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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") between UNIFAB International,
Inc., a Louisiana corporation ("Company"), and Xxxxxx X. Xxxxxx ("Employee") is
dated as of ___________________, 1997 (the "Agreement Date").
The Company and the Employee agree as follows:
1. EMPLOYMENT CAPACITY AND TERM.
(a) CAPACITY AND TERM. The Employee will serve as the
President and Chief Executive Officer of the Company and the chief executive
officer of all of the Company's significant subsidiaries, for the period
beginning on the Agreement Date through the fifth anniversary of the Agreement
Date (the "Employment Term"), subject to any earlier termination of Employee's
status as an employee pursuant to this Agreement. Following the term of this
Agreement, each party shall have the right to enforce all rights, and shall be
bound by all obligations, of such party that are continuing rights and
obligations under the terms of this Agreement.
(b) DUTIES. As the President and Chief Executive Officer, the
Employee shall perform such duties, consistent with the Employee's job title,
including serving as the chief executive officer of all of the Company's
significant subsidiaries, as may be prescribed from time to time by the Board
of Directors of the Company (the "Board") and shall perform such duties as are
described in the Company's Bylaws.
(c) CHAIRMAN. For as long as the Employee is President and
Chief Executive Officer of the Company, the Board shall nominate the Employee
for re-election as a director upon the end of his term as a director and shall
appoint the Employee, for as long as he remains a director, as the Chairman of
the Board of Directors. If the Employee ceases for any reason to be the
President and Chief Executive Officer of the Company, the Employee will, if
requested by the Company, resign as the Chairman of the Board of Directors of
the Company and as a director of the Company and as director and officer of all
of the Company's subsidiaries.
2. DEVOTION TO RESPONSIBILITIES.
During the Employment Term, the Employee will devote all of his
business time and attention to the business of the Company and its
subsidiaries, and he will not engage in or be employed by any other business
activity or business, whether or not such business activity or business is for
gain, profit or other pecuniary advantage; provided, however, that this
Agreement shall not prohibit the Employee from (i) serving as a member of the
board of directors, board of trustees or the like of any for profit or non-
profit entity, or performing services of any type for any civic or community
entity, whether or not the Employee receives compensation therefor, (ii)
investing his assets in such form or manner as will require no more than
nominal services on the part of the Employee in the operation of the business
of the entity in which such investment is made,
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or (iii) serving in various capacities with, and attending meetings of,
industry, trade or governmental groups and associations, including without
limitation the industry, trade or governmental groups and associations with
which the Employee is currently involved, as long as the Employee's engaging in
activities permitted by virtue of clauses (i), (ii) and (iii) above does not
materially and unreasonably interfere with the ability of the Employee to
perform the services and discharge the responsibilities required of him under
this Agreement. Notwithstanding clause (ii) above, during the Employment Term,
the Employee may not beneficially own more than 2% of the outstanding shares of
any class of equity security of a business organization, other than the
Company, that is required to file periodic reports with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). For purposes of this paragraph, "beneficially own" shall have
the same meaning ascribed to that term in Rule 13d-3 under the Exchange Act.
3. COMPENSATION AND BENEFITS. The Company will provide or will
cause to be provided to the Employee the compensation and benefits described
below:
(a) SALARY. An annual salary during the Employment Term of
$180,000 ("Annual Base Compensation"), payable to the Employee in equal semi-
monthly installments.
(b) BONUS. An annual incentive bonus, payable, if at all,
only with respect to services provided by the Employee during the Employment
Term. The annual incentive bonus will be determined, accrued and paid in
accordance with the schedule set forth in Appendix A hereto.
(c) STOCK OPTIONS. On the date hereof and pursuant to the
1997 Incentive Compensation Plan, the Employee will be granted nonqualified
options to purchase 65,000 shares of the Company's common stock, $0.01 par
value per share (the "Common Stock"). The per share exercise price of the
shares subject to such options will be equal to the initial public offering
price of the Company's Common Stock, and the Company and the Employee shall
execute a Stock Option Agreement substantially in the form of Appendix B
hereto. The Employee will also be eligible for additional stock incentive
compensation as determined by the Compensation Committee of the Company's Board
of Directors.
(d) OTHER BENEFITS. During the Employment Term, the Employee
shall be entitled to all benefits and perquisites provided to senior executive
employees of the Company, including but not limited to the benefits referred to
in Appendix C hereof.
4. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. (i) The Employee's status as an
employee will terminate immediately and automatically upon the Employee's death
during the Employment Term.
(ii) (A) The Employee's status as an employee shall
terminate if the Employee has a disability that would entitle him to receive
benefits under the Company's long-term disability insurance policy in effect at
the time because he is totally or partially disabled thereunder. Any such
termination shall become effective on the first day on which the Employee is
eligible to
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receive payments under such policy (or on the first day that he would be so
eligible, if he had applied timely for such payments).
(B) If the Company has no long-term disability
plan in effect, if (1) the Employee is rendered incapable because of physical
or mental illness of satisfactorily discharging his duties and responsibilities
under this Agreement for a period of 90 consecutive days or for an aggregate of
120 days during any period of 365 days and (2) a duly qualified physician
chosen by the Company and acceptable to the Employee or his legal
representatives so certifies in writing, the Board shall have the power to
determine that the Employee has become disabled. If the Board makes such a
determination, the Company shall have the continuing right and option, during
the period that such disability continues, and by notice given in the manner
provided in this Agreement, to terminate the status of Employee as an employee.
Any such termination shall become effective 30 days after such notice of
termination is given, unless within such 30-day period, the Employee becomes
capable of rendering services of the character contemplated hereby (and a
physician chosen by the Company and acceptable to the Employee or his legal
representatives so certifies in writing) and the Employee in fact resumes such
services.
(C) The term "Disability Effective Date" shall
mean the date on which termination of employment becomes effective due to
Disability.
(iii) The Employee's death or the Employee's incapacity
due to physical or mental illness to discharge the responsibilities assigned by
this Agreement shall not constitute a breach of this Agreement by the Employee.
(b) CAUSE. The Company may terminate the Employee's status as
an employee for Cause. As used herein, termination by the Company of the
Employee's status as an employee for "Cause" shall mean termination as a result
of (i) the willful and continuing failure by the Employee to perform the
services contemplated by this Agreement (other than any such failure resulting
from the Employee's disability of the type specified in Section 4(a)), (ii) the
Employee's breach of or failure to comply with the covenants set forth in
Sections 6, 7 or 9 of this Agreement, or (iii) the willful engaging by the
Employee in gross misconduct injurious to the Company; provided that, no act,
or failure to act, on the Employee's part shall be considered "willful" for
purposes of this Agreement unless done, or omitted to be done, without a
reasonable belief that such action or omission was in, or not opposed to, the
best interests of the Company. Any act, or failure to act, by the Employee
that is based upon authority given pursuant to a resolution duly adopted by the
Board of Directors or based upon the advice of counsel for the Company shall be
presumed to be done, or omitted to be done, by the Employee in good faith and
in the best interests of the Company.
(c) GOOD REASON. The Employee may terminate his status as an
employee for Good Reason. The termination by the Employee of his status as an
employee for Good Reason shall be deemed to be a justifiable termination and
shall excuse the Employee from the obligation to render services under or
relating to this Agreement. As used herein, the term "Good Reason" shall mean:
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(i) The occurrence of any of the following during the
Employment Term:
(A) the assignment by the Board of Directors to
the Employee of any duties or responsibilities which are inconsistent with the
Employee's status, title and position as President and Chief Executive Officer
of the Company;
(B) any removal of the Employee from, or any
failure to reappoint or reelect the Employee to, the position of President and
Chief Executive Officer of the Company and as the chief executive officer of
all of its significant subsidiaries, except in connection with a termination by
the Company of the Employee's employment for Cause or on account of disability
or death of the Employee, or the termination by the Employee of his employment
other than for Good Reason;
(C) the Company's requiring the Employee to be
based anywhere other than in New Iberia, Louisiana, except for required travel
in the ordinary course of the Company's business;
(ii) 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 or to pay any other amounts required to be paid under this Agreement,
which failure continues for a period of ten days after written notice thereof
is given by the Employee to the Company;
(iii) the failure by the Company to obtain the assumption
of its obligations under this Agreement by any successor or assign as
contemplated in Paragraph 11 of the Agreement;
(iv) any purported termination by the Company of the
Employee's status as an employee which is not effected pursuant to a Notice of
Termination satisfying the requirements of Paragraph 4(d) hereof, or which is
not justified as a termination based on Cause; or
(v) any breach of this Agreement by the Company.
(d) NOTICE OF TERMINATION. Any purported notice of
termination of the Employee's status as an employee must be communicated in a
writing delivered to the other party as provided in Paragraph 12 hereof (a
notice of termination complying with this sentence is referred to in this
Agreement as a "Notice of Termination"). Any such Notice of Termination that
purports to terminate Employee's employment for Cause or for Good Reason shall
specify the provision or provisions of this Agreement relied upon by the party
giving such notice and shall set forth in reasonable detail the facts and
circumstances claimed by such party to provide a basis for termination of the
Employee's employment under the provision(s) so indicated.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if
Employee's employment is terminated by the Company for Cause, or by Employee
for Good Reason, the date of delivery of the Notice of Termination or any later
date specified therein, as the case may be, (ii) if the Employee's employment
is terminated by the Company other than for Cause or disability, the
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Date of Termination shall be the date on which the Company notifies the
Employee of such termination and (iii) if Employee's employment is terminated
by reason of his death or disability, the Date of Termination shall be the date
of death of Employee or the Disability Effective Date, as the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON, OTHER THAN FOR CAUSE, DEATH OR DISABILITY.
(i) If (A) the Company terminates the Employee's status as an employee other
than for Cause, death or disability, or (B) the Employee shall terminate his
employment for Good Reason, then the Company shall pay to the Employee in a
lump sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts:
(1) the sum of (x) the amount of the
Employee's Annual Base Compensation earned through the Date of Termination, to
the extent not theretofore paid and (y) any compensation previously deferred by
the Employee (together with any accrued interest on earnings thereon) and any
accrued vacation pay, in each case to the extent not previously paid (the sum
of the amounts described in clauses (x) and (y) being hereinafter referred to
as the "Accrued Obligations").
(2) the aggregate amount of the
Employee's Annual Base Compensation for the period beginning on the Date of
Termination and continuing through the last day of the Employment Term (such
amount being referred to herein as the "Non-Accrued Compensation").
(3) to the extent not theretofore paid
or provided, the Company shall timely pay or provide to the Employee any other
amounts required to be paid or provided or which the Employee is eligible to
receive under any plan, program, policy or practice of the Company (such other
amounts being referred to herein as the "Other Benefits").
(ii) In the event that, during the term of this
Agreement, the Employee's status as an Employee is terminated under the
circumstances described in subsections 5(a)(i)(A) or (B) above following a
change of control of the Company, and such change of control occurs after the
third anniversary hereof, then, in lieu of any amount that Employee would
otherwise be entitled to receive by virtue of paragraph 5(a)(i)(2) above,
Employee shall be entitled to receive an amount equal to two times his Annual
Base Compensation.
(iii) As used in this Agreement, the phrase "change in
control of the Company" shall mean a change in control of the type that would
be required to be reported in response to Item 6(e) of Schedule 14A promulgated
under the Exchange Act, whether or not the Company is then subject to such
reporting requirement; provided that, without limitation, such a change of
control shall be deemed to have occurred if (A) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or
fiduciary holding securities under an employee benefit plan of the Company and
other than a person who is a director of the
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Company on the date hereof, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) directly or indirectly, of securities of the
Company representing 30% or more of the Company's combined voting power of the
Company's then outstanding securities, (B) at any time following the execution
of this Agreement, a majority of the Board of Directors is not comprised of (1)
individuals who on the Agreement Date were members of the Board plus (2) any
new directors whose nomination for election by the Board or the Company's
stockholders was approved by the vote of two-thirds of the directors then in
office who either were directors or whose nomination was previously so
approved.
(b) DEATH. If the Employee's status as an employee is
terminated by reason of the Employee's death, this Agreement shall terminate
without further obligations to the Employee's legal representatives under this
Agreement, other than for payment of (i) Accrued Obligations, (ii) 50% of the
Non-Accrued Compensation (the "Death Cash Payment") and (iii) the timely
payment or provision of Other Benefits. The sum of the Accrued Obligations and
the Death Cash Payment shall be paid to the Employee's estate or beneficiary,
as applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
used in this Section 5(b) shall include, without limitation, and the Employee's
estate and/or beneficiaries shall be entitled to receive, benefits at least
equal to the most favorable benefits provided by the Company to the estates and
beneficiaries of its senior executive officers under such plans, programs,
practices and policies relating to death benefits, if any, as in effect on the
date of Employee's death.
(c) DISABILITY. If Employee's status as an employee is
terminated by reason of Employee's disability, this Agreement will terminate
without further obligation to the Employee, other than the payment of (i)
Accrued Obligations, (ii) 50% of the Non-Accrued Compensation (the "Disability
Cash Payment") and (iii) the timely payment or provision of Other Benefits.
The sum of Accrued Obligations and the Disability Cash Payment will be paid to
the Employee in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
used in this Section 5(c) shall include, and the Employee will be entitled
after the Disability Effective Date to receive, disability and other benefits
at least equal to the most favorable of those generally provided by the Company
to disabled executive officers and their families in accordance with such
plans, programs, practices and policies related to disability that are in
effect on the Disability Effective Date.
(d) CAUSE, OTHER THAN FOR GOOD REASON. If the Employee's
status as an employee shall be terminated for Cause by Employer, or voluntarily
terminated by Employee other than for Good Reason, this Agreement shall
terminate without further obligation to the Employee other than for (i) Accrued
Obligations, which shall be paid in a lump sum in cash within 30 days of the
Date of Termination, and (ii) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Employee his accrued, vested
benefits under any benefit plan or program of the Company.
(e) CHANGE OF CONTROL BENEFIT. If Employee is subjected to an
excise tax as a result of the golden parachute provisions of section 4999 of
the Internal Revenue Code of 1986, as
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amended, the Company shall pay to Employee such amounts as are necessary to
place Employee in the same after-tax position as he would have been had such
golden parachute provisions not been applicable to him. This tax gross-up
provision shall take into account any such applicable excise tax, any state or
federal interest and penalties and any state or federal income tax and excise
tax payable with respect to the additional payment provided by this Section
5(e).
6. REGISTRATION RIGHTS. (a) (i) In the event that, during the
term of this Agreement, the Employee's status as an Employee is terminated
under the circumstances described in subsections 5(a)(i)(A) or (B) above or
under any circumstances following a change of control of the Company, then
Employee may request in writing that the Company register all or any portion
(but not less than 100,000) of the Registrable Securities beneficially owned by
the Employee for sale in the manner specified in such request. Upon receipt of
such a request the Company will, at its sole cost and expense as provided in
Section 6(c) below, use its best efforts to register (on the appropriate form
reasonably acceptable to the Employee) the number of Registrable Securities
specified in the Employee's request.
(ii) The Company shall be obligated to effect one
registration of the Registrable Securities pursuant to this Section 6(a),
except as otherwise provided in paragraph (iv) below. The obligation of the
Company under this Section 6(a) shall be deemed satisfied only if a
Registration Statement registering all Registrable Securities specified in the
Employee's request received pursuant to subsection 6(a)(i) for sale in
accordance with the method of disposition specified by the Employee shall have
become effective and at least 80% of such Registrable Securities included
therein have been sold pursuant thereto.
(iii) The Company shall be entitled to include in any
Registration Statement referred to in this Section 6(a), for sale in accordance
with the methods of disposition specified by the Employee, securities to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter or underwriters (if the method of
disposition requested by the Employee is an underwritten public offering), such
inclusion would have a material adverse effect on the efforts to sell the
Registrable Securities included in the Registration Statement pursuant to
Section 6(a)(i).
(iv) If the managing underwriter shall (A) certify in
writing that the inclusion of some or all of the Registrable Securities would
materially and adversely affect the market for the Company's securities, (B)
state the basis of such opinion and (C) state the maximum number of Registrable
Securities, if any, that may be distributed without such adverse effect, then
the Company may, upon written notice to the Employee, reduce the amount of
Registrable Securities included in the Registration Statement; provided that,
if the number of Registrable Securities included in the Registration Statement
is reduced pursuant to this Section 6(a)(iv), the Employee will be granted the
right to one additional demand registration in connection with which the
Employee shall have all of the rights provided for in this Section 6, including
this paragraph (iv).
(v) If at the time of any request to register
Registrable Securities pursuant to this Section 6(a), the Company is engaged in
any other activity which, in the good faith
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determination of the Company's Board of Directors, would be adversely affected
by the requested registration to the material detriment of the Company, then
the Company may at its option direct that the filing of a Registration
Statement pursuant to such a request be delayed for a period not in excess of
120 days from the time of such request.
(vi) If requested by the underwriters for any
underwritten offering by the Employee pursuant to a registration requested
under this Section 6(a), the Company shall enter into an underwriting agreement
with such underwriters in a form reasonably satisfactory in substance and form
to the Employee and the underwriters that shall contain such representations
and warranties by the Company and such other terms as are generally prevailing
in an agreement of this type, including, without limitation, indemnities to the
effect and to the extent provided in Section 6(f) hereof. The Employee will
cooperate with the Company in the negotiation of the underwriting agreement and
shall give consideration to the reasonable suggestions of the Company regarding
the form thereof. The Employee shall be a party to such underwriting agreement
and may, in its discretion, require that any or all of the representations and
warranties by, and other agreements on the part of, the Company to and for the
benefit of such underwriters shall also be made to and for the benefit of the
Employee and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement be conditions precedent to
the obligations of the Employee. In the case of a firm commitment public
offering pursuant to this Section 6(a), the Company shall choose the managing
underwriter or underwriters; provided that this selection shall be subject to
the approval of the Employee, which approval shall not be unreasonably
withheld.
(b) If and whenever the Company is required by the provisions
of this Agreement to use its best efforts to effect the registration of any of
the Registrable Securities under the Securities Act, the Company shall as
expeditiously as reasonably possible:
(i) Prepare and file with the SEC a Registration
Statement and otherwise comply with the provisions of the Securities Act with
respect to such Registrable Securities and use its best efforts to cause that
Registration Statement to become effective;
(ii) Prepare and file with the SEC any amendments and
supplements to the Registration Statement as may be necessary to keep the
Registration Statement effective until the earlier of (i) the date on which all
Registrable Securities included therein have been sold pursuant to the plan of
distribution included in such Registration Statement and (ii) the thirtieth day
from the effective date of the Registration Statement;
(iii) Furnish to the Employee such numbers of copies of
the prospectus, including preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as the Employee
may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities;
(iv) Use its best efforts to register or qualify the
Registrable Securities covered by the Registration Statement under the
securities or blue sky laws of such jurisdictions as the Employee shall
reasonably request, and do any and all other acts and things that may be
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necessary or advisable to enable the Employee to consummate the public sale or
other disposition of such Registrable Securities in such jurisdictions;
provided, however, that the Company shall not be required to qualify to do
business as a foreign corporation or consent to general service of process in
any such jurisdiction;
(v) Before filing the Registration Statement or
prospectus or amendments or supplements thereto, furnish the Employee with
copies of all such documents proposed to be filed, which shall be subject to
reasonable approval of counsel designated by the Employee;
(vi) Furnish to the Employee a signed counterpart,
addressed to the Employee (and the underwriters, if any), of (i) an opinion of
the Company's legal counsel dated the effective date of such Registration
Statement (and, if such registration includes an underwritten public offering,
dated the date of the closing under the underwriting agreement), and (ii) a
"comfort" letter dated the effective date of such Registration Statement (and,
if such registration includes an underwritten public offering, dated the date
of the closing under the underwriting agreement), signed by the independent
public accountants who certified the Company's financial statements included in
such Registration Statement, covering substantially the same matters with
respect to such Registration Statement (and the prospectus included therein,
and in the case of the accountants' letter with respect to events subsequent to
the date of such financial statements), as are customarily included in opinions
of issuer's counsel and an accountant's letter delivered to the underwriters in
underwritten public offerings of securities, and in the case of the
accountant's letter, such other financial matters as the Employee (or the
underwriters, if any) may reasonably request; and
(vii) At any time when a prospectus relating to the
Registrable Securities is required to be delivered under the Securities Act,
notify the Employee upon discovery of, or upon the happening of any event as a
result of which, the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made.
(viii) If the Company has delivered preliminary or final
prospectuses to the Employee, and after having done so the prospectus is
amended to comply with the requirements of the Securities Act, notify the
Employee and, if requested, the Employee shall immediately cease making offers
of Registrable Securities and return all prospectuses to the Company. The
Company shall promptly provide the Employee with a revised prospectuses and
following receipt of the revised prospectuses the Employee shall be free to
resume making offers of the Registrable Securities.
(c) The costs and expenses incurred in connection with any
registration, qualification or compliance pursuant to this Agreement,
including, without limitation, all registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for the Company and the
expenses of any special accounting services and audits incidental to or
required by such registration, shall be paid by the Company; provided, however,
the Company shall not be required to pay legal fees of counsel for the
Employee, or underwriters' fees, discounts, commissions
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and broker-dealer charges relating to the Registrable Securities, all of which
expenses shall be paid by the Employee.
(d) The Employee will furnish the Company, upon the written
request of the Company, all information in its possession necessary to include
in the Registration Statement and to effect the registration and qualifications
under the Securities Act and the blue sky laws and will otherwise cooperate
with the Company in effecting such registration and qualifications.
(e) The Company shall:
(i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act;
(ii) use its best efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and Exchange Act; and
(iii) furnish to the Employee upon request a written
statement by the Company as to its compliance with the reporting requirements
of Rule 144, the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
of the Company as the Employee may reasonably request to avail itself of any
similar rule or regulation of the SEC allowing itself any such securities
without registration.
(f) (i) In the event of any registration of any of the
Registrable Securities under the Securities Act pursuant to this Agreement, the
Company shall indemnify and hold harmless the Employee and each underwriter of
such Registrable Securities and each other Person, if any, who controls such
persons within the meaning of the Securities Act or the Exchange Act, against
any losses, claims, damages or liabilities (including reasonable legal and
other expenses incurred in investigating and defending against the same), joint
or several, to which the Employee or such underwriter or controlling person may
become subject under the Securities Act, the Exchange Act, state securities
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (1) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (2) any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus, if used prior to
the effective date of the Registration Statement, or contained in the
prospectus (as amended or supplemented if the Company files any amendment
thereof or supplement thereto with the SEC), if used within the period during
which the Company is required to keep the Registration Statement to which such
prospectus relates current pursuant to the terms hereof, or the omission or
alleged omission to state therein (if so used) a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that (A) the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or omission
made in such Registration Statement, preliminary prospectus or prospectuses, or
any such amendment or supplement, in reliance upon and in conformity with
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information furnished to the Company, in writing, by or on behalf of the
Employee, underwriter or controlling person specifically for use in the
preparation thereof or (B) the Company shall not be required to indemnify any
underwriter from whom the Person asserting any such losses, claims, damages,
expenses or liabilities purchased the Registrable Securities that are the
subject thereof or to the benefit of any person controlling such underwriter,
if such underwriter failed to send or give a copy of the prospectus or any
amendment thereof or supplement thereto to such person at or prior to the
written confirmation of the sale of such Registrable Securities to such person.
(ii) In the event of any registration of any of the
Registrable Securities under the Securities Act pursuant to this Agreement, the
Employee shall indemnify and hold harmless the Company, each of its directors
and officers and each underwriter (if any) and each person who controls the
Company or any such underwriter within the meaning of the Securities Act or the
Exchange Act, if any, against any losses, claims, damages or liabilities, joint
or several, to which the Company, such directors and officers, underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act, state securities or Blue Sky laws, or otherwise, insofar as such losses,
claims, damages, liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of material
fact contained in any Registration Statement under which such Registrable
Securities were registered under the Securities Act, any preliminary prospectus
or final prospectus or prospectuses contained in the Registration Statement, or
an amendment or supplement to the Registration Statement, or arise out of or
are based upon any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if the statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of the Employee specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement.
(iii) Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or litigation resulting therefrom; provided, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement. The Indemnified
Party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall pay such expenses if (1)
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential different
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding, (2) the employment of counsel by the Indemnified
Party has been authorized by the Indemnifying Party, or (3) the Indemnifying
Party has not, in fact, employed counsel to assume the defense of such action.
No Indemnifying Party, in the defense of any such claim or litigation shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a
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12
release from all liability in respect of such claim or litigation, and no
Indemnified Party shall consent to entry of any judgment or settle such claim
or litigation without the prior written consent of the Indemnifying Party.
(g) As used in this Section 6, the following terms shall have
the meanings indicated below:
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions
thereof.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement with the
SEC in compliance with the Securities Act for the purpose of effecting a public
sale of securities.
"Registrable Securities" means (a) all shares of common
stock, $0.01 par value per share (the "Common Stock"), of the Company
beneficially owned by the Employee and (b) any other securities issued by the
Company after the date hereof with respect to such shares (and with respect to
the Common Stock generally) by means of exchange, reclassification, dividend,
distribution, split up, combination, subdivision, recapitalization, merger,
spin-off, reorganization or otherwise; provided, however, that as to any
Registrable Securities, such securities shall cease to constitute Registrable
Securities for the purposes of this Agreement if and when (i) a Registration
Statement with respect to the sale of such securities shall have been declared
effective by the SEC and such securities shall have been sold pursuant thereto
in accordance with the intended plan and method of distribution therefor set
forth in the final prospectus forming a part of such Registration Statement;
(ii) such securities shall have been sold in satisfaction of all applicable
resale provisions of Rule 144 under the Securities Act; (iii) such securities
cease to be beneficially owned by the Employee, or (iv) such securities cease
to be issued and outstanding for any reason.
"Registration Statement" means a registration statement
filed by the Company with the SEC pursuant to Section 6(a) hereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
7. TRADE SECRETS, ETC. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries or
corporate affiliates and their respective businesses and operations, which
shall have been obtained by the Employee during the Employee's employment
(whether prior to or after the Agreement Date) and which shall not have become
public knowledge (other than by acts of the Employee or any of his
representatives in violation of this Agreement). At the end of the Employment
Term, the Employee agrees (i) not, without the prior written consent of the
Company
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13
or as may be otherwise required by law or legal process, to communicate or
divulge any such information, knowledge or data to any party other than the
Company and (ii) to deliver promptly to the Company any confidential
information, knowledge or data in his possession, whether produced by the
Company or any of its subsidiaries and corporate affiliates or by the Employee,
that relates to the business of the Company or any of its subsidiaries and
joint ventures or any past, current or prospective activity of the Company or
any of its subsidiaries and joint ventures. The Employee shall be permitted to
retain copies of such data as are necessary in order to enable the Employee to
assert any rights under this Agreement, provided that such data shall be used
solely for such purpose.
8. CUSTOMER LISTS. The Employee recognizes and acknowledges that
any written list or lists of the customers of the Company or any of its
subsidiaries and joint ventures ("customer lists"), as such customer lists may
exist from time to time, are valuable, special and unique assets of the
Company. The Employee agrees that he will not use for his own personal benefit
or disclose such customer lists to any person, firm, corporation, association
or other entity for any reason or purpose whatsoever. Personal and social
contacts with past, present or future customers of the Company shall not be
prohibited hereby.
9. LIMITED COVENANT NOT TO COMPETE. (a) For a period of two years
commencing with the expiration of the term of this Agreement, the Employee will
not, directly or indirectly, own, manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership, management,
operation or control of any company or other business enterprise engaged in a
line or lines of business similar to that of the Company or any of its
subsidiaries or joint ventures, within each parish of the State of Louisiana or
any other jurisdiction, whether within or outside the United States (each such
parish and other jurisdiction being identified in Appendix D hereto) in which
the business of the Company or any of its subsidiaries or joint ventures is
carried on, so long as the Company or any of its subsidiaries or joint ventures
carries on a like line of business therein; provided, however, that nothing
contained herein shall prohibit the Employee from making investments in any
publicly held company which do not exceed in the aggregate two percent of the
equity interest of such company.
(b) 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 D as may be necessary or appropriate to
correctly reflect the jurisdictions which, at the time of such modification,
should be covered by Appendix D and this Section 9. Furthermore, Employee
agrees that all references to Appendix D in this Agreement shall be deemed to
refer to Appendix D as so supplemented, amended, restated or otherwise modified
from time to time.
10. CERTAIN PROPRIETARY RIGHTS. The Employee agrees to and hereby
does assign to the Company all his right, title and interest in and to all
inventions, business plans, work models or procedures, whether or not
patentable, which are made or conceived solely or jointly by him:
(a) At any time during the term of his employment by the
Company, or
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14
(b) With the use of time or materials of the Company. The
Employee agrees to communicate to the Company or its representatives all facts
known to him concerning such matters, to sign all necessary instruments, make
all necessary oaths and generally, at the Company's expense, to do everything
reasonably practicable (without expense to the Employee) to aid the Company in
obtaining and enforcing proper legal protection for all such matters in all
countries and in vesting title to such matters in the Company. 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.
11. INJUNCTIVE RELIEF. In the event of a breach or threatened breach
by the Employee of the provisions of Sections 7, 8, 9 or 10 of this Agreement
during or after the term of this Agreement, the Company shall be entitled to
injunctive relief restraining the Employee from violation of such paragraph.
Nothing herein shall be construed as prohibiting the Company from pursuing any
other remedy at law or in equity it may have in the event of breach or
threatened breach of this Agreement by the Employee.
12. BINDING EFFECT.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any of its successors or assigns.
(b) This Agreement is personal to the Employee and shall not
be assignable by the Employee without the consent of the Company (there being
no obligation to give such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution. The rights of the
Employee under Section 6 hereof may be transferred by will and testament of the
Employee.
(c) The Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to agree to perform all
of the obligations under this Agreement in the same manner and to the same
extent as would have been required of the Company had no assignment or
succession occurred, such assumption to be set forth in a writing reasonably
satisfactory to the Employee. In the event of any such assignment or
succession, the term "Company" as used in this Agreement shall refer also to
such successor or assign.
13. 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 or 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:
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15
If to the Company, addressed to:
UNIFAB International, Inc.
0000 Xxxx Xxxx
Xxx Xxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Vice President and Chief Financial Officer
If to the Employee, addressed to:
Xxxxxx X. Xxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
or such other address as to which any party hereto may have notified the other
in writing.
14. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Louisiana.
15. ENTIRE AGREEMENT. This Agreement, including Appendices A through
D, inclusive, all of which are herein incorporated by reference and made a part
hereof, and the documents referred to herein, contain or refer 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.
16. SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall at any time or to any
extent be invalid or unenforceable, 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 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.
17. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach thereof.
18. REMEDIES NOT EXCLUSIVE. No remedy specified herein shall be
deemed to be such party's exclusive remedy, and accordingly, in addition to all
of the rights and remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by applicable law, rule or
regulation.
19. BENEFICIARIES. Whenever this Agreement provides for any payment
to be made to the Employee or his estate, such payment may be made instead to
such beneficiary or beneficiaries as the Employee may have designated in
writing and filed with the Company. The Employee shall
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16
have the right to revoke any such designation from time to time and to
redesignate any beneficiary or beneficiaries by written notice to the Company.
20. COMPANY'S RESERVATION OF RIGHTS. Employee acknowledges and
understands that the Employee serves at the pleasure of the Board of Directors
and that the Company has the right at any time to terminate Employee's status
as an employee of the Company, or to change or diminish his status as the
President and Chief Executive Officer during the Employment Term, subject to
the rights of the Employee to claim the benefits conferred by Sections 5(a) and
6 hereof if such action constitutes a termination by the Company without Cause
or a termination by the Employee for Good Reason.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
UNIFAB INTERNATIONAL, INC.
By:
-------------------------------------
Xxxxxxx X. Xxxxxxxxx
Director, Member of
Compensation Committee
EMPLOYEE:
---------------------------------------------
Xxxxxx X. Xxxxxx
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APPENDIX A
SCHEDULE FOR EMPLOYEE BONUS DETERMINATION
Bonus as% of Salary Belowh 15% net income return on capital 0*
Achieve 15% minimum net income return on capital . . . . . . . . . . . . 50.0%
Achieve greater than minimum net income return on capital:
16% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.3%
17% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56.7%
18% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.0%
19% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63.3%
20% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.7%
21% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.0%
22% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.3%
23% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76.7%
24% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.0%
25% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.3%
26% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.7%
27% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90.0%
28% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.3%
29% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.7%
Achieve 30% or greater net income return on capital 100.0%
*FY1998 only - guaranteed minimum of $50,000.
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APPENDIX B
FORM OF OPTION AGREEMENT UNDER THE COMPANY'S
1997 INCENTIVE COMPENSATION PLAN
OFFICER AND
EMPLOYEE
AGREEMENT
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
UNIFAB INTERNATIONAL, INC.
LONG-TERM INCENTIVE PLAN
THIS AGREEMENT is entered into and effective as of __________, 1997, by
and between UNIFAB International, Inc., a Louisiana corporation (the
"Company"), and ________ ________ (the "Optionee").
WHEREAS Optionee is a key employee of the Company and the Company
considers it desirable and in its best interest that Optionee be given an
inducement to acquire a proprietary interest in the Company and an incentive to
advance the interests of the Company by possessing an option to purchase shares
of the common stock of the Company, $.01 par value per share (the "Common
Stock") in accordance with the UNIFAB International, Inc. Long-Term Incentive
Plan (the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
X.
Xxxxx of Option
The Company hereby grants to Optionee the right, privilege and option to
purchase _______ shares of Common Stock (the "Option") at an exercise price
equal to the initial public offering price of the Common Stock (the "Exercise
Price"). The grant of the Option is subject to the issuance and sale of Common
Stock registered with the Securities and Exchange Commission on Form S-1 (Reg.
No. 333-31609) in connection with the Company's initial public offering of the
Common Stock and such grant shall be effective as of the Closing Time referred
to in that certain Transition Agreement dated ________, 1997 to which the
Company is a party. The date on which the Closing Time occurs shall
hereinafter be referred to as the "Date of Grant." The Option shall be
exercisable at the time specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
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19
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the other provisions of
this Section II, the Optionee shall be entitled to exercise the Option as
follows:
With respect to one-third of the shares of Common Stock subject to the
Option, beginning on the Date of Grant; With respect to two-thirds of
the shares of Common Stock subject to the Option, less any shares
previously issued, beginning one year following the Date of Grant; and
With respect to all of the shares of Common Stock subject to the Option,
less any shares previously issued, beginning two years following the
Date of Grant.
The Option shall expire and may not be exercised later than ten years
following the Date of Grant.
2.2 During Optionee's lifetime, the Option may be exercised only by
him or his guardian if he has been declared incompetent. In the event of
death, the Option may be exercised as provided herein by the Optionee's estate
or by the person to whom such right devolves as a result of the Optionee's
death.
2.3 If an Optionee ceases to be an employee because of death,
disability within the meaning of Section 22(e)(3) of the Code ("Disability") or
retirement, the Option must be exercised, to the extent otherwise exercisable
at the time of termination of employment, within one year from the date on
which the Optionee ceases to be an employee, but in no event later than ten
years following the Date of Grant.
2.4 If Optionee's employment is terminated, other than as a result of
death, disability or retirement, the Option must be exercised, to the extent
otherwise exercisable at the time of termination of employment, within 30 days
from the date on which Optionee ceases to be an employee, but in no event later
than ten years following the date of grant.
III.
Method of Exercise of Option
3.1 Optionee may exercise all or a portion of the Option by
delivering to the Company a signed written notice of his intention to exercise
the Option, specifying therein the number of shares to be purchased. Upon
receiving such notice, and after the Company has received full payment of the
Exercise Price, the appropriate officer of the Company shall cause the transfer
of title of the shares purchased to Optionee on the Company's stock records and
cause to be issued to Optionee a stock certificate for the number of shares
being acquired. Optionee shall not have any rights as a shareholder until the
stock certificate is issued to him.
3.2 The Option may be exercised by the payment of the Exercise Price
in cash, in shares of Common Stock held for six months or in a combination of
cash and shares of Common Stock held
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20
for six months. The Optionee may also pay the Exercise Price by delivering a
properly executed exercise notice together with irrevocable instructions to a
broker approved by the Compensation Committee (with a copy to the Company) to
promptly deliver to the Company the amount of sale or loan proceeds to pay the
Exercise Price.
IV.
No Contract of Employment Intended
Nothing in this Agreement shall confer upon Optionee any right to
continue in the employment of the Company or any of its subsidiaries, or to
interfere in any way with the right of the Company or any of its subsidiaries
to terminate Optionee's employment relationship with the Company or any of its
subsidiaries at any time.
V.
Binding Effect
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators and
successors.
VI.
Non-Transferability
The Option granted hereby may not be transferred, assigned, pledged or
hypothecated in any manner, by operation of law or otherwise, other than by
will, by the laws of descent and distribution or pursuant to a domestic
relations order, as defined in the Code, and shall not be subject to execution,
attachment or similar process.
VII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions of the Plan as in
effect on the date hereof and as it may be amended. In the event any provision
of this Agreement conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed on the day and year first above written.
UNIFAB INTERNATIONAL, INC.
By:
---------------------------------
Member
Compensation Committee
---------------------------------
Optionee
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APPENDIX C
OTHER BENEFITS AVAILABLE TO EMPLOYEES
- 21 -
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APPENDIX D
JURISDICTIONS IN WHICH COMPETITION IS RESTRICTED
AS PROVIDED IN SECTION 8 OF THE EMPLOYMENT AGREEMENT
BETWEEN INTERNATIONAL, INC. AND XXXXXX X. XXXXXX
Louisiana - Parish of Iberia
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