TRANSITION AGREEMENT
Exhibit
10.5
PARTIES:
Xxxx
Pacific Shipyards Corporation
0000
00xx
Xxxxxx XX
Xxxxxxx,
XX 00000
Xxxxxxx
X. Xxxxx
0000
00xx
Xxxxxx XX
Xxxxxxx,
XX 00000
This Transition Agreement (“Agreement”)
is entered into by the Parties, effective on the date of last signature
below. Xxxx Pacific Shipyards Corporation is referred to in this
Agreement as “the Company” and Xxxxxxx X. Xxxxx is referred to in this Agreement
as “Executive.”
RECITALS
Executive is employed by the
Company.
Contemporaneous with this Agreement, Xxxx, Vigor Industrial LLC (“Parent”) and Nautical
Miles, Inc., an indirect subsidiary of Parent (“Merger Sub”) are entering into a Merger Agreement whereby
Merger Sub will acquire all of the capital stock of Xxxx pursuant to a
merger between a subsidiary corporation of Merger Sub and
Xxxx
(the “Merger”).
The Company desires to retain the
services of the Executive following the Merger, assigning him duties and
responsibilities commensurate with his base compensation, professional
credentials and unique skills, under the terms and conditions set forth in this
Agreement.
1. Employment
of Executive
1.1 Subject
to this Agreement, the Company shall continue to employ Executive after the
closing of the Merger at a monthly base salary not less than the monthly base
salary in effect for Executive on the day before the closing date of the
Merger. In addition, the Company shall provide Executive such
employment benefits as it provides to other salaried employees, subject to any
benefit changes approved by the Chairman of the Board of Directors of (Xxxxxxx),
the parent corporation of The Company.
1.2 This
Agreement relates to Executive’s employment with the Company after the Merger
but does not obligate either of the Parties to continue that
employment. Executive’s employment will remain at will at all times,
subject to the terms set forth in this Agreement.
2. Severance
Pay
Subject to the conditions below, if
Executive’s employment with the Company is terminated by the Company without
Cause, as defined below, during the 18-month period starting on the closing date
of the Merger or Executive terminates his employment with the Company for “Good
Reason” (as defined below), Executive will be eligible to receive severance pay
as described below.
2.1 The
Company shall continue to pay Executive’s monthly base salary, determined as of
the day before the closing date of the Merger, from the effective date of
Executive’s termination of employment through the remainder of the 18-month
period starting on the closing date of the Merger. For example, if
Executive’s employment with the Company is terminated by the Company without
Cause effective 10½ months after the closing date of the Merger, severance pay
will continue for 7½ months from the effective date of Executive’s termination
of employment.
2.2 Severance
payments will be made on the Company’s regular paydays during the payment period
described in 2.1 above. Following such termination of employment,
severance payments for any pay periods that ended after the effective date of
Executive’s termination of employment and before the first payment is made shall
be paid, without interest, with the first severance payment.
2.3 No
severance payments shall be made pursuant to this Agreement unless all of the
following requirements are met:
2.3-1 Executive’s employment with the
Company has been terminated by the Company without Cause or the Executive
terminates his employment with the Company for Good Reason. If
Executive’s employment with the Company terminates for any reason other than
termination by the Company without Cause or termination by the Executive for
Good Reason, no severance payments shall be made. Termination without
Cause shall not include Executive’s voluntary termination of employment other
than for Good Reason or termination of employment due to death or
disability.
2.3-2 Within 30 days after
the effective date of Executive’s termination of employment by the Company, or
Executive’s termination of employment by Executive for Good Reason, Executive
has signed and delivered to the Company a comprehensive release of the Company,
its successors, their affiliates and their current and former directors,
officers, employees, agents and owners covering all employment-related claims
other than those pursuant to this Agreement, and the revocation period under the
Older Workers Benefit Protection Act and any similar statute or rule shall have
expired without Executive revoking such release.
2.4 “Termination
without Cause” means termination of Executive’s employment by the Company other
than termination for Cause. Termination for Cause means termination
of Executive’s employment by the Company for any of the following
reasons:
2.4-1 An order of any
federal or state regulatory authority having jurisdiction over the Company or
any of its affiliates which has the effect in the reasonable opinion of the
Chairman of the Board of Directors of (Xxxxxxx), the parent corporation of The
Company to limit the scope of Executive’s duties or otherwise inhibits Executive
from successfully performing Executive duties assigned by the Chairman of the
Board of Directors of (Xxxxxxx);
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2.4-2 The persistent failure
of Executive to perform Executive’s duties unless such failure is caused by
Executive’s physical or mental disability, or refusal to perform assignments or
duties assigned by the Company;
2.4-3 A breach by Executive
of any material provision of this Agreement with the Company, its successors or
any of its affiliates;
2.4-4 Executive’s commission
of a crime that constitutes a felony or other crime of moral turpitude or
criminal fraud;
2.4-5 Chemical or alcohol
dependency or usage that materially and adversely affects Executive’s
performance of Executive’s duties;
2.4-6 Any act of disloyalty
or breach of responsibilities to the Company, its successors or any of its
affiliates by Executive which is meant by the Executive to cause harm to the
Company.
2.4-7 Misappropriation (or
attempted misappropriation) of any of funds or property of the Company, its
successors or any of their affiliates.
2.4-8 Conduct which
constitutes willful, wanton or grossly negligent non-performance or misfeasance
of Executive’s Duties.
2.5 Executive
may terminate his employment for Good Reason if: (A)(1) there is a reduction in
Executive’s base salary or (2) Executive is directed or required to relocate to
a facility or location outside the greater Seattle areas, or (3) the Company is
in material breach of any of its obligations under this Agreement, or (4) the
Executive is assigned duties or responsibilities that are not commensurate with
his base compensation, professional credentials and unique skills; and (B)
within the 60 day period immediately following such material reduction Executive
elects to terminate his employment voluntarily. Notwithstanding the
foregoing, Executive shall give the Company written notice of any event
described herein which Executive may use to terminate his employment for Good
Reason, and the Company shall have a period of sixty (60) days from
receipt of such notice to cure the same. If such event or
circumstances is cured by the Company within such 60-day cure period, Executive
shall have no right to terminate for Good Reason as result
thereof. Further, in the event Executive alleges that he is entitled
to terminate his employment for Good Reason as a result of a breach by the
Company described in A (3) above, Executive shall only be entitled to
so terminate if the Company is found to be in material breach by the arbitrator
pursuance to the arbitration provision of this Agreement.
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3. Final
and Binding Agreement
This Agreement shall be final and
binding upon the Company and Executive, and upon their respective heirs,
representatives, executors, administrators, successors, and
affiliates.
4. Entire
Agreement
This Agreement sets forth the entire
agreement between the Parties regarding severance pay and fully supersedes any
and all prior agreements or understandings between the parties on this
subject. Any amendment to this Agreement must be in writing, signed
by duly authorized representatives of the Parties, and must specifically state
that it is intended to amend this Agreement.
5. Controlling
Law
Except as preempted by federal law, and
subject to section 6 below, this Agreement shall be interpreted and enforced in
accordance with the laws of the State of Washington.
6. Arbitration
to Resolve Disputes
Any dispute arising out of this
Agreement shall be resolved by final and binding arbitration under the Model
Employment Arbitration Rules of the American Arbitration Association and shall
be submitted to a National Academy arbitrator residing in Oregon or Washington,
selected in accordance with such rules. In consideration of this
agreement to submit such disputes to final and binding arbitration, the Parties
expressly waive the right to submit any dispute arising under this Agreement to
government agencies and courts. Either party may require that an
official record of the proceedings be prepared by a professional
reporter. The party who is determined to be the losing party by the
arbiter in such arbitration proceeding shall pay the attorneys fees and costs of
the party determined to be the prevailing party by the arbiter in such
arbitration proceeding.
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Xxxx
Pacific Shipyards Corporation
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/s/ Xxxxxxx X. Xxxxx
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By:
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/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx
X. Xxxxx
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Xxxxxxx
X. Xxxxx, President
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Dated:
December 22, 2010
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Dated: December
22,
2010
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