote of at least a
majority of those individuals who are members of the Incumbent
Board and a majority of those individuals who are members of such
Incumbent Class (or deemed to be such pursuant to this proviso),
shall be considered as though such individual were a member of
the Incumbent Class; but, provided further, that any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board of Directors of the Company or actual or threatened tender
offer for shares of the Company or similar transaction or other
contest for corporate control (other than a tender offer by the
Company) shall not be so considered as a member of the Incumbent
Class; or
(iii) The approval by the stockholders of the Company
of a Corporate Transaction or, if consummation of such Corporate
Transaction is subject, at the time of such approval by stock-
holders, to the consent of any government or governmental agency,
the obtaining of such consent (either explicitly or implicitly);
excluding, however, a Management Event or a Corporate Transaction
pursuant to which (1) all or substantially all of the individuals
and entities who are the beneficial owners, respectively, of the
outstanding shares of Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than eighty
percent (80%) of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate
Transaction and the combined voting power of the outstanding
voting securities of such corporation entitled to vote generally
in the election of directors, (2) no Person (other than the
Company, any employee benefit plan (or related trust) of the
Company or the corporation resulting from such Corporate
Transaction and any Person beneficially owning, immediately prior
to such Corporate Transaction, directly or indirectly, twenty
percent (20%) or more of the outstanding shares of Common Stock
or Outstanding Company Voting Securities, as the case may be)
will beneficially own, directly or indirectly, twenty percent
(20%) or more of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the then outstanding
securities of such corporation entitled to vote generally in the
election of directors and (3) individuals who were members of the
Incumbent Board will constitute at least a majority of the
members of board of directors of the corporation resulting from
such Corporate Transaction; or
(iv) The approval of the stockholders of the Company
of (1) a complete liquidation or dissolution of the Company or
(2) the sale or other disposition of all or substantially all of
the assets of the Company; excluding, however, such a sale or
other disposition to a corporation (A) in connection with a
Management Event or (B) with respect to which following such sale
or other disposition, (1) more than eighty percent (80%) of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors will be then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the outstanding shares of Common Stock and
Outstanding Company Voting Securities immediately prior to such
sale or other disposition, (2) no Person (other than the Company
and any employee benefit plan (or related trust) of the Company
or such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or
indirectly, twenty percent (20%) or more of the outstanding
shares of Common Stock or Outstanding Company Voting Securities,
as the case may be) will beneficially own, directly or
indirectly, twenty percent (20%) or more of, respectively, the
then outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors and (3) individuals who were members of the
Incumbent Board will constitute at least a majority of the
members of the board of directors of such corporation.
In the event of any conflict between this Section 7 and
any other Section of this Agreement (other than Section 5), the
terms of this Section 7 shall control, so that, without
limitation, the Executive shall be entitled to the payment and
benefits provided under this Section 7 notwithstanding any
purported termination (whether for Cause or otherwise) and
regardless of whether such purported termination precedes or
follows the giving of a notice of termination by the Executive
under this Section 7 by the Company.
8. Immediately upon the occurrence of a Change in
Control, the Company shall establish a grantor trust on behalf of
the Executive, subject to the claims of the Company's creditors
(commonly referred to as a "Rabbi Trust"). The Company shall
contribute to the Rabbi Trust an amount sufficient to provide for
the severance benefits and payment of all other benefits under
this Agreement (except benefits under the Executive Medical Plan
for Retired Employees). Any payments made to the Executive under
this Agreement shall be made from such Rabbi Trust. The Rabbi
Trust shall terminate and any remaining assets shall be returned
to the Company no sooner than July 1, 2005, unless the Executive
has provided written notice of an unsatisfied claim to the
trustee of the Rabbi Trust, in which case the Rabbi Trust shall
not terminate until such claim is resolved pursuant to
paragraph 12.
9. Upon presentation to Lone Star of appropriate
documentation, Executive will be entitled to reimbursement within
guidelines established by Lone Star for all reasonable and
necessary business expenses incurred by him for entertainment,
travel and similar items and for costs for operating from the
Executive's Greenwich, Connecticut office. However, the
Executive shall be personally responsible for rental payments
such office as long as he decides, in his discretion, to maintain
such office.
10. Executive agrees that during his period of
employment by Lone Star and thereafter he shall hold in
confidence and not disclose to any unauthorized person any
knowledge or information acquired and possessed by him of a
confidential nature or any trade secret with respect to the
business of Lone Star, and not to disclose, publish or make use
of the same without the prior express consent of Lone Star.
Executive shall be free to disclose such information, knowledge
or trade secret in the ordinary course of his carrying out his
duties as an officer of Lone Star, and shall be free to disclose
such information, knowledge or trade secret during his period of
employment by Lone Star and thereafter if such matters become
public or if compelled by legal process.
11. Executive agrees that during the term of his
employment he will not without the consent of Lone Star, in any
manner, directly or indirectly, own, manage, be employed by,
operate, join, control, participate in, be connected with, engage
in, or become interested in any business competitive with, the
business then carried on by Lone Star in those parts of the world
where Lone Star does business. Ownership of publicly traded
securities of a business of the same or similar nature to, or
competitive with, that carried on by Lone Star, shall not violate
this paragraph, provided the Executive does not acquire more than
5% of the voting stock of any such corporation. Notwithstanding
any other provision of this Agreement, the Executive shall not be
required to use his full time efforts hereunder and may take on
outside business commitments provided they do not unreasonably
impair his ability or capacity to serve as the Chairman of the
Board of the Company.
12. (a) Any dispute relating to this Agreement
arising between the Executive and the Company shall be settled by
arbitration in accordance with the commercial arbitration rules
of the American Arbitration Association ("AAA"). The arbitration
proceedings, including the rendering of an award, shall take
place in Stamford, Connecticut (or such other location mutually
agreed upon by the Company and the Executive), and shall be
administered by the AAA.
(b) The arbitral tribunal shall be appointed
within 30 days of the notice of dispute, and shall consist of
three arbitrators, one of which shall be appointed by the
Company, one by the Executive, and the third by both the Company
and the Executive jointly; provided, however, that, if the
Company and the Executive do not select the third arbitrator
within such 30-day period, such third arbitrator shall be chosen
by the AAA as soon as practicable following notice to the AAA by
the parties of their inability to choose such third arbitrator.
(c) Decisions of such arbitral tribunal shall be
in accordance with the laws of the State of Connecticut
(excluding the conflicts of law rules which require the
application of any other law). The award of any such arbitral
tribunal shall be final (except as otherwise provided by the laws
of the State of Connecticut and the Federal laws of the United
States, to the extent applicable). Judgment upon such award may
be entered by the prevailing party in any state or Federal court
sitting in Connecticut or any other court having jurisdiction
thereof, or application may be made by such party to any such
court for judicial acceptance of such award and an order of
enforcement.
(d) The Company shall reimburse the Executive for
all costs, including reasonable attorneys' fees, in connection
with any proceeding (whether or not in arbitration) to obtain or
enforce any right or benefit under this Agreement in which the
Executive is the prevailing party.
Any amounts not paid by the Company under this
Agreement within five business days after the date they are due
shall be paid with interest from their due date at the rate
announced from time to time by Citibank, N.A. as its prime or
similar rate plus 3%.
13. Nothing is this Agreement shall in any manner
affect any benefit to which the Executive is entitled as a result
of Executive's position as an outside director of the Company,
and the Company hereby agrees that such benefits (including
without limitation post-service benefits consisting of $15,000
annual deferred compensation for ten years and continued life
insurance coverage) have fully vested and may not hereafter be
decreased, deleted, abridged, or in any other fashion adversely
affected by the Company.
14. (a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company (including any made from
plans sponsored by the Company, through annuities, Rabbi Trusts
or otherwise) to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement (including this Section 14), the Company's
Executive Incentive Plan or otherwise (any such payments or
distributions being individually referred to herein as a
"Payment", and any two or more of such payments or distributions
being referred to herein as "Payments"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended ("Code") (such excise tax, together with any
interest thereon, any penalties, additions to tax, or additional
amounts with respect to such excise tax, and any interest in
respect of such penalties, additions to tax or additional
amounts, being collectively referred herein to as the "Excise
Tax"), then Executive shall be entitled to receive and the
Company shall make an additional payment or payments
(individually referred to herein as a "Gross-Up Payment", and any
two or more of such additional payments being referred to herein
as "Gross-Up Payments") in an amount such that after payment by
the Executive of all Taxes (as defined in Section 14(e)) imposed
upon all Gross-Up Payments, Executive retains an amount of such
Gross-Up Payments equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 14(c) and
(d), any determination required to be made under Section 14(a)
including whether Gross-Up Payments are required and the amount
of such Gross-Up Payments, shall initially be made, at the
Company's expense, by nationally recognized tax counsel retained
to represent the Executive by the Company, such counsel to be
mutually acceptable to the Company and Executive ("Tax Counsel").
Tax Counsel shall provide detailed supporting legal authorities,
calculations and documentation both to the Company and Executive
within 15 business days after the termination of Executive's
employment, if applicable, and such other time or times as is
reasonably requested by the Company or the Executive. If Tax
Counsel makes the initial determination that no Excise Tax is
payable by the Executive with respect to a Payment or Payments,
it shall furnish the Executive with an opinion that no Excise Tax
will be imposed with respect to any such Payment or Payments. As
a result of the uncertainty in the application of Sections 4999
and 280G of the Code, it is possible that Gross-Up Payments (or
portions thereof) which will not have been made by the Company
should have been made, and if upon any reasonable written request
from Executive, the Company or Tax Counsel, Tax Counsel
thereafter determines that Executive is required to make a
payment of any Excise Tax or any additional Excise Tax, as the
case may be, Tax Counsel shall, at the Company's expense,
determine the amount of the underpayment that has occurred and
any such underpayment (together with any additional Taxes
resulting from the Payment or resulting from the underpayment of
Excise Tax) shall be promptly paid by the Company to Executive.
(c) The Company shall defend (by the Tax Counsel or by
other nationally recognized tax counsel acceptable to the
Executive), hold harmless and indemnify the Executive on a fully
grossed-up after Tax basis from and against any and all Excise
Tax, other Taxes, claims, losses, liabilities, obligations,
damages, impositions, assessments, demands, judgments,
settlements, fines, interest, costs and expenses (including
reasonable attorneys', accountants', and experts' fees and
expenses) (collectively, "Costs") with respect to any claim made
against the Executive by the Internal Revenue Service, any other
governmental agency or any other person or entity, for any Excise
Tax.
(d) Pending the outcome of any such claim, the Company
shall advance to Executive on an interest-free basis, the total
amount of the Excise Tax or other Taxes claimed in order for
Executive to pay or cause to be paid the Excise Tax or other
Taxes claimed. Executive shall, at the Company's reasonable
request and at the Company's sole cost and expense, file a claim
for refund of such Excise Tax and/or other Taxes and xxx for a
refund of such Taxes if such claim for refund is disallowed by
the appropriate taxing authority (it being understood and agreed
by the parties hereto that the Company shall only be entitled to
xxx for a refund and the Company shall not be entitled to
initiate any proceeding in, for example, United States Tax Court)
and shall indemnify and hold Executive harmless, on a fully
grossed-up after Tax basis, from any Tax imposed with respect to
such advance or with respect to any imputed income with respect
to such advance. Within ten (10) days after the Company is
notified of a claim against the Executive for Excise Tax, whether
such notice is provided by the Executive or otherwise, the
Company (i) shall notify the Executive in writing (a "Defense
Notice") that the Company is defending and indemnifying the
Executive for such claim pursuant to Section 14(c), and
thereafter (ii) shall control the defense or prosecution, at its
sole cost, expense and risk, of such claim by all appropriate
proceedings, which proceedings shall be defended or prosecuted
diligently by the Company to a final determination; provided,
however, that (i) the Company shall not, without Executive's
prior written consent, enter into any compromise or settlement of
such claim that would adversely affect Executive, (ii) any
request from the Company to the Executive regarding any extension
of the statute of limitations relating to assessment, payment or
collection of taxes for the taxable year of Executive with
respect to which the contested issues involved in, and amount of,
the claim relate is limited solely to such contested issues and
amount, and (iii) the Company's control of any contest or
proceeding shall be limited to issues with respect to the claim
and Executive shall be entitled to settle or contest, in his sole
and absolute discretion, any other issue raised by the Internal
Revenue Service or any other taxing authority. So long as the
Company is diligently defending or prosecuting such claim,
Executive shall provide or cause to be provided to the Company
any information reasonably requested by the Company that relates
to such claim, and shall otherwise cooperate (at the Company's
sole cost and expense) with the Company and its representatives
in good faith in order to contest effectively such claim. The
Company shall keep Executive informed of all developments and
events relating to any such claim (including, without limitation,
providing to Executive copies of all written materials pertaining
to any such claim), and Executive or his authorized
representatives shall be entitled, at Executive's expense, to
participate in all conferences, meetings and proceedings relating
to any such claim. If the Company fails to (i) timely deliver a
Defense Notice or (ii) thereafter perform the obligations under
Section 14(c) to the Executive's reasonable satisfaction, then
Executive shall at any time thereafter have the right (but not
the obligation), at his election and in his sole and absolute
discretion, to defend or prosecute, at the sole cost, expense and
risk of the Company, such claim. Executive shall have full
control of such defense or prosecution and such proceedings,
including any settlement or compromise thereof. If requested by
Executive, the Company shall cooperate, and shall cause its
affiliates to cooperate, in good faith with Executive and his
authorized representatives in order to contest effectively such
claim. The Company may attend, but not participate in or
control, any defense, prosecution, settlement or compromise of
any claim controlled by Executive pursuant to this Section 14(d)
and shall bear its own costs and expenses with respect thereto.
In the case of any claim that is defended or prosecuted by
Executive, Executive shall, from time to time, be entitled to
current payment, on a fully grossed-up after Tax basis, from the
Company with respect to Costs incurred by Executive in connection
with, or arising out of, such defense or prosecution.
(e) For purposes of this Section 14, the terms "Tax"
and "Taxes" mean any and all federal, state and local taxes of
any kind whatsoever (including, but not limited to, any and all
Excise Tax, income taxes, FICA taxes and employment taxes),
together with any interest thereon, any penalties, additions to
tax, or additional amounts with respect to such taxes and any
interest in respect of such penalties, additions to tax, or
additional amounts.
15. The Company has purchased and shall maintain in
effect, on behalf of the Executive, an insurance policy to cover
any litigation costs of the Executive (or his spouse) associated
with the enforcement of this Agreement against the Company in an
amount of $250,000. The Company shall fully reimburse the
Executive for the federal, state and local taxes incurred by the
Executive in connection with the purchase and maintenance of such
policy (the "Reimbursement") and any federal, state or local
taxes on the Reimbursement, based on the highest marginal tax
rate in effect so that the Executive has no federal, state or
local tax liability as a result of this section.
16. This Agreement constitutes the entire agreement
between the parties as to matters covered hereby and may not be
changed or modified except by an agreement in writing signed by
Lone Star and the Executive. This Agreement supersedes the
Superseded Employment Agreement.
17. This Agreement shall be governed by and construed
in accordance with the laws of the State of Connecticut.
18. This Agreement shall be binding upon and inure to
the benefit of the Company, including any purchaser of all or
substantially all of the assets of the Company and the surviving
entity of any merger or consolidation to which the Company is a
party and the Executive and his heirs, executors, administrators
and legal representatives.
19. The Company agrees that if the Executive's
employment with the Company is terminated pursuant to this
Agreement during the term of this Agreement, the Executive shall
not be required to seek other employment or to attempt in any way
to reduce any amounts payable to the Executive by the Company
pursuant to this Agreement. Further, the amount of any payment
or benefit provided for in this Agreement shall not be reduced by
any compensation earned by the Executive or benefit provided to
the Executive as the result of employment by another employer or
otherwise. Except as otherwise provided herein and apart from
any disagreement between the Executive and the Company concerning
interpretation of this Agreement or any term or provision hereof,
the Company's obligations to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any circumstances, including without
limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Executive.
20. Except as provided herein, this Agreement cannot
be assigned by Lone Star or Executive without prior written
consent.
21. All notices, communications, etc., shall be sent
to:
(a) Corporate Secretary
Lone Star Industries, Inc.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
(b) Xxxxx X. Xxxxxxx
Two Greenwich Place, Suite 100
Greenwich, CT 06830
Xxxxx X. Xxxxxxx
LONE STAR INDUSTRIES, INC.
By:
Xxxxxxx X. Xxxxxxxx
President and Chief
Executive Officer
- and -
By:
Xxxx X. Xxxxxxxxx
Chairman of the Compensation and
Stock Option Committee
EXHIBIT A
THE EXECUTIVE MEDICAL PLAN
COVERAGE
(1) Provides for the full payment for medical services for the
employee and his qualified dependents which are recommended
or performed by a legally qualified physician.
(2) Provides for the full payment of hospital expenses.
(3) Provides for the full payment of the charges made by a
physician for the performance of a surgical operation.
(4) Provides for the full payment of examinations and laboratory
tests taken while not confined in a hospital.
(5) Provides for the full payment of medical expenses resulting
from an accident.
(6) Provides for the full payment of dental expenses.
(7) Provides for the full payment for prescription charges.
(8) Provides for the full payment for eye examinations and eye
glasses.
(9) Provides for short and long term nursing care (at home or in
nursing care facilities).
(10) Provides for reimbursement of Medicare Part B premiums.
EXCLUSIONS
The coverages set forth above are subject to the
following provisions and general exclusions:
Eligible expenses under the plan shall not include
payment of any charge as follows:
(1) For transportation or travel other than local use
of ambulance.
(2) In connection with an injury or disease resulting
from war or any act of war, whether declared or
undeclared, which war or act of war occurs while
an individual is insured under this coverage.
(3) Which are incurred on account of bodily injury
arising out of or in the course of employment by
an employer, or disease with respect to which any
benefits are payable under any workmen's
compensation, occupational disease, or similar
law.
(4) Which is paid or payable or reimbursable by or
through any plan or program of any government or
any subdivision or agency thereof, other than a
plan or program established for its civilian
employees.
- Lifetime Benefit
The maximum lifetime benefit under this Executive
Medical Plan is $1,000,000 for each participant.
- Non-Duplication of Benefits:
When benefits would be payable under another group
plan, benefits under those plans will be coordinated to
the extent that the total benefits under all programs
will not exceed full reimbursement.
EXHIBIT B
LONE STAR INDUSTRIES
EXECUTIVE MEDICAL AND LEGAL INSURANCE
Description: Single Premium Insurance covering the failure or refusal of Lone
Star Industries or successor company to pay benefits
that are due, including failure as a result of financial insolvency.
Policy Period: To be effective as agreed
Non-Cancelable
Coverage: This policy will indemnify the executives for lost benefits, up to
the Limits of Liability shown above for the following classes:
A) Xxxxx Xxxxxxx and Spouse
Xxxxxxx Xxxxxxxx and Spouse
B) Other eligible executives of Lone Star Industries, Inc. (9)
The medical portion, applicable to Class A above, provides for the full payment
of:
- Medical services recommendation or performed by a legally qualified physician
- Hospital expenses
- Surgical charges
- Out patient examinations and laboratory tests
- Medical expenses resulting from an accident
- Dental expenses
- Prescription charges
- Eye examinations and glasses
- Short and long term nursing care, at home or in a nursing care facility,
including room and board charges for the convalescent center
- Reimbursement of Medicare Part B premiums
This program excludes charges for:
- Transportation or travel other than those approved by Medicare
- Treatment resulting from war or acts of war
- Treatment arising out of or in the course of employment
- Any expenses payable through any plan or program of government or any
subdivision or agency thereof
Limits of Liability: A) Per Individual $1,000,000 Lifetime
Legal Expense Limit of Liability: $250,000 Each
B) Legal Expense Limit of Liability: $100,000 Each
Premium: $507,500 due at inception
