EXHIBIT 10.4
X. X. Xxxxx
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of
May 6, 1997 (the "Effective Date"), by and between Innovative Valve
Technologies, Inc., a Delaware corporation (the "Company"), and X. X. Xxxxx (the
"Executive") and is amended and restated as of October 15, 1997.
RECITAL:
WHEREAS, the Company desires to employ the Executive, and the
Executive agrees to work in the employ of the Company, and
WHEREAS, the parties hereto desire to set forth the terms of
Executive's Employment with the Company,
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive, and the
Executive hereby accepts Employment, on the terms and
conditions herein set forth.
2. DUTIES. (a) The Company will employ the Executive as Senior
Vice President -- Technology & Marketing ("SVP") of the
Company, (b) the Executive will serve in the Company's employ
in that position and (c) under the direction of the Board of
Directors of the Company (the "Board") or the Chief Executive
Officer of the Company (the "CEO"), the Executive shall
perform such duties, and have such powers, authority,
functions, duties and responsibilities for the Company and
corporations and other entities affiliated with the Company as
are commensurate and consistent with his employment in the
position of SVP. The Executive also shall have such additional
powers, authority, functions, duties and responsibilities as
may be assigned to him by the Board or the CEO; provided that,
without the Executive's written consent, those additional
powers, authority, functions, duties and responsibilities
shall not be inconsistent or interfere with, or detract from,
those herein vested in, or otherwise then being performed for
the Company by, the Executive. In the event of an increase in
the Executive's duties, the CEO shall review the Executive's
compensation and benefits to determine if an adjustment in
compensation and employee benefits commensurate with the
Executive's new duties is warranted, in accordance with the
Company's
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compensation policies and subject to approval by the
Compensation Committee of the Board (the "Compensation
Committee").
3. TERM OF EMPLOYMENT. Subject to the provisions of Section 8,
the term of the Executive's Employment hereunder shall
commence on June 9, 1997, for a continually renewing term of
two years commencing on that date and renewing each day
thereafter for an additional day without any further action by
either the Company or the Executive, it being the intention of
the parties that there shall be continuously a remaining term
of two years' duration of the Executive's Employment until an
event has occurred as described in, or one of the parties
shall have made an appropriate election pursuant to, the
provisions of Section 8. When the termination date of the
Executive's Employment shall have occurred and the Company
shall have paid to the Executive all the applicable amounts
that Section 9 provides the Company shall pay as a result of
the termination of the Executive's Employment, this Agreement
will terminate and have no further force or effect, except
that Sections 15 through 29 shall survive that termination
indefinitely and Section 11 shall survive for the period of
time provided for therein.
4. EXTENT OF SERVICES. The Executive shall not at any time during
his Employment engage in any other activities unless those
activities do not interfere materially with the Executive's
duties and responsibilities to the Company at that time. The
foregoing, however, shall not preclude the Executive from
engaging in appropriate civic, charitable, professional or
trade association activities or from serving on one or more
boards of directors of public companies, as long as such
activities and services do not conflict with his
responsibilities to the Company.
5. RELOCATION. In consideration of the Executive's Employment
hereunder, the Executive will move his principal place of
residence from California to the Houston, Texas area. The
Executive estimates that the cost of this relocation will be
from $100,000 to $110,000, and the Company will, on the
Executive's submission of appropriate invoices and receipts,
pay directly or reimburse the Executive for all the reasonable
costs and expenses the Executive incurs in moving his
household from California to the Houston, Texas area, provided
that the Company's liability therefor shall not exceed
$130,000. The Company agrees to advance to the Executive prior
to the date of that moving up to $100,000 for which the
Executive may provide appropriate invoices or receipts at a
later date. Once the Executive has relocated his principal
place of residence to the Houston, Texas area, the Executive
shall not be required to move his principal place of residence
from the Houston, Texas area or to perform regular duties that
could reasonably be expected to require either such move
against his wish or to spend amounts of
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HOU03:534820.1
time each week outside the Houston, Texas area which are
unreasonable in relation to the duties and responsibilities of
the Executive hereunder, and the Company agrees that, if it
requests the Executive to make such a move and the Executive
declines that request, (a) that declination shall not
constitute any basis for a termination of the Executive's
Employment and (b) no animosity or prejudice will be held
against Executive.
6. COMPENSATION.
(a) SALARY. An annual base salary shall be payable to the
Executive by the Company as a guaranteed minimum amount
under this Agreement for each calendar year during the
period from the Effective Date to the termination date
of the Executive's Employment. That annual base salary
shall (i) accrue daily on the basis of a 365-day year,
(ii) be payable to the Executive in the intervals
consistent with the Company's normal payroll schedules
(but in no event less frequently than semi-monthly) and
(iii) be payable at an initial annual rate of $175,000.
The Executive's annual base salary shall not be
decreased, but shall be adjusted annually in each
December to reflect such adjustments, if any, as the CEO
determines appropriate based on the Executive's
performance during the most recent performance period,
in accordance with the Company's compensation policies
and subject to the approval of the Compensation
Committee. A failure of the Company to increase the
Executive's annual base salary would not constitute a
breach or violation of this Agreement by the Company.
(b) STOCK SALE AND STOCK OPTIONS. The Company shall sell to
the Executive, and the Executive shall purchase from the
Company, effective as of the Effective Date, 50,000
shares of the Company's authorized and unissued common
stock, par value $.001 per share (the "Common Stock"),
for a cash purchase price of $.001 per share. The
Company shall also grant to the Executive effective as
of the Effective Date (i) a nonqualified stock option to
purchase 50,000 shares of Common Stock from the Company
at an exercise price per share equal to the IPO Price
and (ii) a nonqualified option to purchase 50,000 shares
of Common Stock from the Company at an exercise price
per share equal to the lesser of (A) $9.00 and (B) the
IPO Price (each option being an "Option"). The term of
each Option shall be seven years from the IPO Closing
Date. Each Option will become exercisable with respect
to 25% of the shares of Common Stock covered thereby on
each of the IPO Closing Date and the first three
anniversaries of the IPO Closing Date, subject to
acceleration
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as provided in this Section 6(b). Neither the number of
shares of Common Stock subject to, nor the exercise
price established by, either Option will be subject to
any adjustment by reason of any direct or indirect
combination of the outstanding Common Stock prior to the
IPO Closing Date. The Executive agrees that the Options
shall be evidenced by award agreements under the
Innovative Valve Technologies, Inc. 1997 Incentive Plan
(the "1997 Incentive Plan"). If the Executive's
Employment is terminated under Section 8(a), (b) or (d)
prior to the fifth anniversary of the IPO Closing Date,
the Options will, notwithstanding any contrary provision
of any Incentive Plan or any award agreement evidencing
the Options thereunder, (i) become, to the extent not
already exercisable, exercisable in whole on the
termination date of the Executive's Employment and (ii)
remain exercisable at least until the date that is the
second anniversary of that termination date. If the
Executive's Employment is terminated under Section 8(e)
prior to the fifth anniversary of the IPO Closing Date,
the Options will, notwithstanding any contrary provision
of any Incentive Plan or any award agreement evidencing
the Options thereunder, (i) become, to the extent not
already exercisable, exercisable on each anniversary of
the IPO Closing Date, as provided above, and (ii) remain
exercisable (to the extent then and thereafter
exercisable) at least until the date that is the seventh
anniversary of the IPO Closing Date. If the Executive's
Employment is terminated under Section 8(c) or (f), the
Options, to the extent they are outstanding and
exercisable as of the time immediately prior to the
termination date of the Executive's Employment, will
remain outstanding and continue to be exercisable until
the date that is 10 days after that termination date (or
such later date, if any, as the Incentive Plan covering
the Options or any award agreement evidencing the
Options shall prescribe in the case of the termination
of the Executive's Employment under the circumstances
covered by Section 8(c) or (f), as the case may be).
(c) OTHER COMPENSATION. The Executive shall be entitled to
participate in all Compensation Plans from time to time
in effect while in the Employment of the Company,
regardless of whether the Executive is an Executive
Officer. All awards to the Executive under all Incentive
Plans shall take into account the Executive's positions
with and duties and responsibilities to the Company and
its subsidiaries and affiliates.
Without limiting the generality of the foregoing, the
Executive shall be eligible for an annual incentive
award in accordance with the Annual Incentive Plan (the
"AIP") currently being developed as a part of the 1997
Incentive Plan, or such other plan as may be substituted
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for the AIP, and subject to the approval of the
Compensation Committee. The actual target amount of the
Executive's annual bonus under the AIP is currently
unknown, although the Company and the Executive
contemplate it will be 70% of the Executive's annual
salary under Section 6(a). The Executive's rights to
benefits at the termination of his Employment under the
Compensation Plans shall be governed by the provisions
of those plans.
(d) EXPENSES. The Executive shall be entitled to prompt
reimbursement of all reasonable business expenses
incurred by him in the performance of his duties during
the term of this Agreement, subject to the presenting of
appropriate vouchers and receipts in accordance with the
Company's policies.
7. OTHER BENEFITS.
(a) EMPLOYEE BENEFITS AND PROGRAMS. During the term of this
Agreement, the Executive and the members of his
immediate family shall be entitled to participate in any
employee benefit plans or programs of the Company to the
extent that his position, tenure, salary, age, health
and other qualifications make him or them, as the case
may be, eligible to participate, subject to the rules
and regulations applicable thereto.
(b) COUNTRY CLUB MEMBERSHIPS. The Company shall pay the
first $15,000 of any initial membership fee for the
Executive to join a country club in the Houston, Texas
area, plus the monthly membership fee (up to $300 per
month) with respect thereto throughout the term of this
Agreement.
(c) BRIDGE LOANS. The Company shall extent an interest-free
loan to the Executive of up to $100,000 (the "Bridge
Loan") on (i) at least 10 business days prior written
notice from the Executive and (ii) execution by the
Executive of a mutually acceptable unsecured promissory
note evidencing the Bridge Loan. The entire amount of
the Bridge Loan shall mature and become due and payable
upon the earlier of (i) June 9, 1999 or (ii) termination
of the Executive's Employment hereunder for any reason.
At the option of the Executive or the Company, the
Bridge Loan may be repaid in accordance with the terms
hereof out of, or offset against, any bonus or other
amount payable to the Executive hereunder.. .
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(d) VACATION. The Executive shall be entitled to four weeks
of vacation leave with full pay during each year of this
Agreement (each such year being a 12-month period ending
on May 6). The times for such vacations shall be
selected by the Executive, subject to the prior approval
of the Company. The Executive may accrue up to eight
weeks of vacation time from year to year, but vacation
time otherwise shall not accrue from year to year.
(e) CAR ALLOWANCE. The Executive shall be furnished with an
automobile allowance in the aggregate amount of (i) $800
per month, for payment of all costs and expenses
incurred by the Executive relating to the purchase,
lease or operation of an automobile by the Executive
(other than fuel expenses), including but not limited to
oil, repair and maintenance costs and expenses, plus
(ii) the actual amount of the fuel expenses incurred by
the Executive in operating such automobile.
8. TERMINATION. The Executive's Employment hereunder may be
terminated prior to the term provided for in Section 3 only
under the following circumstances:
(a) DEATH. The Executive's Employment shall terminate
automatically on the date of his death.
(b) DISABILITY. If a Disability occurs and is continuing,
the Executive's Employment shall terminate 30 days after
the Company gives the Executive written notice that it
intends to terminate his Employment on account of that
Disability or on such later date as the Company
specifies in such notice. If the Executive resumes the
performance of substantially all his duties under this
Agreement before the termination becomes effective, the
notice of intent to terminate shall be deemed to have
been revoked.
(c) VOLUNTARY TERMINATION. The Executive may terminate his
Employment at any time and without Good Cause with 30
days' prior written notice to the Company.
(d) TERMINATION FOR GOOD CAUSE. The Executive may terminate
his Employment for Good Cause at any time within 180
days (730 days if the Good Cause is the occurrence of a
Change of Control) after the Executive becomes
consciously aware that the facts and circumstances
constituting that Good Cause exist and are continuing by
giving the Company 14 days' prior written notice that
the
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Executive intends to terminate his Employment for Good
Cause, which notice will identify that Good Cause;
provided, however, that if a Change of Control occurs,
the Executive shall not have Good Cause to terminate his
Employment solely by reason of the occurrence of that
event until 270 days after that occurrence.
(e) INVOLUNTARY TERMINATION. The Executive's Employment is
at will. The Company reserves the right to terminate the
Executive's Employment at anytime whatsoever, without
cause, with 14 days' prior written notice to the
Executive.
(f) INVOLUNTARY TERMINATION FOR CAUSE. The Company reserves
the right to terminate the Executive's Employment for
Cause. In the event that the Company determines that
Cause exists under Section 10(f)(i) for the termination
of the Executive's Employment, the Company shall provide
in writing (the "Notice of Cause") the basis for that
determination and the manner, if any, in which the
breach or neglect can be cured. If either the Company
has determined that the breach or neglect cannot be
cured, as set forth in the Notice of Cause, or has
advised the Executive in the Notice of Cause of the
manner in which the breach or neglect can be cured, but
the Executive fails to effect that cure within 30 days
after his receipt of the Notice of Cause, the Company
shall be entitled to give the Executive written notice
of his termination for Cause. In the event that the
Company determines that Cause exists under Section
10(f)(ii) for the termination of the Executive's
Employment, it shall be entitled to terminate the
Executive's Employment without providing a Notice of
Cause or any opportunity prior to that termination to
contest that determination. Any termination of the
Executive's Employment for Cause pursuant to this
Section 8(f) shall be effective immediately upon the
Executive's receipt of the Company's written notice of
that termination and the Cause therefor.
9. SEVERANCE PAYMENTS. If the Executive's Employment is
terminated during the term of this Agreement, the Executive
shall be entitled to receive severance payments as follows:
(a) If the Executive's Employment is terminated under
Section 8(a), (b), (d) or (e), the Company will pay or
cause to be paid to the Executive (or, in the case of a
termination under Section (a), the beneficiary the
Executive has designated in writing to the Company to
receive payment pursuant to this Section 9(a) or, in the
absence of such designation, the Executive's estate):
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(i) the Accrued Salary;
(ii) the Other Earned Compensation;
(iii) the Reimbursable Expenses; and
(iv) the Severance Benefit.
(b) If the Executive's Employment is terminated under
Section 8(c) or (f), the Company will pay or cause to be
paid to the Executive:
(i) the Accrued Salary determined as of the
termination date of the Executive's Employment;
(ii) the Other Earned Compensation; and
(iii) the Reimbursable Expenses.
(c) Any payments to which the Executive (or his designated
beneficiary or estate, if Section 8(a) applies) is
entitled pursuant to paragraph (i) and (iv) of
subsection (a) of this Section 9 or paragraph (i) of
subsection (b) of this Section 9, as applicable, will be
paid in a single lump sum within five days after the
termination date of the Executive's Employment;
provided, however, that if Section 8(a) applies and the
Executive's designated beneficiary or estate is the
beneficiary of one or more insurance policies purchased
by the Company and then in effect the proceeds of which
are payable to that beneficiary by reason of the
Executive's death, then (i) the Company, at its option,
may credit the amount of those proceeds, as and when
paid by the insurer to that beneficiary, against the
payment to which the Executive's designated beneficiary
or estate is entitled pursuant to paragraph (iv) of
subsection (a) of this Section 9 and, if it exercises
that option, (ii) the payment otherwise due pursuant to
that paragraph (iv) will bear interest on the
outstanding balance thereof from and including the fifth
day after that termination date to the date of payment
by the insurer to that beneficiary at the rate of
interest specified in Section 29; and provided, further,
that if Section 8(b) applies and the Executive is the
beneficiary of disability insurance purchased by the
Company and then in effect, the Company, at its option,
may credit the proceeds of that insurance which are
payable to the Executive, valued at their present value
as of that termination date using the interest rate
specified in Section 29 and then in effect as the
discount rate, against the payment to which the
Executive is
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entitled pursuant to paragraph (iv) of subsection (a) of
this Section 9. Any payments to which the Executive (or
his designated beneficiary or estate, if Section 8(a)
applies) is entitled pursuant to paragraphs (ii) and
(iii) of subsection (a) or (b) of this Section 9, as
applicable, will be paid in a single lump sum within
five days after the termination date of the Executive's
Employment or as soon thereafter as is administratively
feasible, together with interest accrued thereon from
and including the fifth date after that termination date
to the date of payment at the rate of interest specified
in Section 29.
(d) Except as provided in Sections 13 and 23 and this
Section, the Company will have no payment obligations
under this Agreement to the Executive (or his designated
beneficiary or estate, if Section 8(a) applies) after
the termination date of the Executive's Employment.
10. DEFINITION OF TERMS. The following terms used in this
Agreement when capitalized shall have the following meanings:
(a) ACCRUED SALARY. "Accrued Salary" shall mean the salary
that has accrued, and the salary that would accrue
through and including the last day of the pay period in
which the termination date of the Executive's Employment
occurs, under Section 6(a) which has not been paid to
the Executive as of that termination date.
(b) ACQUIRING PERSON. "Acquiring Person" shall mean any
person who or which, together with all Affiliates and
Associates of such person, is or are the Beneficial
Owner of 15% or more of the shares of Common Stock then
outstanding; provided, however, that a person shall not
be or become an Acquiring Person if such person,
together with its Affiliates and Associates, shall
become the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding solely as a result of a
reduction in the number of shares of Common Stock
outstanding due to the repurchase of Common Stock by the
Company, unless and until such time as such person or
any Affiliate or Associate of such person shall purchase
or otherwise become the Beneficial Owner of additional
shares of Common Stock constituting 1% or more of the
then outstanding shares of Common Stock or any other
person (or persons) who is (or collectively are) the
Beneficial Owner of shares of Common Stock constituting
1% or more of the then outstanding shares of Common
Stock shall become an Affiliate or Associate of such
person, unless, in either such case, such person,
together with all Affiliates and Associates of such
person, is not then the Beneficial Owner of 15% or more
of the shares of Common Stock
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then outstanding. Notwithstanding anything in this
definition of "Acquiring Person" to the contrary, no
Exempt Person shall be deemed to be or become an
"Acquiring Person" or an Affiliate or Associate of any
other person for purposes of this definition.
(c) AFFILIATE. "Affiliate" has the meaning ascribed to that
term in Exchange Act Rule 12b-2.
(d) ASSOCIATE. "Associate" shall mean, with reference to any
person, (i) any corporation, firm, partnership,
association, unincorporated organization or other entity
(other than the Company or a subsidiary of the Company)
of which that person is an officer or general partner
(or officer or general partner of a general partner) or
is, directly or indirectly, the Beneficial Owner of 10%
or more of any class of its equity securities, (ii) any
trust or other estate in which that person has a
substantial beneficial interest or for or of which that
person serves as trustee or in a similar fiduciary
capacity and (iii) any relative or spouse of that
person, or any relative of that spouse, who has the same
home as that person.
(e) BENEFICIAL OWNER. A specified person shall be deemed the
"Beneficial Owner" of, and shall be deemed to
"beneficially own," any securities:
(i) of which that person or any of that person's
Affiliates or Associates, directly or indirectly,
is the "beneficial owner" (as determined pursuant
to Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or
otherwise has the right to vote or dispose of,
including pursuant to any agreement, arrangement
or understanding (whether or not in writing);
provided, however, that a person shall not be
deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this
subparagraph (i) as a result of an agreement,
arrangement or understanding to vote that security
if that agreement, arrangement or understanding:
(A) arises solely from a revocable proxy or
consent given in response to a public (that is,
not including a solicitation exempted by Exchange
Act Rule 14a-2(b)(2)) proxy or consent
solicitation made pursuant to, and in accordance
with, the applicable provisions of the Exchange
Act; and (B) is not then reportable by such person
on Exchange Act Schedule 13D (or any comparable or
successor report);
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(ii) which that person or any of that person's
Affiliates or Associates, directly or indirectly,
has the right or obligation to acquire (whether
that right or obligation is exercisable or
effective immediately or only after the passage of
time or the occurrence of an event) pursuant to
any agreement, arrangement or understanding
(whether or not in writing) or on the exercise of
conversion rights, exchange rights, other rights,
warrants or options, or otherwise; provided,
however, that a person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own,"
securities tendered pursuant to a tender or
exchange offer made by that person or any of that
person's Affiliates or Associates until those
tendered securities are accepted for purchase or
exchange; or
(iii) which are beneficially owned, directly or
indirectly, by (A) any other person (or any
Affiliate or Associate thereof) with which the
specified person or any of the specified person's
Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy or
consent as described in the proviso to
subparagraph (i) of this definition) or disposing
of any voting securities of the Company or (B) any
group (as that term is used in Exchange Act Rule
13d-5(b)) of which that specified person is a
member;
provided, however, that nothing in this definition shall
cause a person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through that
person's participation in good faith in a firm
commitment underwriting until the expiration of 40 days
after the date of that acquisition. For purposes of this
Agreement, "voting" a security shall include voting,
granting a proxy, acting by consent, making a request or
demand relating to corporate action (including, without
limitation, calling a stockholder meeting) or otherwise
giving an authorization (within the meaning of Section
14(a) of the Exchange Act) in respect of such security.
(f) CAUSE. "Cause" shall mean that the Executive has
(i) willfully breached or habitually neglected
(otherwise than by reason of injury or physical or
mental illness) the duties
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which he was required to perform under the terms
of this Agreement, or
(ii) committed act(s) of dishonesty, fraud or
misrepresentation or other act(s) of moral
turpitude that would prevent the effective
performance of his duties under this Agreement.
(g) CHANGE OF CONTROL. "Change of Control" shall mean the
occurrence of any of the following events that occurs
after the IPO Closing Date: (i) any person becomes an
Acquiring Person; (ii) a merger of the Company with or
into, or a sale by the Company of its properties and
assets substantially as an entirety to, another person
occurs and, immediately after that occurrence, any
person, other than an Exempt Person, together with all
Affiliates and Associates of such person, shall be the
Beneficial Owner of 15% or more of the total voting
power of the then outstanding Voting Shares of the
person surviving that transaction (in the case or a
merger or consolidation) or the person acquiring those
properties and assets substantially as an entirety; or
(iii) Xxxxxx Services Corp., together with all its
Affiliates (collectively, "Xxxxxx"), shall become the
Beneficial Owner of 50% or more of the shares of Common
Stock then outstanding.
(h) COMPANY. "Company" shall mean (i) Innovative Valve
Technologies, Inc., a Delaware corporation, and (ii) any
person that assumes the obligations of "the Company"
hereunder, by operation of law, pursuant to Section 16
or otherwise.
(i) COMPENSATION PLAN. "Compensation Plan" shall mean any
compensation arrangement, plan, policy, practice or
program established, maintained or sponsored by the
Company or any subsidiary of the Company, or to which
the Company or any subsidiary of the Company
contributes, on behalf of any Executive Officer or any
member of the immediate family of any Executive Officer
by reason of his status as such, (i) including (A) any
"employee pension benefit plan" (as defined in Section
3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) or other "employee benefit
plan" (as defined in Section 3(3) of ERISA), (B) any
other retirement or savings plan, including any
supplemental benefit arrangement relating to any plan
intended to be qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"),
or whose benefits are limited by the Code or ERISA, (C)
any "employee welfare plan" (as defined in Section 3(1)
of ERISA), (D) any arrangement, plan, policy,
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practice or program providing for severance pay,
deferred compensation or insurance benefit, (E) any
Incentive Plan and (F) any arrangement, plan, policy,
practice or program (1) authorizing and providing for
the payment or reimbursement of expenses attributable to
air travel and hotel occupancy while traveling on
business for the Company or (2) providing for the
payment of business luncheon and country club dues,
long-distance charges, mobile phone monthly air time or
other recurring monthly charges or any other fringe
benefit, allowance or accommodation of employment, but
(ii) excluding any compensation arrangement, plan,
policy, practice or program to the extent it provides
for annual base salary.
(j) DISABILITY. "Disability" shall mean that the Executive
has been unable to perform his essential duties under
this Agreement for a period of at least six consecutive
months as a result of his incapacity due to injury or
physical or mental illness.
(k) EMPLOYMENT. "Employment" shall mean the salaried
employment of the Employee by the Company or a
subsidiary of the Company hereunder.
(l) EXECUTIVE OFFICER. "Executive Officer" shall mean any of
the chairman of the board, the chief executive officer,
the chief operating officer, the chief financial
officer, the president, any executive, regional or other
group or senior vice president or any vice president of
the Company.
(m) EXEMPT PERSON. "Exempt Person" shall mean: (i)(A) the
Company, any subsidiary of the Company, any employee
benefit plan of the Company or any subsidiary of the
Company and (B) any person organized, appointed or
established by the Company for or pursuant to the terms
of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of
the Company or any subsidiary of the Company; (ii) the
Executive, any Affiliate of the Executive which the
Executive controls or any group (as that term is used in
Exchange Act Rule 13d-5(b)) of which the Executive or
any such Affiliate is a member; and (iii) so long as
Xxxxxx remains the Beneficial Owner of 15% or more of
the outstanding shares of Common Stock, Xxxxxx.
(n) GOOD CAUSE. "Good Cause" for the Employee's termination
of his Employment shall mean: (i) any decrease in the
annual base salary
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under Section 6(a) or any other violation hereof in any
material respect by the Company; (ii) any material
reduction in the Executive's compensation under Section
6; (iii) the assignment to the Employee of duties
inconsistent in any material respect with the Employee's
then current positions (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities or any other action by the Company
which results in a material diminution in those
positions, authority, duties or responsibilities; or
(iv) the occurrence of a Change of Control.
(o) INCENTIVE PLAN. "Incentive Plan" shall mean any
compensation arrangement, plan, policy, practice or
program established, maintained or sponsored by the
Company or any subsidiary of the Company, or to which
the Company or any subsidiary of the Company
contributes, on behalf of any Executive Officer and
which provides for incentive, bonus or other
performance-based awards of cash, securities, the
phantom equivalent of securities or other property,
including any stock option, stock appreciation right and
restricted stock plan, but excluding any plan intended
to qualify as a plan under any one or more of Sections
401(a), 401(k) or 423 of the Code.
(p) IPO. "IPO" shall mean the first time a registration
statement filed under the Securities Act of 1933, as
amended (the "Securities Act"), and respecting an
underwritten primary offering by the Company of shares
of the Common Stock is declared effective under that act
and the shares registered by that registration statement
are issued and sold by the Company (otherwise than
pursuant to the exercise of any over-allotment option).
(q) IPO CLOSING DATE. "IPO Closing Date" shall mean the date
on which the Company first receives payment for the
shares of the Common Stock it sells in the IPO.
(r) IPO PRICE. "IPO Price" shall mean the price per share at
which the Common Stock is initially offered to the
public in the IPO.
.
(s) OTHER EARNED COMPENSATION. "Other Earned Compensation"
shall mean all the compensation earned by the Executive
prior to the termination date of his Employment as a
result of his Employment (including compensation the
payment of which has been deferred by the Executive, but
excluding Accrued Salary and compensation to be paid to
the Executive in accordance with the terms of any
- 14 -
Compensation Plan), together with all accrued interest
or earnings, if any, thereon, which has not been paid to
the Executive as of that date.
(t) REIMBURSABLE EXPENSES. "Reimbursable Expenses" shall
mean the expenses incurred by the Executive on or prior
to the termination date of his Employment which are to
be reimbursed to the Executive under Section 6(c) and
which have not been reimbursed to the Executive as of
that date.
(u) SEVERANCE BENEFIT. "Severance Benefit" shall mean the
sum of: (i) the amount equal to the product of (A) the
Applicable Monthly Salary Rate multiplied by (B) the
greater of (1) 24 and (2) the sum of 12 plus the number
(rounded to the next highest whole number, if not a
whole number) equal to the quotient of (a) the number of
whole and partial months during which the Executive has
remained in his Employment prior to the end of the month
in which the termination date of his Employment occurs
divided by (b) 12 (provided, however, that if the
Executive's Employment is terminated pursuant to Section
8(d) because a Change of Control has occurred, the sum
determined pursuant to this clause (2) shall not exceed
36); and (ii) the amount equal to the greater of (A)
twice the target amount of all incentive awards or
payments that would have been owing to the Executive for
the Company's fiscal year in which the termination date
of the Executive's Employment occurs were the
Executive's Employment to have continued to the end of
that fiscal year, regardless of the level of attainment
of the performance objectives for that fiscal year, (B)
twice the amount of the highest aggregate amount of all
incentive awards and payments made to the Executive for
any fiscal year of the Company prior to that fiscal year
or (C) if the Executive's Employment is terminated prior
to the payment of any incentive payment or award to the
Executive for his services hereunder during the
Company's fiscal year ended December 31, 1997, $210,000.
As used herein, "Applicable Monthly Salary Rate" shall
mean 1/12th of the higher of (i) the annual salary rate
in effect under Section 6(a) immediately prior to the
termination date of the Executive's Employment and (ii)
the highest annual salary rate theretofore in effect
under Section 6(a) for any period.
11. NON-COMPETITION CLAUSE. In addition to his obligations as an
executive and whether or not he remains an executive of the Company,
the Executive agrees that during the period commencing with the
Effective Date and ending upon the second anniversary of the
termination date of his Employment following termination of his
Employment under any of Section 8(b), (c), (e) or (f), he will not,
without the prior written consent
- 15 -
of the Company, engage, directly or indirectly, in any business that
sells any products or performs any services in competition with the
Company or any subsidiary of the Company in any area within any
"Territory" surrounding any service facility of the Company or any
subsidiary of the Company (determined as of that termination date).
For purposes of this Section 11, the "Territory" surrounding any
service facility will be: (i) the city, town or village in which
that service facility is located; (ii) the county or parish in which
that service facility is located; (iii) the counties or parishes
contiguous to the county or parish in which that service facility is
located; (iv) the area located within 50 miles of that service
facility; (v) the area located within 100 miles of that service
area; and (vi) the area in which that service facility regularly
provides services at the locations of its customers.
12. REGISTRATION RIGHTS; LEGEND.
(a) As used in this Section 12, the term "Registrable Stock" shall
mean the Award Shares and the shares of Common Stock issuable
on the exercise of the Options (the "Option Shares").
(b) As soon as is practicable following the IPO Closing Date, the
Company will file a registration statement on Form S-8 under
the Securities Act to register the Option Shares (which
registration statement may be the registration statement that
registers all the shares of Common Stock reserved or to be
available for issuance pursuant to the 1997 Incentive Plan).
(c) Prior to July 15, 1997, the Company will execute and deliver
to the Executive a registration rights agreement in
substantially the form delivered to the Executive.
(d) The Executive represents that the Registrable Stock and the
Options are being acquired for investment only and not with a
view toward the resale or distribution thereof. The Executive
is willing and able to bear the economic risk of an investment
in the Registrable Stock, has no need for liquidity with
respect thereto and is able to sustain a complete loss of his
investment. The Executive agrees and understands that the
shares of Registrable Stock are restricted securities as
defined in Rule 144 promulgated under the Securities Act and
may not be sold, assigned or transferred except in a
registered offering under the Securities Act and applicable
blue sky laws, or pursuant to an exemption therefrom. The
following legend shall be set forth on each certificate
representing the Award Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, NOR THE SECURITIES LAWS OF ANY STATE. SUCH
- 16 -
SECURITIES CANNOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED EXCEPT UPON (1) SUCH REGISTRATION, OR
(2) DELIVERY TO THE ISSUER OF THESE SECURITIES OF AN OPINION
OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER, THAT
REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR (3)
SUBMISSION TO THE ISSUER OF THESE SECURITIES OF OTHER
EVIDENCE, REASONABLY ACCEPTABLE TO THE ISSUER, TO THE EFFECT
THAT ANY SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER SHALL
NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED,
APPLICABLE STATE SECURITIES LAWS OR ANY RULES OR REGULATIONS
PROMULGATED THEREUNDER."
13. TAX INDEMNITY. Should any of the payments of salary, other incentive
or supplemental compensation, benefits, allowances, awards,
payments, reimbursements or other perquisites, or any other payment
in the nature of compensation, singly, in any combination or in the
aggregate, that are provided for hereunder to be paid to or for the
benefit of the Executive be determined or alleged to be subject to
an excise or similar purpose tax pursuant to Section 4999 of the
Code, or any successor or other comparable federal, state or local
tax law by reason of being a "parachute payment" (within the meaning
of Section 280G of the Code), the Company shall pay to the Executive
such additional compensation as is necessary (after taking into
account all federal, state and local taxes payable by the Executive
as a result of the receipt of such additional compensation) to place
the Executive in the same after-tax position (including federal,
state and local taxes) he would have been in had no such excise or
similar purpose tax (or interest or penalties thereon) been paid or
incurred. The Company hereby agrees to pay such additional
compensation within the earlier to occur of (i) five business days
after the Executive notifies the Company that the Executive intends
to file a tax return taking the position that such excise or similar
purpose tax is due and payable in reliance on a written opinion of
the Executive's tax counsel (such tax counsel to be chosen solely by
the Executive) that it is more likely than not that such excise tax
is due and payable or (ii) 24 hours of any notice of or action by
the Company that it intends to take the position that such excise
tax is due and payable. The costs of obtaining the tax counsel
opinion referred to in clause (i) of the preceding sentence shall be
borne by the Company, and as long as such tax counsel was chosen by
the Executive in good faith, the conclusions reached in such opinion
shall not be challenged or disputed by the Company. If the Executive
intends to make any payment with respect to any such excise or
similar purpose tax as a result of an adjustment to the Executive's
tax liability by any federal, state or local tax authority, the
Company will pay such additional compensation by delivering its
cashier's check payable in such amount to the Executive within five
business days after the Executive notifies the Company of his
intention to make such payment. Without limiting the obligation of
the Company hereunder, the Executive
- 17 -
agrees, in the event the Executive makes any payment pursuant to the
preceding sentence, to negotiate with the Company in good faith with
respect to procedures reasonably requested by the Company which
would afford the Company the ability to contest the imposition of
such excise or similar purpose tax; provided, however, that the
Executive will not be required to afford the Company any right to
contest the applicability of any such excise or similar purpose tax
to the extent that the Executive reasonably determines (based upon
the opinion of his tax counsel) that such contest is inconsistent
with the overall tax interests of the Executive.
14. LOCATIONS OF PERFORMANCE. The Executive's services shall be
performed primarily in the vicinity of Houston, Texas. The parties
acknowledge, however, that the Executive may be required to travel
in connection with the performance of his duties hereunder.
15. PROPRIETARY INFORMATION.
(a) The Executive agrees to comply fully with the Company's
policies relating to non-disclosure of the Company's trade
secrets and proprietary information and processes. Without
limiting the generality of the foregoing, the Executive will
not, during the term of his Employment, disclose any such
secrets, information or processes to any person, firm,
corporation, association or other entity for any reason or
purpose whatsoever except as may be required by law or
governmental agency or legal process, nor shall the Executive
make use of any such property for his own purposes or for the
benefit of any person, firm, corporation or other entity
(except the Company or any of its subsidiaries) under any
circumstances during or after the term of his Employment,
provided that after the term of his Employment this provision
shall not apply to secrets, information and processes that are
then in the public domain (provided that the Executive was not
responsible, directly or indirectly, for such secrets,
information or processes entering the public domain without
the Company's consent).
(b) The Executive hereby sells, transfers and assigns to the
Company all the entire right, title and interest of the
Executive in and to all inventions, ideas, disclosures and
improvements, whether patented or unpatented, and
copyrightable material, to the extent (i) made or conceived by
the Executive solely or jointly with others during the term of
this Agreement and (ii) relating to or used or useful in the
design, manufacture, assembly, operation, maintenance, repair,
reconditioning or remanufacturing of batch or continuous
process systems or units and their component parts and related
equipment and tools, including, without limitation, industrial
valves and their component parts and packing materials and
other process system components (collectively "Valve
Technology"). The Executive shall communicate
- 18 -
promptly and disclose to the Company, in such form as the
Company requests, all information, details and data pertaining
to the aforementioned Valve Technology; and, whether during
the term hereof or thereafter, the Executive shall execute and
deliver to the Company such formal transfers and assignments
and such other papers and documents as may be required of the
Executive to permit the Company to file and prosecute any
patent applications relating to such Valve Technology and, as
to copyrightable material, to obtain copyright thereon.
(c) Trade secrets, proprietary information and processes shall not
be deemed to include information which is:
(i) known to the Executive at the time it is disclosed to
him;
(ii) publicly known (or becomes publicly known) without the
fault or negligence of Executive;
(iii) received from a third party without restriction and
without breach of this Agreement;
(iv) approved for release by written authorization of the
Company; or
(v) required to be disclosed by law or legal process;
provided, however, that in the event of a proposed
disclosure pursuant to this subsection (c)(v), the
Executive shall give the Company prior written notice
before such disclosure is made.
16. ASSIGNMENT. This Agreement may not be assigned by any party hereto;
provided that the Company may assign this Agreement, in connection
with a merger or consolidation involving the Company or a sale of
its business, properties and assets substantially as an entirety to
the surviving corporation or purchaser as the case may be, so long
as such assignee assumes the Company's obligations hereunder. The
Company shall require any successor (direct or indirect (including,
without limitation, by becoming the sole stockholder of the Company)
and whether by purchase, merger, consolidation, share exchange or
otherwise) to the business, properties and assets of the Company
substantially as an entirety expressly to assume and agree to
perform this Agreement in the same manner and to the same extent the
Company would have been required to perform it had no such
succession taken place. This Agreement shall be binding upon all
successors and assigns.
17. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by registered
mail to the Executive at his residence maintained on the Company's
records, or to the Company at its address at
- 19 -
00000 Xxxxxxx Xxxxx, Xxxxx X-000, Xxxxxxx, Xxxxx, 00000, Attention:
Chief Executive Officer, or such other addresses as either party
shall notify the other in accordance with the above procedure.
18. FORCE MAJEURE. Neither party shall be liable to the other for any
delay or failure to perform hereunder, which delay or failure is due
to causes beyond the control of said party, including, but not
limited to: acts of God; acts of the public enemy; acts of the
United States of America or any state, territory or political
subdivision thereof or of the District of Columbia; fires; floods;
epidemics; quarantine restrictions; strikes; or freight embargoes;
provided, however, that this Section 18 will not relieve the Company
of any of its payment obligations to the Executive under this
Agreement. Notwithstanding the foregoing provisions of this Section
18, in every case the delay or failure to perform must be beyond the
control and without the fault or negligence of the party claiming
excusable delay.
19. INTEGRATION. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter hereof
and supersedes all prior or contemporaneous agreements whether
written or oral. No waiver, alteration or modification of any of the
provisions of this Agreement shall be binding unless in writing and
signed by duly authorized representatives of the parties hereto.
20. WAIVER. Failure or delay on the part of either party hereto to
enforce any right, power or privilege hereunder shall not be deemed
to constitute a waiver thereof. Additionally, a waiver by either
party of a breach of any promise herein by the other party shall not
operate as or be construed to constitute a waiver of any subsequent
breach by such other party.
21. SAVINGS CLAUSE. If any term, covenant or condition of this Agreement
or the application thereof to any person or circumstance shall to
any extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such term, covenant or condition to
persons or circumstances other than those as to which it is held
invalid or unenforceable shall not be affected thereby, and each
term, covenant or condition of this Agreement shall be valid and
enforced to the fullest extent permitted by law.
22. AUTHORITY TO CONTRACT. The Company warrants and represents to the
Executive that the Company has full authority to enter into this
Agreement and to consummate the transactions contemplated hereby and
that this Agreement is not in conflict with any other agreement to
which the Company is a party or by which it may be bound. The
Company further warrants and represents to the Executive that the
individual executing this Agreement on behalf of the Company has the
full power and authority to bind the Company to the terms hereof and
has been authorized to do so in accordance with the Company's
articles or certificate of incorporation and bylaws.
- 20 -
23. PAYMENT OF EXPENSES. If at any time during the term hereof or
afterwards: (a) there should exist a dispute or conflict between the
Executive and the Company or another Person as to the validity,
interpretation or application of any term or condition hereof, or as
to the Executive's entitlement to any benefit intended to be
bestowed hereby, which is not resolved to the satisfaction of the
Executive, (b) the Executive must (i) defend the validity of this
Agreement or (ii) contest any determination by the Company
concerning the amounts payable (or reimbursable) by the Company to
the Executive or (c) the Executive must prepare responses to an
Internal Revenue Service ("IRS") audit of, or otherwise defend, his
personal income tax return for any year the subject of any such
audit, or an adverse determination, administrative proceedings or
civil litigation arising therefrom, which is occasioned by or
related to an audit by the IRS of the Company's income tax returns,
then the Company hereby unconditionally agrees: (a) on written
demand of the Company by the Executive, to provide sums sufficient
to advance and pay on a current basis (either by paying directly or
by reimbursing the Executive) not less than 30 days after a written
request therefor is submitted by the Executive, the Executive's out
of pocket costs and expenses (including attorney's fees, expenses of
investigation, travel, lodging, copying, delivery services and
disbursements for the fees and expenses of experts, etc.) incurred
by the Executive in connection with any such matter; (b) the
Executive shall be entitled, upon application to any court of
competent jurisdiction, to the entry of a mandatory injunction
without the necessity of posting any bond with respect thereto which
compels the Company to pay or advance such costs and expenses on a
current basis; and (c) the Company's obligations under this Section
23 will not be affected if the Executive is not the prevailing party
in the final resolution of any such matter unless it is determined
pursuant to Section 25 that, in the case of one or more of such
matters, the Executive has acted in bad faith or without a
reasonable basis for his position, in which event and, then only
with respect to such matter or matters, the successful or prevailing
party or parties shall be entitled to recover from the Executive
reasonable attorneys' fees and other costs incurred in connection
with that matter or matters (including the amounts paid by the
Company in respect of that matter or matters pursuant to this
Section 23), in addition to any other relief to which it or they may
be entitled.
24. REMEDIES. In the event of a breach by the Executive of Section 11 or
15 of this Agreement, in addition to other remedies provided by
applicable law, the Company will be entitled to issuance of a
temporary restraining order or preliminary injection enforcing its
rights under such Section.
25. ARBITRATION. Any and all disputes or controversies whether of law or
fact and of any nature whatsoever arising from or respecting this
Agreement shall be decided by arbitration by the American
Arbitration Association in accordance with its Commercial Rules,
except as modified herein.
- 21 -
(a) The arbitrator shall be selected as follows: in the event the
Company and the Executive agree on one arbitrator, the
arbitration shall be conducted by such arbitrator. In the
event the Company and the Executive do not so agree, the
Company and the Executive shall each select one independent,
qualified arbitrator, and the two arbitrators so selected
shall select the third arbitrator. The arbitrator(s) are
herein referred to as the "Panel." The Company reserves the
right to object to any individual arbitrator who shall be
employed by or affiliated with a competing organization.
(b) Arbitration shall take place at Houston, Texas, or any other
location mutually agreeable to the parties. At the request of
either party, arbitration proceedings will be conducted in the
utmost secrecy; in such case all documents, testimony and
records shall be received, heard and maintained by the Panel
in secrecy, available for inspection only by the Company or
the Executive and their respective attorneys and their
respective experts, who shall agree in advance and in writing
to receive all such information confidentially and to maintain
such information in secrecy until such information shall
become generally known. The Panel shall be able to award any
and all relief, including relief of an equitable nature. The
award rendered by the Panel may be enforceable in any court
having jurisdiction thereof.
(c) Reasonable notice of the time and place of arbitration shall
be given to all parties and any interested persons as shall be
required by law.
(d) The Company will pay all the fees and out-of-pocket expenses
of each arbitrator selected pursuant to this Section 25.
26. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to its
conflicts of law principles.
27. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
28. INDEMNIFICATION. The Executive shall be indemnified by the Company
to the maximum permitted by the law of the state of the Company's
incorporation, and by the law of the state of incorporation of any
subsidiary of the Company of which the Executive is a director or an
officer or employee, as the same may be in effect from time to time.
29. INTEREST. If any amounts required to be paid or reimbursed to the
Executive hereunder are not so paid or reimbursed at the times
provided herein (including amounts required to be paid by the
Company pursuant to Sections 6, 13 and 23), those
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amounts shall accrue interest compounded daily at the annual
percentage rate which is three percentage points above the interest
rate shown as the Prime Rate in the Money Rates column in the then
most recently published edition of THE WALL STREET JOURNAL
(Southwest Edition), or, if such rate is not then so published, on
at least a weekly basis, the interest rate announced by Chase
Manhattan Bank (or its successor), from time to time, as its Base
Rate (or prime lending rate), from the date those amounts were
required to have been paid or reimbursed to the Executive until
those amounts are finally and fully paid or reimbursed; provided,
however, that in no event shall the amount of interest contracted
for, charged or received hereunder exceed the maximum non-usurious
amount of interest allowed by applicable law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date hereinabove first written.
INNOVATIVE VALVE TECHNOLOGIES, INC.
By:/s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
EXECUTIVE:
/s/ D. A. XXXXX
X. X. Xxxxx
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PROMISSORY NOTE
$100,000.00 Houston, Texas October 31, 1997
FOR VALUE RECEIVED, X.X. XXXXX, an individual whose address is 00000
Xxxxxxx Xx., Xxxxx X-000, Xxxxxxx, Xxxxx 00000 (hereinafter referred to as
"Maker'), promises to pay to the order of INNOVATIVE VALVE TECHNOLOGIES, INC., a
Delaware corporation (hereinafter referred to as "Payee"), at 00000 Xxxxxxx Xx.,
Xxxxx X-000, Xxxxxxx, Xxxxx 00000, or at such other place and to such other
party or parties as the owner and holder hereof may from time to time designate
in writing, the sum of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00), in
lawful money of the United States of America which shall be legal tender for the
payment of debts from time to time. No interest shall be due and payable under
this Note prior to the maturity hereof.
This Note shall be paid as follows: The entire outstanding principal
amount hereof shall mature and become due and payable, without notice or demand,
on the earlier of (i) June 9, 1999, or (ii) termination of Maker's employment
under that certain Employment Agreement entered into as of May 6, 1997, by and
between Maker and Payee (the "Employment Agreement"). This Note evidences the
Bridge Loan, as such term is defined in the Employment Agreement. As set forth
in the Employment Agreement, at the option of Maker or Payee, the indebtedness
evidenced hereby may be repaid in accordance with the terms hereof out of, or
offset against, any bonus or other amount payable to Maker under the Employment
Agreement. But for these rights of repayment and offset, Payee would not have
extended the Bridge Loan to Maker. The covenants and obligations of Maker are
intended by Maker and Payee to, and shall, be construed as covenants independent
of the covenants and agreements of Payee under the Employment Agreement, and the
existence of any claim or cause of action of Maker against Payee, whether
predicated on the Employment Agreement or otherwise, shall not constitute a
defense to payment hereunder.
Maker shall have the privilege to prepay at any time, and from time to
time, all or any part of the principal amount of this Note, without notice,
penalty or fee. Any check, draft, money order, or other instrument given in
payment of all or any portion of this Note may be accepted by Payee and handled
in collection in the customary manner, but the same shall not constitute payment
hereunder or diminish any rights of Payee except to the extent that actual cash
proceeds of such instruments are unconditionally received by Payee.
To the extent permitted by applicable law, Maker hereby waives demand or
presentment for payment of this Note, notice of nonpayment, protest, notice of
protest, suit, notice of intention of accelerate, notice of acceleration,
diligence or any notice of or defense on account of the extension of time of
payments or change in the method of payments.
All past due principal on this Note shall bear interest from and after
maturity until paid at a per annum rate equal to the lesser of (i) the Prime
Rate (as hereinafter defined), or (ii) the maximum nonusurious rate allowed
under applicable law. As used herein, the term "Prime Rate" means, on
-1-
any day, the prime rate for that day as determined from time to time by Texas
Commerce Bank National Association. Payments will be credited first to the
accrued but unpaid interest, and then to principal.
In the event default is made in the prompt payment of this Note when due
in accordance with the terms set forth above, and the same is placed in the
hands of an attorney for collection, or suit is brought on same, or the same is
collected through any judicial proceeding whatsoever, or if any action be had
hereon, then the undersigned agrees and promises to pay an additional amount as
reasonable, calculated and foreseeable attorneys' and collection fees incurred
by Payee in connection with enforcing its rights herein contemplated, all of
which amounts shall become part of the principal hereof.
No failure to exercise and no delay on the part of Payee in exercising
any power or right in connection herewith shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No course of dealing between Maker and Payee shall operate as a
waiver of any right of Payee. No modification or waiver of any provision of this
Note nor any consent to any departure therefrom shall in any event be effective
unless the same shall be in writing and signed by the person against whom
enforcement thereof is to be sought, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
This Note has been executed and delivered and shall be construed in
accordance with and governed by the laws of the State of Texas and of the United
States of America applicable in Texas.
Whenever possible, each provision of this Note shall be interpreted in
such manner as to be effective, valid and enforceable under applicable law, but
if any provision of this Note shall be prohibited by, or invalid or
unenforceable under, applicable law, then (i) Maker and Payee shall amend such
provisions by the minimal amount necessary to bring such provisions within the
ambit of enforceability, and (ii) a court may, at the request of either Maker or
Payee, revise, reform or reconstruct such provisions in a manner sufficient to
cause them to be enforceable. In no event shall any prohibition against, or the
invalidity or unenforceability of, any provision hereof affect the validity or
enforceability of any other provision hereof.
THIS NOTE AND THE EMPLOYMENT AGREEMENT REPRESENT THE FINAL AGREEMENT
BETWEEN MAKER AND PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN MAKER AND PAYEE. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN MAKER AND PAYEE.
/s/ D.A. XXXXX
X.X. XXXXX
- 2 -
