EXHIBIT 10.10
January 31, 1997
Xx. Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Change of Control Severance Agreement
-------------------------------------
Dear Xx. Xxxxxxxx:
Chicago Bridge & Iron Company (the "Company") is a wholly owned
subsidiary of Praxair, Inc. (the "Parent"). The Parent is contemplating the
possible direct or indirect sale of all or a substantial part of its interests
in the Company. The Company recognizes that members of senior management may
become concerned about the effect of such action on their job and financial
security. The Company considers the maintenance of a sound and vital management
to be essential to protecting and enhancing the best interests of the Company
and its Parent. Accordingly, the Board of Directors of the Company has
determined to enter into this agreement (your "Agreement") to provide you with
severance benefits in the event your employment with the Company terminates
following a Change of Control (as defined below) under certain circumstances.
The purpose of entering into this Agreement is to induce you to
remain in the employ of the Company pending and after any direct or indirect
sale by the Parent of the Company or an intermediate holding corporation to
which the Parent has transferred the majority of the Company's stock, measured
by either or both vote and value (the "Holding Corporation") to an unrelated
third party or the consummation of an initial public offering ("IPO") for the
Company's stock or the stock of the Holding Corporation. Therefore, in
consideration of your continued employment with the Company under these
circumstances, the Company and you agree as follows:
1. Termination Benefits.
--------------------
(a) Basic Benefits. In the event your employment with the
--------------
Company and any subsidiary of the Company terminates by reason of a Qualifying
Termination within two years after a Change of Control, you shall receive,
within thirty days after your employment terminates, a lump sum amount equal to
One Million Five Hundred Thousand Dollars ($1,500,000.00). In addition, if your
employment with the Company and any subsidiary by which you are employed is
terminated by the Company or any such subsidiary for any reason (other than your
willful misconduct or gross negligence in the performance of your duties as an
employee which results in a material detriment to either the Company or the
Holding Corporation) within six months prior
to the occurrence of a Change of Control, you shall be paid the lump sum
referred to in the immediately preceding sentence, minus the gross amount of any
severance benefits otherwise paid to you, within ten days following such Change
of Control.
(b) Outplacement. In the event of a Qualifying Termination
------------
(or a termination of your employment prior to a Change of Control with
respect to which you are entitled to receive a payment under Section 1(a)
of this Agreement), the Company agrees that, upon a written request from
you, it will engage on your behalf an outplacement or similar firm of
your choice to provide you with customary services and support in seeking
other appropriate employment.
(c) Certain Further Payments.
------------------------
(i) Additional Payments in Respect of Excise Taxes. In the
----------------------------------------------
event that a Change of Control occurs at the time that either the Company or the
Holding Corporation has a class of equity securities registered under Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any
amount or benefit paid or distributed to you pursuant to this Agreement, taken
together with any amounts or benefits otherwise paid or distributed to you, are
or become subject to the tax (the "Excise Tax") imposed under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax
that may hereafter be imposed, the Company shall pay you, at the same time as it
pays the severance benefit described above, an additional amount (the "Tax
Reimbursement Payment") such that the net amount retained by you with respect to
such Covered Payments, after deduction of any Excise Tax on the Covered Payments
and any Federal, state and local income or employment tax and Excise Tax on the
Tax Reimbursement Payment provided for by this Section 1(b), but before
deduction for any Federal, state or local income or employment tax withholding
on such Covered Payments, shall be equal to the amount of the Covered Payments.
(ii) Calculation of the Excise Tax. For purposes of
-----------------------------
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(A) all "parachute payments" in excess of the "base amount"
(as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless, and except to the extent that, in the
good faith judgment of the Company's independent certified public
accountants appointed prior to the Change of Control or tax counsel
selected by such Accountants (the "Accountants"), the Company has a
reasonable basis to conclude that such Covered Payments (in whole or in
part) represent reasonable compensation for personal services actually
rendered (within
3
the meaning of Section 280G(b)(4)(B) of the Code) in
excess of the "base amount," or such "parachute payments" are otherwise
not subject to such Excise Tax, and
(B) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Accountants in accordance
with the principles of Section 280G of the Code.
(iii) Calculation of the Tax Reimbursement Payment. For
--------------------------------------------
purposes of determining the amount of the Tax Reimbursement Payment, you shall
be deemed to pay:
(A) Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Tax
Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in
which the Tax Reimbursement Payment is to be made, net of the maximum
reduction in Federal income taxes which could be obtained from the
deduction of such state or local taxes if paid in such year.
(d) Adjustments to Tax Reimbursement Payment. In the event
----------------------------------------
that the Excise Tax is subsequently determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, you shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has been
paid to any Federal, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been made to you.
You and the Company shall mutually agree upon the course of action to be pursued
if your good faith claim for refund or credit is denied; provided that the
--------
Company shall bear the cost of any expenses incurred which are related to
pursuing any recovery of any amount paid in respect of the Excise Tax.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the
4
amount taken into account hereunder at the time the Tax Reimbursement Payment is
made (including, but not limited to, by reason of any payment the existence or
amount of which cannot be determined at the time of the Tax Reimbursement
Payment), the Company shall make an additional Tax Reimbursement Payment in
respect of such excess (plus any interest or penalty payable with respect to
such excess) at the time that the amount of such excess is finally determined.
2. Definitions.
-----------
(a) Change of Control When the Company or the Holding
-------------------------------------------------
Corporation is Not Public. At any time that neither the Company nor the Holding
-------------------------
Corporation has any equity securities registered under Section 12 of the
Exchange Act, a "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Exchange Act), other than the Parent,
the Holding Corporation, the Company or any majority-owned subsidiary of
either the Parent, the Holding Corporation or the Company, becomes the
"beneficial owner" (as such term is used in Section 13 of the Exchange
Act) of 50% or more of either (x) the total number of the common shares
of the Holding Corporation or the Company then outstanding or (y) the
voting power of all of the voting securities of the Holding Corporation
or the Company then outstanding; or
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation with or
into another company pursuant to which the stockholders of the Company or
the Holding Corporation, as the case may be, do not own, immediately
after the transaction, more than 50% of the voting power and the value of
the stock of the company that survives, or (B) the sale, exchange or
other disposition of all or substantially all of the assets of the
Company or the Holding Corporation.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred by reason of a transfer of the Company's stock to the Holding
Corporation or any public offering of the equity securities of the Company or
Holding Corporation, so long as, immediately following such transfer or the
consummation of such offering, no person or group (as such terms are used in
Section 13 of the Exchange Act) other than the Parent or one of its majority
owned subsidiaries owns, directly or indirectly, more than 25% of the Company's
or the Holding Corporation's equity securities.
5
(b) Change of Control When the Company or the Holding
-------------------------------------------------
Corporation is Public. At any time one or more classes of the equity securities
---------------------
of the Company or the Holding Corporation are registered under Section 12 of the
Exchange Act, a "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Exchange Act), other than the Parent,
the Holding Corporation, the Company or any majority owned subsidiary of
the Parent, the Holding Corporation or the Company, becomes the
"beneficial owner" (as such term is used in Section 13 of the Exchange
Act) of 25% or more of the total voting power of the Company's or the
Holding Corporation's outstanding securities;
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation with or
into another company pursuant to which the stockholders of the Company or
the Holding Corporation as the case may be, do not own, immediately after
the transaction, more than 50% of the voting power and the value of the
stock of the Company that survives, or (B) the sale, exchange or other
disposition of all or substantially all of the assets of the Company or
the Holding Corporation; or
(iii) if, during any period of two years or less,
individuals who at the beginning of such period constituted the Board of
Directors of the Company or the Holding Corporation, as the case may be,
cease for any reason to constitute at least a majority thereof; provided
--------
that any new director who is elected to, or nominated for election to,
the Board of Directors with the approval of at least 75% of the directors
then still in office who were directors at the beginning of the period
shall be treated as though having been a director at the beginning of
such period.
(c) "Qualifying Termination" means the termination of your
employment with the Company and any of its subsidiaries by which you are
employed (i) by the Company or any such subsidiary for any reason other than
your willful misconduct or gross negligence in the performance of your duties as
an employee which results in a material detriment to the Company or the Holding
Corporation or (ii) by you within 180 days following the occurrence of any of
the following events (without your prior written consent):
6
(A) any significant reduction in your positions,
duties, titles, responsibilities and status with the Company and its
subsidiaries from those in effect immediately prior to such Change of
Control;
(B) a reduction in your base salary, a reduction in
your annual bonus opportunity or a material reduction in the aggregate
value of your participation in the Company's employee benefits programs,
as each was in effect immediately prior to such Change of Control; or
(C) your principal place of employment is moved to a
location more than 50 miles from your principal place of employment
immediately prior to such Change of Control or you are required in the
performance of your duties to travel to an extent substantially more
burdensome than your travel obligations immediately prior to such Change
of Control.
Notwithstanding anything else contained herein to the contrary, a Qualifying
Termination shall not be deemed to have occurred by reason of (i) your death,
(ii) any termination of your employment due to your inability to perform the
duties of your position for a period of at least 180 days on account of any
physical or mental impairment, or (iii) your voluntary retirement at or after
your normal retirement date under any of the Company's employee pension plans in
which you participate.
3. Miscellaneous.
-------------
(a) Arbitration; Related Expenses. Any dispute or controversy
-----------------------------
arising under or in connection with this Agreement shall be settled exclusively
by arbitration held in accordance with the rules of the American Arbitration
Association pertaining to the resolution of employment disputes. Any such
arbitration shall be held in Chicago, Illinois or such other location which the
parties have mutually agreed to in writing. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall pay on a
current basis all legal expenses (including attorneys' fees) incurred by you in
connection with such arbitration, subject to your obligation to repay such
amounts, plus interest at the short-term annual Applicable Federal Rate (as
determined under Section 1274(b) of the Code as in effect on the date your
employment terminates), if you should not prevail as to at least one material
issue adjudicated in such proceeding.
(b) No Offset; No Mitigation. The Company's obligation to
------------------------
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim,
7
recoupment, defense or other right which the Company may have against you or
others whether by reason of your subsequent employment or otherwise. You shall
not be obligated to mitigate any damages you incur by reason of any Qualifying
Termination and the amounts payable hereunder shall not be reduced by any
amounts received by you as a result of your employment or self-employment
following your termination hereunder.
(c) Entire Obligation of Company. In the event your
----------------------------
employment with the Company and any subsidiary of the Company by which you are
employed terminates following a Change of Control, the amounts payable to you
hereunder and any vested amounts or benefits owing to you under the Company's
otherwise applicable employee benefit plans and programs and any accrued
vacation pay not yet paid, shall constitute the entire obligation of the Company
and its affiliates to you. Payment or other satisfaction thereof shall be
contingent upon your execution of a release in favor of the Company
substantially in the form attached hereto as Exhibit A, stating that the
payments and other benefits referred to in the immediately preceding sentence
constitute full settlement of any claim under law or in equity that you might
otherwise assert against the Company or any of its subsidiaries on account of
such termination.
(d) Employment at Will. This Agreement shall neither obligate
------------------
the Company or any subsidiary of the Company to continue you in its employ (or
to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Company or any
subsidiary of the Company.
(e) Successors. This Agreement shall be binding upon and
----------
inure to the benefit of you, your estate and the Company and any successor of
the Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
(f) Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Illinois, applied without reference to principles of
conflict of laws.
(g) Severability. If any provision of this contract as
------------
applied to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
(h) Waiver. No provision of this Agreement may be modified,
------
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company or a duly authorized Committee thereof. No
waiver by either party hereto at any time of any breach
8
by the other party hereto of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of any other condition or
provision at any time.
(i) Entire Agreement. This Agreement contains the entire
----------------
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
If you are in agreement with the foregoing, please so indicate
by signing and returning to the Company the enclosed copy of this letter,
whereupon this letter shall constitute a binding agreement between you and the
Company.
Very truly yours,
CHICAGO BRIDGE & IRON COMPANY
By________________________________
Agreed:
_______________________________
Employee
9
FULL AND FINAL RELEASE
Xxxxxx X. Xxxxxxxx (hereinafter "EMPLOYEE"), in exchange for
sufficient consideration, on behalf of himself, his family, his heirs and
assigns, irrevocably and unconditionally releases Chicago Bridge & Iron Company,
any parent corporations, any subsidiary corporations, any affiliated entities
whether or not incorporated, the employees, agents, officers, directors, and
shareholders of all such entities and any person or entity which may succeed to
the rights and liabilities of such persons or entities by assignment or
otherwise (hereinafter "CBI"), from all claims, controversies, liabilities,
demands, causes of action, debts, obligations, promises, acts, agreements,
rights of contribution and/or indemnification, and damages of whatever kind or
nature, whether known or unknown, suspected or unsuspected, foreseen or
unforeseen, liquidated or contingent, actual or potential, joint or individual,
that he has had or now has, based on any and all aspects of EMPLOYEE'S
employment with CBI or his separation from that employment, including, but not
limited to, all claims arising under the Age Discrimination in Employment Act;
Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the
Equal Pay Act; the Americans with Disabilities Act; the Employee Retirement
Income Security Act of 1974; or any federal, state or local laws or regulations
relating to employment or benefits associated with employment, any and all
claims for breach of express or implied contract or the covenant of good faith
and fair dealing (whether written or oral), all claims for retaliation or
violation of public policy, breach of promise, detrimental reliance or tort
(e.g., intentional infliction of emotional distress, defamation, assault,
battery, false imprisonment, wrongful termination, interference with contractual
or advantageous relationship, etc.), whether based on common law or otherwise;
claims for emotional distress, mental anguish, personal injury, loss of
consortium, and any and all claims that may be asserted on EMPLOYEE'S behalf by
others. The foregoing list is meant to be illustrative rather than inclusive.
This release does not preclude EMPLOYEE from seeking to obtain any benefits to
which he may be entitled under any employee welfare benefit plan or retirement
or profit sharing plan sponsored by CBI, but his entitlement to such benefits,
if any, will be determined in accordance with the plan documents.
If I initiate or participate in any legal action in violation
of this release, CBI may reclaim any amounts paid in respect of my termination,
without waiving the release granted herein, and terminate any benefits or
payments that are due to me, in addition to any other remedies. This release
shall be construed in accordance with the laws of the State of Illinois,
applicable to contracts made and entirely to be performed therein.
EMPLOYEE ACKNOWLEDGES AND AGREES THAT THIS RELEASE IS A FULL
AND FINAL BAR TO ANY AND ALL CLAIM(S) OF ANY TYPE THAT HE MAY NOW HAVE AGAINST
CBI. EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS BEEN GIVEN FORTY-FIVE (45) DAYS
TO CONSIDER WHETHER TO EXECUTE THIS RELEASE, THAT HE HAS SEVEN (7) DAYS TO
RESCIND THIS RELEASE AFTER ITS EXECUTION, WHICH SHALL BE EFFECTED BY WRITTEN
NOTICE TO CBI DELIVERED WITHIN SUCH SEVEN (7) DAY PERIOD, AND THAT HE HAS BEEN
ADVISED THAT HE SHOULD SPEAK WITH COUNSEL REGARDING THE SIGNIFICANCE OF THIS
RELEASE.
10
Dated:____________________ Signed:_____________________
11
January 31, 1997
Xx. Xxxxxxx X. Xxxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Change of Control Severance Agreement
-------------------------------------
Dear Xx. Xxxxxxx:
Chicago Bridge & Iron Company (the "Company") is a wholly owned
subsidiary of Praxair, Inc. (the "Parent"). The Parent is contemplating the
possible direct or indirect sale of all or a substantial part of its interests
in the Company. The Company recognizes that members of senior management may
become concerned about the effect of such action on their job and financial
security. The Company considers the maintenance of a sound and vital management
to be essential to protecting and enhancing the best interests of the Company
and its Parent. Accordingly, the Board of Directors of the Company has
determined to enter into this agreement (your "Agreement") to provide you with
severance benefits in the event your employment with the Company ter-minates
following a Change of Control (as defined below) under certain circumstances.
The purpose of entering into this Agreement is to induce you to
remain in the employ of the Company pending and after any direct or indirect
sale by the Parent of the Company or an intermediate holding corporation to
which the Parent has transferred the majority of the Company's stock, measured
by either or both vote and value (the "Holding Corporation") to an unrelated
third party or the consummation of an initial public offering ("IPO") for the
Company's stock or the stock of the Holding Corporation. Therefore, in
consideration of your continued employment with the Company under these
circumstances, the Company and you agree as follows:
1. Termination Benefits.
--------------------
(a) Basic Benefits. In the event your employment with the
--------------
Company and any subsidiary of the Company terminates by reason of a Qualifying
Termination within two years after a Change of Control, you shall receive,
within thirty days after your employment terminates, a lump sum amount equal to
Three Hundred Seventy-Five Thousand Dollars ($375,000.00). In addition, if your
employment with the Company and any subsidiary by which you are employed is
terminated by the Company or any such subsidiary for any reason (other than your
willful misconduct or gross negligence in the performance of your duties as an
employee which results in a material detriment to either the Company or the
Holding Corporation) within six months prior
to the occurrence of a Change of Control, you shall be paid the lump sum
referred to in the immediately preceding sentence, minus the gross amount of any
severance benefits otherwise paid to you, within ten days following such Change
of Control.
(b) Outplacement. In the event of a Qualifying Termination (or a
------------
termination of your employment prior to a Change of Control with respect to
which you are entitled to receive a payment under Section 1(a) of this
Agreement), the Company agrees that, upon a written request from you, it will
engage on your behalf an outplacement or similar firm of your choice to provide
you with customary services and support in seeking other appropriate employment.
(c) Certain Further Payments.
------------------------
(i) Additional Payments in Respect of Excise Taxes. In the
----------------------------------------------
event that a Change of Control occurs at the time that either the Company or the
Holding Corporation has a class of equity securities registered under Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any
amount or benefit paid or distributed to you pursuant to this Agreement, taken
together with any amounts or benefits otherwise paid or distributed to you, are
or become subject to the tax (the "Excise Tax") imposed under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax
that may hereafter be imposed, the Company shall pay you, at the same time as it
pays the severance benefit described above, an additional amount (the "Tax
Reimbursement Payment") such that the net amount retained by you with respect to
such Covered Payments, after deduction of any Excise Tax on the Covered Payments
and any Federal, state and local income or employment tax and Excise Tax on the
Tax Reimbursement Payment provided for by this Section 1(b), but before
deduction for any Federal, state or local income or employment tax withholding
on such Covered Payments, shall be equal to the amount of the Covered Payments.
(ii) Calculation of the Excise Tax. For purposes of determining
-----------------------------
whether any of the Covered Payments will be subject to the Excise Tax and the
amount of such Excise Tax,
(A) all "parachute payments" in excess of the "base amount"
(as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless, and except to the extent that, in
the good faith judgment of the Company's independent certified public
accountants appointed prior to the Change of Control or tax counsel
selected by such Accountants (the "Accountants"), the Company has a
reasonable basis to conclude that such Covered Payments (in whole or
in part) represent reasonable compensation for personal services
actually rendered (within
3
the meaning of Section 280G(b)(4)(B) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject
to such Excise Tax, and
(B) the value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Accountants in accordance
with the principles of Section 280G of the Code.
(iii) Calculation of the Tax Reimbursement Payment. For purposes
--------------------------------------------
of determining the amount of the Tax Reimbursement Payment, you shall be deemed
to pay:
(A) Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the
Tax Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in which
the Tax Reimbursement Payment is to be made, net of the maximum
reduction in Federal income taxes which could be obtained from the
deduction of such state or local taxes if paid in such year.
(d) Adjustments to Tax Reimbursement Payment. In the event
----------------------------------------
that the Excise Tax is subsequently determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, you shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has been
paid to any Fed-eral, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been made to you.
You and the Company shall mutually agree upon the course of action to be pursued
if your good faith claim for refund or credit is denied; provided that the
--------
Company shall bear the cost of any expenses incurred which are related to
pursuing any recovery of any amount paid in respect of the Excise Tax.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the
4
amount taken into account hereunder at the time the Tax Reimbursement Payment is
made (including, but not limited to, by reason of any payment the existence or
amount of which cannot be determined at the time of the Tax Reimbursement
Payment), the Company shall make an additional Tax Reimbursement Payment in
respect of such excess (plus any interest or penalty payable with respect to
such excess) at the time that the amount of such excess is finally determined.
2. Definitions.
-----------
(a) Change of Control When the Company or the Holding
Corporation is Not Public. At any time that neither the Company nor the Holding
Corporation has any equity securities registered under Section 12 of the
Exchange Act, a "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such terms are
used in Section 13 of the Exchange Act), other than the Parent, the
Holding Corporation, the Company or any majority-owned subsidiary of
either the Parent, the Holding Corporation or the Company, becomes the
"beneficial owner" (as such term is used in Section 13 of the Exchange
Act) of 50% or more of either (x) the total number of the common shares
of the Holding Corporation or the Company then outstanding or (y) the
voting power of all of the voting securities of the Holding Corporation
or the Company then outstanding; or
(ii) upon the consummation of (A) any merger or other business
combination of the Company or the Holding Corporation with or into
another company pursuant to which the stockholders of the Company or
the Holding Corporation, as the case may be, do not own, immediately
after the transaction, more than 50% of the voting power and the value
of the stock of the company that survives, or (B) the sale, exchange or
other disposition of all or substantially all of the assets of the
Company or the Holding Corporation.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred by reason of a transfer of the Company's stock to the Holding
Corporation or any public offering of the equity securities of the Company or
Holding Corporation, so long as, immediately following such transfer or the
consummation of such offering, no person or group (as such terms are used in
Section 13 of the Exchange Act) other than the Parent or one of its majority
owned subsidiaries owns, directly or indirectly, more than 25% of the Company's
or the Holding Corporation's equity securities.
5
(b) Change of Control When the Company or the Holding Corporation
-------------------------------------------------------------
is Public. At any time one or more classes of the equity securities of the
---------
Company or the Holding Corporation are registered under Section 12 of the
Exchange Act, a "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such terms are
used in Section 13 of the Exchange Act), other than the Parent, the
Holding Corporation, the Company or any majority owned subsidiary of
the Parent, the Holding Corporation or the Company, becomes the
"beneficial owner" (as such term is used in Section 13 of the Exchange
Act) of 25% or more of the total voting power of the Company's or the
Holding Corporation's outstanding securities;
(ii) upon the consummation of (A) any merger or other business
combination of the Company or the Holding Corporation with or into
another company pursuant to which the stockholders of the Company or
the Holding Corporation as the case may be, do not own, immediately
after the transaction, more than 50% of the voting power and the value
of the stock of the Company that survives, or (B) the sale, exchange or
other disposition of all or substantially all of the assets of the
Company or the Holding Corporation; or
(iii) if, during any period of two years or less, individuals
who at the beginning of such period constituted the Board of Directors
of the Company or the Holding Corporation, as the case may be, cease
for any reason to constitute at least a majority thereof; provided that
--------
any new director who is elected to, or nominated for election to, the
Board of Directors with the approval of at least 75% of the directors
then still in office who were directors at the beginning of the period
shall be treated as though having been a director at the beginning of
such period.
(c) "Qualifying Termination" means the termination of your
employment with the Company and any of its subsidiaries by which you are
employed (i) by the Company or any such subsidiary for any reason other than
your willful misconduct or gross negligence in the performance of your duties as
an employee which results in a material detriment to the Company or the Holding
Corporation or (ii) by you within 180 days following the occurrence of any of
the following events (without your prior written consent):
6
(A) any significant reduction in your positions, duties, titles,
responsibilities and status with the Company and its subsidiaries from
those in effect immediately prior to such Change of Control;
(B) a reduction in your base salary, a reduction in your annual
bonus opportunity or a material reduction in the aggregate value of
your participation in the Company's employee benefits programs, as each
was in effect immediately prior to such Change of Control; or
(C) your principal place of employment is moved to a location
more than 50 miles from your principal place of employment immediately
prior to such Change of Control or you are required in the performance
of your duties to travel to an extent substantially more burdensome
than your travel obligations immediately prior to such Change of
Control.
Notwithstanding anything else contained herein to the contrary, a Qualifying
Termination shall not be deemed to have occurred by reason of (i) your death,
(ii) any termination of your employment due to your inability to perform the
duties of your position for a period of at least 180 days on account of any
physical or mental impairment, or (iii) your voluntary retirement at or after
your normal retirement date under any of the Company's employee pension plans in
which you participate.
3. Miscellaneous.
-------------
(a) Arbitration; Related Expenses. Any dispute or controversy
-----------------------------
arising under or in connection with this Agreement shall be settled exclusively
by arbitration held in accordance with the rules of the American Arbitration
Association pertaining to the resolution of employment disputes. Any such
arbitration shall be held in Chicago, Illinois or such other location which the
parties have mutually agreed to in writing. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall pay on a
current basis all legal expenses (including attorneys' fees) incurred by you in
connection with such arbitration, subject to your obligation to repay such
amounts, plus interest at the short-term annual Applicable Federal Rate (as
determined under Section 1274(b) of the Code as in effect on the date your
employment terminates), if you should not prevail as to at least one material
issue adjudicated in such proceeding.
(b) No Offset; No Mitigation. The Company's obligation to
------------------------
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim,
7
recoupment, defense or other right which the Company may have against you or
others whether by reason of your subsequent employment or otherwise. You shall
not be obligated to mitigate any damages you incur by reason of any Qualifying
Termination and the amounts payable hereunder shall not be reduced by any
amounts received by you as a result of your employment or self-employment
following your termination hereunder.
(c) Entire Obligation of Company. In the event your employment
----------------------------
with the Company and any subsidiary of the Company by which you are employed
terminates following a Change of Control, the amounts payable to you hereunder
and any vested amounts or benefits owing to you under the Company's otherwise
applicable employee benefit plans and programs and any accrued vacation pay not
yet paid, shall constitute the entire obligation of the Company and its
affiliates to you. Payment or other satisfaction thereof shall be contingent
upon your execution of a release in favor of the Company substantially in the
form attached hereto as Exhibit A, stating that the payments and other benefits
referred to in the immediately preceding sentence constitute full settlement of
any claim under law or in equity that you might otherwise assert against the
Company or any of its subsidiaries on account of such termination.
(d) Employment at Will. This Agreement shall neither obligate
------------------
the Company or any subsidiary of the Company to continue you in its employ (or
to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Company or any
subsidiary of the Company.
(e) Successors. This Agreement shall be binding upon and inure
----------
to the benefit of you, your estate and the Company and any successor of the
Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
(f) Governing Law. This Agreement shall be governed by the laws
-------------
of the State of Illinois, applied without reference to principles of conflict of
laws.
(g) Severability. If any provision of this contract as applied
------------
to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
(h) Waiver. No provision of this Agreement may be modified,
------
waived or discharged unless such modifica-tion, waiver or discharge is agreed to
in a writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company or a duly authorized Committee thereof. No
waiver by either party hereto at any time of any breach
8
by the other party hereto of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of any other condition or
provision at any time.
(i) Entire Agreement. This Agreement contains the entire
----------------
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
If you are in agreement with the foregoing, please so indicate by
signing and returning to the Company the enclosed copy of this letter, whereupon
this letter shall constitute a binding agreement between you and the Company.
Very truly yours,
CHICAGO BRIDGE & IRON COMPANY
By________________________________
Agreed:
_______________________________
Employee
9
FULL AND FINAL RELEASE
Xxxxxxx X. Xxxxxxx (hereinafter "EMPLOYEE"), in exchange for
sufficient consideration, on behalf of himself, his family, his heirs and
assigns, irrevocably and unconditionally releases Chicago Bridge & Iron Company,
any parent corporations, any subsidiary corporations, any affiliated entities
whether or not incorporated, the employees, agents, officers, directors, and
shareholders of all such entities and any person or entity which may succeed to
the rights and liabilities of such persons or entities by assignment or
otherwise (hereinafter "CBI"), from all claims, controversies, liabilities,
demands, causes of action, debts, obligations, promises, acts, agreements,
rights of contribution and/or indemnification, and damages of whatever kind or
nature, whether known or unknown, suspected or unsuspected, foreseen or
unforeseen, liquidated or contingent, actual or potential, joint or individual,
that he has had or now has, based on any and all aspects of EMPLOYEE'S
employment with CBI or his separation from that employment, including, but not
limited to, all claims arising under the Age Discrimination in Employment Act;
Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the
Equal Pay Act; the Americans with Disabilities Act; the Employee Retirement
Income Security Act of 1974; or any federal, state or local laws or regulations
relating to employment or benefits associated with employment, any and all
claims for breach of express or implied contract or the covenant of good faith
and fair dealing (whether written or oral), all claims for retaliation or
violation of public policy, breach of promise, detrimental reliance or tort
(e.g., intentional infliction of emotional distress, defamation, assault,
battery, false imprisonment, wrongful termination, interference with contractual
or advantageous relationship, etc.), whether based on common law or otherwise;
claims for emotional distress, mental anguish, personal injury, loss of
consortium, and any and all claims that may be asserted on EMPLOYEE'S behalf by
others. The foregoing list is meant to be illustrative rather than inclusive.
This release does not preclude EMPLOYEE from seeking to obtain any benefits to
which he may be entitled under any employee welfare benefit plan or retirement
or profit sharing plan sponsored by CBI, but his entitlement to such benefits,
if any, will be determined in accordance with the plan documents.
If I initiate or participate in any legal action in violation of
this release, CBI may reclaim any amounts paid in respect of my termination,
without waiving the release granted herein, and terminate any benefits or
payments that are due to me, in addition to any other remedies. This release
shall be construed in accordance with the laws of the State of Illinois,
applicable to contracts made and entirely to be performed therein.
EMPLOYEE ACKNOWLEDGES AND AGREES THAT THIS RELEASE IS A FULL AND
FINAL BAR TO ANY AND ALL CLAIM(S) OF ANY TYPE THAT HE MAY NOW HAVE AGAINST CBI.
EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS BEEN GIVEN FORTY-FIVE (45) DAYS TO
CONSIDER WHETHER TO EXECUTE THIS RELEASE, THAT HE HAS SEVEN (7) DAYS TO RESCIND
THIS RELEASE AFTER ITS EXECUTION, WHICH SHALL BE EFFECTED BY WRITTEN NOTICE TO
CBI DELIVERED WITHIN SUCH SEVEN (7) DAY PERIOD, AND THAT HE HAS BEEN ADVISED
THAT HE SHOULD SPEAK WITH COUNSEL REGARDING THE SIGNIFICANCE OF THIS RELEASE.
Dated:____________________ Signed:_____________________
10
January 31, 1997
Xx. Xxxxxxx X. Xxxxx
00000 Xxxxxx Xxxxx Xxxx
Xxxxxx Xxxx, XX 00000
Change of Control Severance Agreement
-------------------------------------
Dear Xx. Xxxxx:
Chicago Bridge & Iron Company (the "Company") is a wholly owned
subsidiary of Praxair, Inc. (the "Parent"). The Parent is contemplating the
possible direct or indirect sale of all or a substantial part of its interests
in the Company. The Company recognizes that members of senior management may
become concerned about the effect of such action on their job and financial
security. The Company considers the maintenance of a sound and vital management
to be essential to protecting and enhancing the best interests of the Company
and its Parent. Accordingly, the Board of Directors of the Company has
determined to enter into this agreement (your "Agreement") to provide you with
severance benefits in the event your employment with the Company ter-minates
following a Change of Control (as defined below) under certain circumstances.
The purpose of entering into this Agreement is to induce you to
remain in the employ of the Company pending and after any direct or indirect
sale by the Parent of the Company or an intermediate holding corporation to
which the Parent has transferred the majority of the Company's stock, measured
by either or both vote and value (the "Holding Corporation") to an unrelated
third party or the consummation of an initial public offering ("IPO") for the
Company's stock or the stock of the Holding Corporation. Therefore, in
consideration of your continued employment with the Company under these
circumstances, the Company and you agree as follows:
1. Termination Benefits.
--------------------
(a) Basic Benefits. In the event your employment with the
--------------
Company and any subsidiary of the Company terminates by reason of a Qualifying
Termination within two years after a Change of Control, you shall receive,
within thirty days after your employment terminates, a lump sum amount equal to
Two Hundred Forty Thousand Dollars ($240,000.00). In addition, if your
employment with the Company and any subsidiary by which you are employed is
terminated by the Company or any such subsidiary for any reason (other than your
willful misconduct or gross negligence in the performance of your duties as an
employee which
results in a material detriment to either the Company or the Holding
Corporation) within six months prior
to the occurrence of a Change of Control, you shall be paid the lump sum
referred to in the immediately preceding sentence, minus the gross amount of any
severance benefits otherwise paid to you, within ten days following such Change
of Control.
(b) Outplacement. In the event of a Qualifying Termination
------------
(or a termination of your employment prior to a Change of Control with respect
to which you are entitled to receive a payment under Section 1(a) of this
Agreement), the Company agrees that, upon a written request from you, it will
engage on your behalf an outplacement or similar firm of your choice to provide
you with customary services and support in seeking other appropriate employment.
(c) Certain Further Payments.
------------------------
(i) Additional Payments in Respect of Excise Taxes. In the
----------------------------------------------
event that a Change of Control occurs at the time that either the Company or the
Holding Corporation has a class of equity securities registered under Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any
amount or benefit paid or distributed to you pursuant to this Agreement, taken
together with any amounts or benefits otherwise paid or distributed to you, are
or become subject to the tax (the "Excise Tax") imposed under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax
that may hereafter be imposed, the Company shall pay you, at the same time as it
pays the severance benefit described above, an additional amount (the "Tax
Reimbursement Payment") such that the net amount retained by you with respect to
such Covered Payments, after deduction of any Excise Tax on the Covered Payments
and any Federal, state and local income or employment tax and Excise Tax on the
Tax Reimbursement Payment provided for by this Section 1(b), but before
deduction for any Federal, state or local income or employment tax withholding
on such Covered Payments, shall be equal to the amount of the Covered Payments.
(ii) Calculation of the Excise Tax. For purposes of
-----------------------------
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(A) all "parachute payments" in excess of the "base amount"
(as defined under Section 280G(b)(3) of the Code) shall be treated as subject to
the Excise Tax, unless, and except to the extent that, in the good faith
judgment of the Company's independent certified public accountants appointed
prior to the Change of Control or tax coun-sel selected by such Accountants (the
"Accountants"), the Company has a reasonable basis to conclude that such Covered
Payments (in whole or in part) represent reasonable compensation for personal
services actually rendered (within
3
the meaning of Section 280G(b)(4)(B) of the Code) in excess of the "base
amount," or such "parachute payments" are otherwise not subject to such
Excise Tax, and
(B) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Accountants in accordance
with the principles of Section 280G of the Code.
(iii) Calculation of the Tax Reimbursement Payment. For
--------------------------------------------
purposes of determining the amount of the Tax Reimbursement Payment, you shall
be deemed to pay:
(A) Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Tax
Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in
which the Tax Reimbursement Payment is to be made, net of the maximum
reduction in Federal income taxes which could be obtained from the
deduction of such state or local taxes if paid in such year.
(d) Adjustments to Tax Reimbursement Payment. In the event
----------------------------------------
that the Excise Tax is subsequently determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, you shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has been
paid to any Fed-eral, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been made to you.
You and the Company shall mutually agree upon the course of action to be pursued
if your good faith claim for refund or credit is denied; provided that the
--------
Company shall bear the cost of any expenses incurred which are related to
pursuing any recovery of any amount paid in respect of the Excise Tax.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the
4
amount taken into account hereunder at the time the Tax Reimbursement Payment is
made (including, but not limited to, by reason of any payment the existence or
amount of which cannot be determined at the time of the Tax Reimbursement
Payment), the Company shall make an additional Tax Reimbursement Payment in
respect of such excess (plus any interest or penalty payable with respect to
such excess) at the time that the amount of such excess is finally determined.
2. Definitions.
-----------
(a) Change of Control When the Company or the Holding
-------------------------------------------------
Corporation is Not Public. At any time that neither the Company nor the Holding
-------------------------
Corporation has any equity securities registered under Section 12 of the
Exchange Act, a "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Exchange Act), other than the Parent,
the Holding Corporation, the Company or any majority-owned subsidiary of
either the Parent, the Holding Corporation or the Company, becomes the
"beneficial owner" (as such term is used in Section 13 of the Exchange
Act) of 50% or more of either (x) the total number of the common shares
of the Holding Corporation or the Company then outstanding or (y) the
voting power of all of the voting securities of the Holding Corporation
or the Company then outstanding; or
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation with or
into another company pursuant to which the stockholders of the Company or
the Holding Corporation, as the case may be, do not own, immediately
after the transaction, more than 50% of the voting power and the value of
the stock of the company that survives, or (B) the sale, exchange or
other disposition of all or substantially all of the assets of the
Company or the Holding Corporation.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred by reason of a transfer of the Company's stock to the Holding
Corporation or any public offering of the equity securities of the Company or
Holding Corporation, so long as, immediately following such transfer or the
consummation of such offering, no person or group (as such terms are used in
Section 13 of the Exchange Act) other than the Parent or one of its majority
owned subsidiaries owns, directly or indirectly, more than 25% of the Company's
or the Holding Corporation's equity securities.
5
(b) Change of Control When the Company or the Holding
-------------------------------------------------
Corporation is Public. At any time one or more classes of the equity securities
---------------------
of the Company or the Holding Corporation are registered under Section 12 of the
Exchange Act, a "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Exchange Act), other than the Parent,
the Holding Corporation, the Company or any majority owned subsidiary of
the Parent, the Holding Corporation or the Company, becomes the
"beneficial owner" (as such term is used in Section 13 of the Exchange
Act) of 25% or more of the total voting power of the Company's or the
Holding Corporation's outstanding securities;
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation with or
into another company pursuant to which the stockholders of the Company or
the Holding Corporation as the case may be, do not own, immediately after
the transaction, more than 50% of the voting power and the value of the
stock of the Company that survives, or (B) the sale, exchange or other
disposition of all or substantially all of the assets of the Company or
the Holding Corporation; or
(iii) if, during any period of two years or less,
individuals who at the beginning of such period constituted the Board of
Directors of the Company or the Holding Corporation, as the case may be,
cease for any reason to constitute at least a majority thereof; provided
--------
that any new director who is elected to, or nominated for election to,
the Board of Directors with the approval of at least 75% of the directors
then still in office who were directors at the beginning of the period
shall be treated as though having been a director at the beginning of
such period.
(c) "Qualifying Termination" means the termination of your
employment with the Company and any of its subsidiaries by which you are
employed (i) by the Company or any such subsidiary for any reason other than
your willful misconduct or gross negligence in the performance of your duties as
an employee which results in a material detriment to the Company or the Holding
Corporation or (ii) by you within 180 days following the occurrence of any of
the following events (without your prior written consent):
6
(A) any significant reduction in your positions,
duties, titles, responsibilities and status with the Company and its
subsidiaries from those in effect immediately prior to such Change of
Control;
(B) a reduction in your base salary, a reduction in
your annual bonus opportunity or a material reduction in the aggregate
value of your participation in the Company's employee benefits programs,
as each was in effect immediately prior to such Change of Control; or
(C) your principal place of employment is moved to a
location more than 50 miles from your principal place of employment
immediately prior to such Change of Control or you are required in the
performance of your duties to travel to an extent substantially more
burdensome than your travel obligations immediately prior to such Change
of Control.
Notwithstanding anything else contained herein to the contrary, a Qualifying
Termination shall not be deemed to have occurred by reason of (i) your death,
(ii) any termination of your employment due to your inability to perform the
duties of your position for a period of at least 180 days on account of any
physical or mental impairment, or (iii) your voluntary retirement at or after
your normal retirement date under any of the Company's employee pension plans in
which you participate.
3. Miscellaneous.
-------------
(a) Arbitration; Related Expenses. Any dispute or controversy
-----------------------------
arising under or in connection with this Agreement shall be settled exclusively
by arbitration held in accordance with the rules of the American Arbitration
Association pertaining to the resolution of employment disputes. Any such
arbitration shall be held in Chicago, Illinois or such other location which the
parties have mutually agreed to in writing. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall pay on a
current basis all legal expenses (including attorneys' fees) incurred by you in
connection with such arbitration, subject to your obligation to repay such
amounts, plus interest at the short-term annual Applicable Federal Rate (as
determined under Section 1274(b) of the Code as in effect on the date your
employment terminates), if you should not prevail as to at least one material
issue adjudicated in such proceeding.
(b) No Offset; No Mitigation. The Company's obligation to
------------------------
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim,
7
recoupment, defense or other right which the Company may have against you or
others whether by reason of your subsequent employment or otherwise. You shall
not be obligated to mitigate any damages you incur by reason of any Qualifying
Termination and the amounts payable hereunder shall not be reduced by any
amounts received by you as a result of your employment or self-employment
following your termination hereunder.
(c) Entire Obligation of Company. In the event your
----------------------------
employment with the Company and any subsidiary of the Company by which you are
employed terminates following a Change of Control, the amounts payable to you
hereunder and any vested amounts or benefits owing to you under the Company's
otherwise applicable employee benefit plans and programs and any accrued
vacation pay not yet paid, shall constitute the entire obligation of the Company
and its affiliates to you. Payment or other satisfaction thereof shall be
contingent upon your execution of a release in favor of the Company
substantially in the form attached hereto as Exhibit A, stating that the
payments and other benefits referred to in the immediately preceding sentence
constitute full settlement of any claim under law or in equity that you might
otherwise assert against the Company or any of its subsidiaries on account of
such termination.
(d) Employment at Will. This Agreement shall neither obligate
------------------
the Company or any subsidiary of the Company to continue you in its employ (or
to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Company or any
subsidiary of the Company.
(e) Successors. This Agreement shall be binding upon and
----------
inure to the benefit of you, your estate and the Company and any successor of
the Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
(f) Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Illinois, applied without reference to principles of
conflict of laws.
(g) Severability. If any provision of this contract as
------------
applied to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
(h) Waiver. No provision of this Agreement may be modified,
------
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company or a duly authorized Committee thereof. No
waiver by either party hereto at any time of any breach
8
by the other party hereto of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of any other condition or
provision at any time.
(i) Entire Agreement. This Agreement contains the entire
----------------
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
If you are in agreement with the foregoing, please so indicate
by signing and returning to the Company the enclosed copy of this letter,
whereupon this letter shall constitute a binding agreement between you and the
Company.
Very truly yours,
CHICAGO BRIDGE & IRON COMPANY
By________________________________
Agreed:
_______________________________
Employee
9
FULL AND FINAL RELEASE
Xxxxxxx X. Xxxxx (hereinafter "EMPLOYEE"), in exchange for
sufficient consideration, on behalf of himself, his family, his heirs and
assigns, irrevocably and unconditionally releases Chicago Bridge & Iron Company,
any parent corporations, any subsidiary corporations, any affiliated entities
whether or not incorporated, the employees, agents, officers, directors, and
shareholders of all such entities and any person or entity which may succeed to
the rights and liabilities of such persons or entities by assignment or
otherwise (hereinafter "CBI"), from all claims, controversies, liabilities,
demands, causes of action, debts, obligations, promises, acts, agreements,
rights of contribution and/or indemnification, and damages of whatever kind or
nature, whether known or unknown, suspected or unsuspected, foreseen or
unforeseen, liquidated or contingent, actual or potential, joint or individual,
that he has had or now has, based on any and all aspects of EMPLOYEE'S
employment with CBI or his separation from that employment, including, but not
limited to, all claims arising under the Age Discrimination in Employment Act;
Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the
Equal Pay Act; the Americans with Disabilities Act; the Employee Retirement
Income Security Act of 1974; or any federal, state or local laws or regulations
relating to employment or benefits associated with employment, any and all
claims for breach of express or implied contract or the covenant of good faith
and fair dealing (whether written or oral), all claims for retaliation or
violation of public policy, breach of promise, detrimental reliance or tort
(e.g., intentional infliction of emotional distress, defamation, assault,
battery, false imprisonment, wrongful termination, interference with contractual
or advantageous relationship, etc.), whether based on common law or otherwise;
claims for emotional distress, mental anguish, personal injury, loss of
consortium, and any and all claims that may be asserted on EMPLOYEE'S behalf by
others. The foregoing list is meant to be illustrative rather than inclusive.
This release does not preclude EMPLOYEE from seeking to obtain any benefits to
which he may be entitled under any employee welfare benefit plan or retirement
or profit sharing plan sponsored by CBI, but his entitlement to such benefits,
if any, will be determined in accordance with the plan documents.
If I initiate or participate in any legal action in violation
of this release, CBI may reclaim any amounts paid in respect of my termination,
without waiving the release granted herein, and terminate any benefits or
payments that are due to me, in addition to any other remedies. This release
shall be construed in accordance with the laws of the State of Illinois,
applicable to contracts made and entirely to be performed therein.
EMPLOYEE ACKNOWLEDGES AND AGREES THAT THIS RELEASE IS A FULL
AND FINAL BAR TO ANY AND ALL CLAIM(S) OF ANY TYPE THAT HE MAY NOW HAVE AGAINST
CBI. EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS BEEN GIVEN FORTY-FIVE (45) DAYS
TO CONSIDER WHETHER TO EXECUTE THIS RELEASE, THAT HE HAS SEVEN (7) DAYS TO
RESCIND THIS RELEASE AFTER ITS EXECUTION, WHICH SHALL BE EFFECTED BY WRITTEN
NOTICE TO CBI DELIVERED WITHIN SUCH SEVEN (7) DAY PERIOD, AND THAT HE HAS BEEN
ADVISED THAT HE SHOULD SPEAK WITH COUNSEL REGARDING THE SIGNIFICANCE OF THIS
RELEASE.
10
Dated:____________________ Signed:_____________________
11
January 31, 1997
Xx. Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Change of Control Severance Agreement
-------------------------------------
Dear Xx. Xxxxxxx:
Chicago Bridge & Iron Company (the "Company") is a wholly owned
subsidiary of Praxair, Inc. (the "Parent"). The Parent is contemplating the
possible direct or indirect sale of all or a substantial part of its interests
in the Company. The Company recognizes that members of senior management may
become concerned about the effect of such action on their job and financial
security. The Company considers the maintenance of a sound and vital management
to be essential to protecting and enhancing the best interests of the Company
and its Parent. Accordingly, the Board of Directors of the Company has
determined to enter into this agreement (your "Agreement") to provide you with
severance benefits in the event your employment with the Company ter-minates
following a Change of Control (as defined below) under certain circumstances.
The purpose of entering into this Agreement is to induce you to
remain in the employ of the Company pending and after any direct or indirect
sale by the Parent of the Company or an intermediate holding corporation to
which the Parent has transferred the majority of the Company's stock, measured
by either or both vote and value (the "Holding Corporation") to an unrelated
third party or the consummation of an initial public offering ("IPO") for the
Company's stock or the stock of the Holding Corporation. Therefore, in
consideration of your continued employment with the Company under these
circumstances, the Company and you agree as follows:
1. Termination Benefits.
--------------------
(a) Basic Benefits. In the event your employment with the
--------------
Company and any subsidiary of the Company terminates by reason of a Qualifying
Termination within two years after a Change of Control, you shall receive,
within thirty days after your employment terminates, a lump sum amount equal to
One Million Dollars ($1,000,000.00). In addition, if your employment with the
Company and any subsidiary by which you are employed is terminated by the
Company or any such subsidiary for any reason (other than your willful
misconduct or gross negligence in the performance of your duties as an employee
which results
in a material detriment to either the Company or the Holding Corporation) within
six months prior
to the occurrence of a Change of Control, you shall be paid the lump sum
referred to in the immediately preceding sentence, minus the gross amount of any
severance benefits otherwise paid to you, within ten days following such Change
of Control.
(b) Outplacement. In the event of a Qualifying Termination
------------
(or a termination of your employment prior to a Change of Control with respect
to which you are entitled to receive a payment under Section 1(a) of this
Agreement), the Company agrees that, upon a written request from you, it will
engage on your behalf an outplacement or similar firm of your choice to provide
you with customary services and support in seeking other appropriate employment.
(c) Certain Further Payments.
------------------------
(i) Additional Payments in Respect of Excise Taxes. In the
----------------------------------------------
event that a Change of Control occurs at the time that either the Company or the
Holding Corporation has a class of equity securities registered under Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any
amount or benefit paid or distributed to you pursuant to this Agreement, taken
together with any amounts or benefits otherwise paid or distributed to you, are
or become subject to the tax (the "Excise Tax") imposed under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax
that may hereafter be imposed, the Company shall pay you, at the same time as it
pays the severance benefit described above, an additional amount (the "Tax
Reimbursement Payment") such that the net amount retained by you with respect to
such Covered Payments, after deduction of any Excise Tax on the Covered Payments
and any Federal, state and local income or employment tax and Excise Tax on the
Tax Reimbursement Payment provided for by this Section 1(b), but before
deduction for any Federal, state or local income or employment tax withholding
on such Covered Payments, shall be equal to the amount of the Covered Payments.
(ii) Calculation of the Excise Tax. For purposes of
-----------------------------
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(A) all "parachute payments" in excess of the "base amount"
(as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless, and except to the extent that, in the
good faith judgment of the Company's independent certified public
accountants appointed prior to the Change of Control or tax coun-sel
selected by such Accountants (the "Accountants"), the Company has a
reasonable basis to conclude that such Covered Payments (in whole or in
part) represent reasonable compensation for personal services actually
rendered (within
the meaning of Section 280G(b)(4)(B) of the Code) in excess of the "base
amount," or such "parachute payments" are otherwise not subject to such
Excise Tax, and
(B) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Accountants in accordance
with the principles of Section 280G of the Code.
(iii) Calculation of the Tax Reimbursement Payment. For
--------------------------------------------
purposes of determining the amount of the Tax Reimbursement Payment, you shall
be deemed to pay:
(A) Federal income taxes at the highest applicable marginal
rate of Federal income taxation for the calendar year in which the Tax
Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in
which the Tax Reimbursement Payment is to be made, net of the maximum
reduction in Federal income taxes which could be obtained from the
deduction of such state or local taxes if paid in such year.
(d) Adjustments to Tax Reimbursement Payment. In the event
----------------------------------------
that the Excise Tax is subsequently determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, you shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has been
paid to any Fed-eral, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been made to you.
You and the Company shall mutually agree upon the course of action to be pursued
if your good faith claim for refund or credit is denied; provided that the
--------
Company shall bear the cost of any expenses incurred which are related to
pursuing any recovery of any amount paid in respect of the Excise Tax.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the
amount taken into account hereunder at the time the Tax Reimbursement Payment is
made (including, but not limited to, by reason of any payment the existence or
amount of which cannot be determined at the time of the Tax Reimbursement
Payment), the Company shall make an additional Tax Reimbursement Payment in
respect of such excess (plus any interest or penalty payable with respect to
such excess) at the time that the amount of such excess is finally determined.
2. Definitions.
-----------
(a) Change of Control When the Company or the Holding
-------------------------------------------------
Corporation is Not Public. At any time that neither the Company nor the Holding
-------------------------
Corporation has any equity securities registered under Section 12 of the
Exchange Act, a "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Exchange Act), other than the Parent,
the Holding Corporation, the Company or any majority-owned subsidiary of
either the Parent, the Holding Corporation or the Company, becomes the
"beneficial owner" (as such term is used in Section 13 of the Exchange
Act) of 50% or more of either (x) the total number of the common shares
of the Holding Corporation or the Company then outstanding or (y) the
voting power of all of the voting securities of the Holding Corporation
or the Company then outstanding; or
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation with or
into another company pursuant to which the stockholders of the Company or
the Holding Corporation, as the case may be, do not own, immediately
after the transaction, more than 50% of the voting power and the value of
the stock of the company that survives, or (B) the sale, exchange or
other disposition of all or substantially all of the assets of the
Company or the Holding Corporation.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred by reason of a transfer of the Company's stock to the Holding
Corporation or any public offering of the equity securities of the Company or
Holding Corporation, so long as, immediately following such transfer or the
consummation of such offering, no person or group (as such terms are used in
Section 13 of the Exchange Act) other than the Parent or one of its majority
owned subsidiaries owns, directly or indirectly, more than 25% of the Company's
or the Holding Corporation's equity securities.
(b) Change of Control When the Company or the Holding
-------------------------------------------------
Corporation is Public. At any time one or more classes of the equity securities
---------------------
of the Company or the Holding Corporation are registered under Section 12 of the
Exchange Act, a "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Exchange Act), other than the Parent,
the Holding Corporation, the Company or any majority owned subsidiary of
the Parent, the Holding Corporation or the Company, becomes the
"beneficial owner" (as such term is used in Section 13 of the Exchange
Act) of 25% or more of the total voting power of the Company's or the
Holding Corporation's outstanding securities;
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation with or
into another company pursuant to which the stockholders of the Company or
the Holding Corporation as the case may be, do not own, immediately after
the transaction, more than 50% of the voting power and the value of the
stock of the Company that survives, or (B) the sale, exchange or other
disposition of all or substantially all of the assets of the Company or
the Holding Corporation; or
(iii) if, during any period of two years or less,
individuals who at the beginning of such period constituted the Board of
Directors of the Company or the Holding Corporation, as the case may be,
cease for any reason to constitute at least a majority thereof; provided
that any new director who is elected to, or nominated for election to,
the Board of Directors with the approval of at least 75% of the directors
then still in office who were directors at the beginning of the period
shall be treated as though having been a director at the beginning of
such period.
(c) "Qualifying Termination" means the termination of your
employment with the Company and any of its subsidiaries by which you are
employed (i) by the Company or any such subsidiary for any reason other than
your willful misconduct or gross negligence in the performance of your duties as
an employee which results in a material detriment to the Company or the Holding
Corporation or (ii) by you within 180 days following the occurrence of any of
the following events (without your prior written consent):
(A) any significant reduction in your positions,
duties, titles, responsibilities and status with the Company and its
subsidiaries from those in effect immediately prior to such Change of
Control;
(B) a reduction in your base salary, a reduction in
your annual bonus opportunity or a material reduction in the aggregate
value of your participation in the Company's employee benefits programs,
as each was in effect immediately prior to such Change of Control; or
(C) your principal place of employment is moved to a
location more than 50 miles from your principal place of employment
immediately prior to such Change of Control or you are required in the
performance of your duties to travel to an extent substantially more
burdensome than your travel obligations immediately prior to such Change
of Control.
Notwithstanding anything else contained herein to the contrary, a Qualifying
Termination shall not be deemed to have occurred by reason of (i) your death,
(ii) any termination of your employment due to your inability to perform the
duties of your position for a period of at least 180 days on account of any
physical or mental impairment, or (iii) your voluntary retirement at or after
your normal retirement date under any of the Company's employee pension plans in
which you participate.
3. Miscellaneous.
-------------
(a) Arbitration; Related Expenses. Any dispute or controversy
-----------------------------
arising under or in connection with this Agreement shall be settled exclusively
by arbitration held in accordance with the rules of the American Arbitration
Association pertaining to the resolution of employment disputes. Any such
arbitration shall be held in Chicago, Illinois or such other location which the
parties have mutually agreed to in writing. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall pay on a
current basis all legal expenses (including attorneys' fees) incurred by you in
connection with such arbitration, subject to your obligation to repay such
amounts, plus interest at the short-term annual Applicable Federal Rate (as
determined under Section 1274(b) of the Code as in effect on the date your
employment terminates), if you should not prevail as to at least one material
issue adjudicated in such proceeding.
(b) No Offset; No Mitigation. The Company's obligation to
------------------------
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have against you or
others whether by reason of your subsequent employment or otherwise. You shall
not be obligated to mitigate any damages you incur by reason of any Qualifying
Termination and the amounts payable hereunder shall not be reduced by any
amounts received by you as a result of your employment or self-employment
following your termination hereunder.
(c) Entire Obligation of Company. In the event your
----------------------------
employment with the Company and any subsidiary of the Company by which you are
employed terminates following a Change of Control, the amounts payable to you
hereunder and any vested amounts or benefits owing to you under the Company's
otherwise applicable employee benefit plans and programs and any accrued
vacation pay not yet paid, shall constitute the entire obligation of the Company
and its affiliates to you. Payment or other satisfaction thereof shall be
contingent upon your execution of a release in favor of the Company
substantially in the form attached hereto as Exhibit A, stating that the
payments and other benefits referred to in the immediately preceding sentence
constitute full settlement of any claim under law or in equity that you might
otherwise assert against the Company or any of its subsidiaries on account of
such termination.
(d) Employment at Will. This Agreement shall neither obligate
------------------
the Company or any subsidiary of the Company to continue you in its employ (or
to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Company or any
subsidiary of the Company.
(e) Successors. This Agreement shall be binding upon and
----------
inure to the benefit of you, your estate and the Company and any successor of
the Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
(f) Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Illinois, applied without reference to principles of
conflict of laws.
(g) Severability. If any provision of this contract as
------------
applied to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
(h) Waiver. No provision of this Agreement may be modified,
------
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company or a duly authorized Committee thereof. No
waiver by either party hereto at any time of any breach
by the other party hereto of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of any other condition or
provision at any time.
(i) Entire Agreement. This Agreement contains the entire
----------------
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
If you are in agreement with the foregoing, please so indicate
by signing and returning to the Company the enclosed copy of this letter,
whereupon this letter shall constitute a binding agreement between you and the
Company.
Very truly yours,
CHICAGO BRIDGE & IRON COMPANY
By________________________________
Agreed:
_______________________________
Employee
FULL AND FINAL RELEASE
Xxxxxxx X. Xxxxxxx (hereinafter "EMPLOYEE"), in exchange for
sufficient consideration, on behalf of himself, his family, his heirs and
assigns, irrevocably and unconditionally releases Chicago Bridge & Iron Company,
any parent corporations, any subsidiary corporations, any affiliated entities
whether or not incorporated, the employees, agents, officers, directors, and
shareholders of all such entities and any person or entity which may succeed to
the rights and liabilities of such persons or entities by assignment or
otherwise (hereinafter "CBI"), from all claims, controversies, liabilities,
demands, causes of action, debts, obligations, promises, acts, agreements,
rights of contribution and/or indemnification, and damages of whatever kind or
nature, whether known or unknown, suspected or unsuspected, foreseen or
unforeseen, liquidated or contingent, actual or potential, joint or individual,
that he has had or now has, based on any and all aspects of EMPLOYEE'S
employment with CBI or his separation from that employment, including, but not
limited to, all claims arising under the Age Discrimination in Employment Act;
Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the
Equal Pay Act; the Americans with Disabilities Act; the Employee Retirement
Income Security Act of 1974; or any federal, state or local laws or regulations
relating to employment or benefits associated with employment, any and all
claims for breach of express or implied contract or the covenant of good faith
and fair dealing (whether written or oral), all claims for retaliation or
violation of public policy, breach of promise, detrimental reliance or tort
(e.g., intentional infliction of emotional distress, defamation, assault,
battery, false imprisonment, wrongful termination, interference with contractual
or advantageous relationship, etc.), whether based on common law or otherwise;
claims for emotional distress, mental anguish, personal injury, loss of
consortium, and any and all claims that may be asserted on EMPLOYEE'S behalf by
others. The foregoing list is meant to be illustrative rather than inclusive.
This release does not preclude EMPLOYEE from seeking to obtain any benefits to
which he may be entitled under any employee welfare benefit plan or retirement
or profit sharing plan sponsored by CBI, but his entitlement to such benefits,
if any, will be determined in accordance with the plan documents.
If I initiate or participate in any legal action in violation
of this release, CBI may reclaim any amounts paid in respect of my termination,
without waiving the release granted herein, and terminate any benefits or
payments that are due to me, in addition to any other remedies. This release
shall be construed in accordance with the laws of the State of Illinois,
applicable to contracts made and entirely to be performed therein.
EMPLOYEE ACKNOWLEDGES AND AGREES THAT THIS RELEASE IS A FULL
AND FINAL BAR TO ANY AND ALL CLAIM(S) OF ANY TYPE THAT HE MAY NOW HAVE AGAINST
CBI. EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS BEEN GIVEN FORTY-FIVE (45) DAYS
TO CONSIDER WHETHER TO EXECUTE THIS RELEASE, THAT HE HAS SEVEN (7) DAYS TO
RESCIND THIS RELEASE AFTER ITS EXECUTION, WHICH SHALL BE EFFECTED BY WRITTEN
NOTICE TO CBI DELIVERED WITHIN SUCH SEVEN (7) DAY PERIOD, AND THAT HE HAS BEEN
ADVISED THAT HE SHOULD SPEAK WITH COUNSEL REGARDING THE SIGNIFICANCE OF THIS
RELEASE.
Dated:____________________ Signed:_____________________
January 31, 1997
Xx. Xxxxxx X. Xxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Change of Control Severance Agreement
-------------------------------------
Dear Xx. Xxxxx:
Chicago Bridge & Iron Company (the "Company") is a wholly owned
subsidiary of Praxair, Inc. (the "Parent"). The Parent is contemplating the
possible direct or indirect sale of all or a substantial part of its interests
in the Company. The Company recognizes that members of senior management may
become concerned about the effect of such action on their job and financial
security. The Company considers the maintenance of a sound and vital management
to be essential to protecting and enhancing the best interests of the Company
and its Parent. Accordingly, the Board of Directors of the Company has
determined to enter into this agreement (your "Agreement") to provide you with
severance benefits in the event your employment with the Company ter-minates
following a Change of Control (as defined below) under certain circumstances.
The purpose of entering into this Agreement is to induce you to
remain in the employ of the Company pending and after any direct or indirect
sale by the Parent of the Company or an intermediate holding corporation to
which the Parent has transferred the majority of the Company's stock, measured
by either or both vote and value (the "Holding Corporation") to an unrelated
third party or the consummation of an initial public offering ("IPO") for the
Company's stock or the stock of the Holding Corporation. Therefore, in
consideration of your continued employment with the Company under these
circumstances, the Company and you agree as follows:
1. Termination Benefits.
--------------------
(a) Basic Benefits. In the event your employment with the
--------------
Company and any subsidiary of the Company terminates by reason of a Qualifying
Termination within two years after a Change of Control, you shall receive,
within thirty days after your employment terminates, a lump sum amount equal to
Seven Hundred Fifty Thousand Dollars ($750,000.00). In addition, if your
employment with the Company and any subsidiary by which you are employed is
terminated by the Company or any such subsidiary for any reason (other than your
willful misconduct or gross negligence in the performance of your duties as an
employee which
results in a material detriment to either the Company or the Holding
Corporation) within six months prior
to the occurrence of a Change of Control, you shall be paid the lump sum
referred to in the immediately preceding sentence, minus the gross amount of any
severance benefits otherwise paid to you, within ten days following such Change
of Control.
(b) Outplacement. In the event of a Qualifying Termination
------------
(or a termination of your employment prior to a Change of Control with respect
to which you are entitled to receive a payment under Section 1(a) of this
Agreement), the Company agrees that, upon a written request from you, it will
engage on your behalf an outplacement or similar firm of your choice to provide
you with customary services and support in seeking other appropriate employment.
(c) Certain Further Payments.
------------------------
(i) Additional Payments in Respect of Excise Taxes. In the
----------------------------------------------
event that a Change of Control occurs at the time that either the Company or the
Holding Corporation has a class of equity securities registered under Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any
amount or benefit paid or distributed to you pursuant to this Agreement, taken
together with any amounts or benefits otherwise paid or distributed to you, are
or become subject to the tax (the "Excise Tax") imposed under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax
that may hereafter be imposed, the Company shall pay you, at the same time as it
pays the severance benefit described above, an additional amount (the "Tax
Reimbursement Payment") such that the net amount retained by you with respect to
such Covered Payments, after deduction of any Excise Tax on the Covered Payments
and any Federal, state and local income or employment tax and Excise Tax on the
Tax Reimbursement Payment provided for by this Section 1(b), but before
deduction for any Federal, state or local income or employment tax withholding
on such Covered Payments, shall be equal to the amount of the Covered Payments.
(ii) Calculation of the Excise Tax. For purposes of
-----------------------------
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(A) all "parachute payments" in excess of the "base amount"
(as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless, and except to the extent that, in the
good faith judgment of the Company's independent certified public
accountants appointed prior to the Change of Control or tax coun-sel
selected by such Accountants (the "Accountants"), the Company has a
reasonable basis to conclude that such Covered Payments (in whole or in
part) represent reasonable compensation for personal services actually
rendered (within
3
the meaning of Section 280G(b)(4)(B) of the Code) in
excess of the "base amount," or such "parachute payments" are otherwise
not subject to such Excise Tax, and
(B) the value of any non-cash benefits or any deferred
payment or benefit shall be deter-mined by the Accountants in accordance
with the principles of Section 280G of the Code.
(iii) Calculation of the Tax Reimbursement Payment. For
--------------------------------------------
purposes of determining the amount of the Tax Reimbursement Payment, you shall
be deemed to pay:
(A) Federal income taxes at the highest applicable marginal
rate of Federal income tax-ation for the calendar year in which the Tax
Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in
which the Tax Reimbursement Payment is to be made, net of the maximum
reduction in Federal income taxes which could be obtained from the
deduction of such state or local taxes if paid in such year.
(d) Adjustments to Tax Reimbursement Payment. In the event
----------------------------------------
that the Excise Tax is subsequently determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, you shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has been
paid to any Fed-eral, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been made to you.
You and the Company shall mutually agree upon the course of action to be pursued
if your good faith claim for refund or credit is denied; provided that the
--------
Company shall bear the cost of any expenses incurred which are related to
pursuing any recovery of any amount paid in respect of the Excise Tax.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the
4
amount taken into account hereunder at the time the Tax Reimbursement Payment is
made (including, but not limited to, by reason of any payment the existence or
amount of which cannot be determined at the time of the Tax Reimbursement
Payment), the Company shall make an additional Tax Reimbursement Payment in
respect of such excess (plus any interest or penalty payable with respect to
such excess) at the time that the amount of such excess is finally determined.
2. Definitions.
-----------
(a) Change of Control When the Company or the Holding
-------------------------------------------------
Corporation is Not Public. At any time that neither the Company nor the Holding
-------------------------
Corporation has any equity securities registered under Section 12 of the
Exchange Act, a "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Exchange Act), other than the
Parent, the Holding Corporation, the Company or any majority-owned
subsidiary of either the Parent, the Holding Corporation or the
Company, becomes the "beneficial owner" (as such term is used in
Section 13 of the Exchange Act) of 50% or more of either (x) the
total number of the common shares of the Holding Corporation or the
Company then outstanding or (y) the voting power of all of the voting
securities of the Holding Corporation or the Company then
outstanding; or
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation with
or into another company pursuant to which the stockholders of the
Company or the Holding Corporation, as the case may be, do not own,
immediately after the transaction, more than 50% of the voting power
and the value of the stock of the company that survives, or (B) the
sale, exchange or other disposition of all or substantially all of
the assets of the Company or the Holding Corporation.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred by reason of a transfer of the Company's stock to the Holding
Corporation or any public offering of the equity securities of the Company or
Holding Corporation, so long as, immediately following such transfer or the
consummation of such offering, no person or group (as such terms are used in
Section 13 of the Exchange Act) other than the Parent or one of its majority
owned subsidiaries owns, directly or indirectly, more than 25% of the Company's
or the Holding Corporation's equity securities.
5
(b) Change of Control When the Company or the Holding
-------------------------------------------------
Corporation is Public. At any time one or more classes of the equity securities
---------------------
of the Company or the Holding Corporation are registered under Section 12 of the
Exchange Act, a "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Exchange Act), other than the Parent,
the Holding Corporation, the Company or any majority owned subsidiary of
the Parent, the Holding Corporation or the Company, becomes the
"beneficial owner" (as such term is used in Section 13 of the Exchange
Act) of 25% or more of the total voting power of the Company's or the
Holding Corporation's outstanding securities;
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation with or
into another company pursuant to which the stockholders of the Company or
the Holding Corporation as the case may be, do not own, immediately after
the transaction, more than 50% of the voting power and the value of the
stock of the Company that survives, or (B) the sale, exchange or other
disposition of all or substantially all of the assets of the Company or
the Holding Corporation; or
(iii) if, during any period of two years or less,
individuals who at the beginning of such period constituted the Board of
Directors of the Company or the Holding Corporation, as the case may be,
cease for any reason to constitute at least a majority thereof; provided
that any new director who is elected to, or nominated for election to,
the Board of Directors with the approval of at least 75% of the directors
then still in office who were directors at the beginning of the period
shall be treated as though having been a director at the beginning of
such period.
(c) "Qualifying Termination" means the termination of your
employment with the Company and any of its subsidiaries by which you are
employed (i) by the Company or any such subsidiary for any reason other than
your willful misconduct or gross negligence in the performance of your duties as
an employee which results in a material detriment to the Company or the Holding
Corporation or (ii) by you within 180 days following the occurrence of any of
the following events (without your prior written consent):
6
(A) any significant reduction in your positions,
duties, titles, responsibilities and status with the Company and its
subsidiaries from those in effect immediately prior to such Change of
Control;
(B) a reduction in your base salary, a reduction in
your annual bonus opportunity or a material reduction in the aggregate
value of your participation in the Company's employee benefits programs,
as each was in effect immediately prior to such Change of Control; or
(C) your principal place of employment is moved to a
location more than 50 miles from your principal place of employment
immediately prior to such Change of Control or you are required in the
performance of your duties to travel to an extent substantially more
burdensome than your travel obligations immediately prior to such Change
of Control.
Notwithstanding anything else contained herein to the contrary, a Qualifying
Termination shall not be deemed to have occurred by reason of (i) your death,
(ii) any termination of your employment due to your inability to perform the
duties of your position for a period of at least 180 days on account of any
physical or mental impairment, or (iii) your voluntary retirement at or after
your normal retirement date under any of the Company's employee pension plans in
which you participate.
3. Miscellaneous.
-------------
(a) Arbitration; Related Expenses. Any dispute or controversy
-----------------------------
arising under or in connection with this Agreement shall be settled exclusively
by arbitration held in accordance with the rules of the American Arbitration
Association pertaining to the resolution of employment disputes. Any such
arbitration shall be held in Chicago, Illinois or such other location which the
parties have mutually agreed to in writing. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall pay on a
current basis all legal expenses (including attorneys' fees) incurred by you in
connection with such arbitration, subject to your obligation to repay such
amounts, plus interest at the short-term annual Applicable Federal Rate (as
determined under Section 1274(b) of the Code as in effect on the date your
employment terminates), if you should not prevail as to at least one material
issue adjudicated in such proceeding.
(b) No Offset; No Mitigation. The Company's obligation to
------------------------
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim,
7
recoupment, defense or other right which the Company may have against you or
others whether by reason of your subsequent employment or otherwise. You shall
not be obligated to mitigate any damages you incur by reason of any Qualifying
Termination and the amounts payable hereunder shall not be reduced by any
amounts received by you as a result of your employment or self-employment
following your termination hereunder.
(c) Entire Obligation of Company. In the event your
----------------------------
employment with the Company and any subsidiary of the Company by which you are
employed terminates following a Change of Control, the amounts payable to you
hereunder and any vested amounts or benefits owing to you under the Company's
otherwise applicable employee benefit plans and programs and any accrued
vacation pay not yet paid, shall constitute the entire obligation of the Company
and its affiliates to you. Payment or other satisfaction thereof shall be
contingent upon your execution of a release in favor of the Company
substantially in the form attached hereto as Exhibit A, stating that the
payments and other benefits referred to in the immediately preceding sentence
constitute full settlement of any claim under law or in equity that you might
otherwise assert against the Company or any of its subsidiaries on account of
such termination.
(d) Employment at Will. This Agreement shall neither obligate
------------------
the Company or any subsidiary of the Company to continue you in its employ (or
to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Company or any
subsidiary of the Company.
(e) Successors. This Agreement shall be binding upon and
----------
inure to the benefit of you, your estate and the Company and any successor of
the Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
(f) Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Illinois, applied without reference to principles of
conflict of laws.
(g) Severability. If any provision of this contract as
------------
applied to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
(h) Waiver. No provision of this Agreement may be modified,
------
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company or a duly authorized Committee thereof. No
waiver by either party hereto at any time of any breach
8
by the other party hereto of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of any other condition or
provision at any time.
(i) Entire Agreement. This Agreement contains the entire
----------------
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
If you are in agreement with the foregoing, please so indicate
by signing and returning to the Company the enclosed copy of this letter,
whereupon this letter shall constitute a binding agreement between you and the
Company.
Very truly yours,
CHICAGO BRIDGE & IRON COMPANY
By________________________________
Agreed:
_______________________________
Employee
9
FULL AND FINAL RELEASE
Xxxxxx X. Xxxxx (hereinafter "EMPLOYEE"), in exchange for
sufficient consideration, on behalf of himself, his family, his heirs and
assigns, irrevocably and unconditionally releases Chicago Bridge & Iron Company,
any parent corporations, any subsidiary corporations, any affiliated entities
whether or not incorporated, the employees, agents, officers, directors, and
shareholders of all such entities and any person or entity which may succeed to
the rights and liabilities of such persons or entities by assignment or
otherwise (hereinafter "CBI"), from all claims, controversies, liabilities,
demands, causes of action, debts, obligations, promises, acts, agreements,
rights of contribution and/or indemnification, and damages of whatever kind or
nature, whether known or unknown, suspected or unsuspected, foreseen or
unforeseen, liquidated or contingent, actual or potential, joint or individual,
that he has had or now has, based on any and all aspects of EMPLOYEE'S
employment with CBI or his separation from that employment, including, but not
limited to, all claims arising under the Age Discrimination in Employment Act;
Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the
Equal Pay Act; the Americans with Disabilities Act; the Employee Retirement
Income Security Act of 1974; or any federal, state or local laws or regulations
relating to employment or benefits associated with employment, any and all
claims for breach of express or implied contract or the covenant of good faith
and fair dealing (whether written or oral), all claims for retaliation or
violation of public policy, breach of promise, detrimental reliance or tort
(e.g., intentional infliction of emotional distress, defamation, assault,
----
battery, false imprisonment, wrongful termination, interference with contractual
or advantageous relationship, etc.), whether based on common law or otherwise;
claims for emotional distress, mental anguish, personal injury, loss of
consortium, and any and all claims that may be asserted on EMPLOYEE'S behalf by
others. The foregoing list is meant to be illustrative rather than inclusive.
This release does not preclude EMPLOYEE from seeking to obtain any benefits to
which he may be entitled under any employee welfare benefit plan or retirement
or profit sharing plan sponsored by CBI, but his entitlement to such benefits,
if any, will be determined in accordance with the plan documents.
If I initiate or participate in any legal action in violation
of this release, CBI may reclaim any amounts paid in respect of my termination,
without waiving the release granted herein, and terminate any benefits or
payments that are due to me, in addition to any other remedies. This release
shall be construed in accordance with the laws of the State of Illinois,
applicable to contracts made and entirely to be performed therein.
EMPLOYEE ACKNOWLEDGES AND AGREES THAT THIS RELEASE IS A FULL
AND FINAL BAR TO ANY AND ALL CLAIM(S) OF ANY TYPE THAT HE MAY NOW HAVE AGAINST
CBI. EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS BEEN GIVEN FORTY-FIVE (45) DAYS
TO CONSIDER WHETHER TO EXECUTE THIS RELEASE, THAT HE HAS SEVEN (7) DAYS TO
RESCIND THIS RELEASE AFTER ITS EXECUTION, WHICH SHALL BE EFFECTED BY WRITTEN
NOTICE TO CBI DELIVERED WITHIN SUCH SEVEN (7) DAY PERIOD, AND THAT HE HAS BEEN
ADVISED THAT HE SHOULD SPEAK WITH COUNSEL REGARDING THE SIGNIFICANCE OF THIS
RELEASE.
Dated:____________________ Signed:_____________________
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