EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT, made and entered into effective as of
___________________________, 2000 (the "Agreement"), is by and between BJ
SERVICES COMPANY, a Delaware corporation (the "Company"), and
___________________________ (the "Employee").
WITNESSETH:
WHEREAS, Employee has rendered outstanding service to the Company and Employee's
experience and knowledge of the affairs of the Company, and Employee's
reputation and contacts are extremely valuable to the Company; and
WHEREAS, in recognition of Employee's service to the Company and as an
inducement to Employee to continue in the employ of the Company, the Company has
offered Employee, among other things, this Agreement, and Employee has accepted
the Company's offer;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Employee hereby agree
as follows.
1. TERM. This Agreement shall commence on the date hereof and shall continue
until December 31, 2000; PROVIDED, HOWEVER, that commencing on January 1, 2001
and on each January 1st thereafter, the term of this Agreement shall
automatically be extended for one additional year unless at least one year prior
to such January 1st date the Company shall have given written notice to Employee
that the term of this Agreement shall cease to be so extended PROVIDED FURTHER
that, this Agreement shall automatically terminate in all events upon the
termination of the Employee's employment for any reason prior to the
commencement of the Protected Period, except as set forth in Section 2.
Notwithstanding anything in this Agreement to the contrary however, this
Agreement may not be terminated and shall remain in full force and effect for at
least two (2) years following a Change in Control, and such additional time as
may be necessary to give effect to its terms.
2. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. Employee shall be
entitled to the benefits specified in Sections 3(iii) and 4 if (i) a Change in
Control occurs while Employee is employed by the Company, and this Agreement is
in effect, and (ii) during the Protected Period Employee's employment is
terminated without Cause by the Company, for Good Reason by Employee, or by
Employee without Good Reason with the consent of the Company's Board of
Directors ("Board"). If Employee's employment is terminated due to Disability
or death, or for Cause, then Employee shall not be entitled to any benefits
under this Agreement except as specified in Sections 3(i) and 3(ii) . No
benefits hereunder are payable prior to the date on which a Change in Control
occurs unless otherwise approved by the Board of Directors of the Company. For
purposes of this Agreement, the "Protected Period" shall mean the period of time
beginning with the Change in Control and ending on the second anniversary of
such Change in Control; PROVIDED, HOWEVER, if Employee's employment with the
Company terminates prior to, but within six months of, the date on which a
Change in Control occurs, and it is reasonably
demonstrated by Employee that such termination of employment was (i) by the
Company in connection with or in anticipation of the Change in Control or
(ii) by Employee under circumstances which would have constituted Good Reason
if the circumstances arose on or after the Change in Control, then for all
purposes of this Agreement the Change in Control shall be deemed to have
occurred, and the Protected Period shall be deemed to have commenced, on the
date immediately prior to the date of such termination of Employee's
employment.
(i) DISABILITY. If, as a result of Employee's incapacity due to physical
or mental illness, Employee shall have been absent from Employee's duties with
the Company on a full-time basis for 180 consecutive calendar days, and within
30 days after written Notice of Termination (as defined hereinafter) Employee
shall not have returned to the full-time performance of Employee's duties, the
Company may thereafter notify Employee of termination, which notice shall, for
purposes of this Agreement, constitute termination of Employee's employment for
"Disability"; PROVIDED, HOWEVER, a termination of Employee's employment for
Disability under this Agreement shall not by itself alter or impair (A)
Employee's rights as a "disabled employee" or otherwise under any of the
Company's employee benefit plans or (B) Employee's status as an "employee" for
any other purpose.
(ii) CAUSE. The Company may terminate Employee's employment for Cause.
For the purposes of this Agreement, the Company shall have "Cause" to
terminate Employee's employment hereunder only (A) upon the willful and
continued failure by Employee to perform substantially Employee's duties with
the Company, other than any such failure resulting from Employee's incapacity
due to physical or mental illness, which failure continues unabated after a
demand for substantial performance is delivered to Employee by the Board that
specifically identified the manner in which the Board believes that Employee
has not substantially performed Employee's duties, (B) if Employee willfully
engages in gross misconduct materially and demonstrably injurious to the
Company or (C) upon fraud, misappropriation or embezzlement related to the
business of the Company on the part of Employee. For purposes of this
paragraph, an act or failure to act on Employee's part shall be considered
"willful" if done or omitted to be done by Employee otherwise than in good
faith and without reasonable belief that Employee's action or omission was in
the best interest of the Company. Notwithstanding the foregoing, Employee
shall not be deemed to have been terminated by the Company for Cause unless
and until the Company shall have delivered to Employee a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board, at a meeting of the Board called and held for
the purpose (after reasonable notice to Employee and an opportunity for
Employee, together with Employee's counsel, to be heard before the Board),
finding that in the good-faith opinion of the Board Employee was guilty of
conduct constituting Cause hereunder and specifying the particulars thereof
in reasonable detail.
(iii) GOOD REASON. Employee may terminate Employee's employment for Good
Reason. For purposes of this Agreement "Good Reason" shall mean any of the
following:
(A) Employee is assigned any duties materially inconsistent with
Employee's positions, duties, responsibilities and status with the Company
immediately prior to a Change in Control, or Employee's reporting
responsibilities, titles or offices are materially changed in an adverse manner
from those in effect immediately prior to such Change in Control (As an
2
illustration, a change from an officer of a publicly traded company to an
officer of a subsidiary of another company would be considered a material
change in the Employee's reporting responsibility, title and office.) or
Employee is removed from or is not re-elected or appointed to any of such
material responsibilities, titles, offices or positions, except in each case
in connection with the termination of Employee's employment for Cause, or
Disability, or as a result of Employee's death, or by Employee for other than
Good Reason and excluding an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by Employee; provided, however, that if the
Executive Compensation Committee of the Board of Directors of the Company
makes a determination, prior to a Change in Control, that the Change in
Control is a "merger of equals" for the purposes of this section 2(iii)(A),
and delivers written notice to the Employee that the transaction has been
designated a "merger of equals" for purposes of this section 2(iii)(A), and
that shorter time periods may apply under this section, then the following
additional provisions shall apply: In the event that (x) Employee remains
employed as an officer of a publicly-traded company following the Change in
Control but (y) an event or events occur within the first six months of the
Protected Period which constitute Good Reason and Employee chooses to
terminate his or her employment for Good Reason, then employee must deliver
his or her Notice of Termination (as defined in paragraph (iv) below) on or
before the date which is six months after the event that constituted Good
Reason, or else lose the right to terminate for Good Reason based on such
event or events and provided, further, that if, during the final eighteen
months of the Protected Period, additional events occur which also constitute
Good Reason, then Employee shall be entitled to terminate his or her
employment for Good Reason at any time pursuant to the terms of this
Agreement; or
(B) Employee's annual rate of base salary is reduced from that in
effect immediately prior to a Change in Control or as the same may be increased
from time to time thereafter (such annual rate of base salary, as so increased
(if applicable) but prior to such reduction, is referred to hereinafter as the
"Base Salary"); or
(C) the Company fails to continue the Company's annual cash bonus
plan for executives as the same may be modified from time to time, but
substantially in the form in effect prior to the date of the Change in Control
(the "Bonus Plan"), (unless the Bonus Plan is replaced within a reasonable time
with a substantively similar plan (the "Substitute Plan")) or fails to continue
Employee as a participant in the Bonus Plan or the Substitute Plan, or reduces
Employee's "Entry Level," "Expected Value," or "Over-Achievement" guideline
percentages under the Bonus Plan or the Substitute Plan from that in effect
immediately prior to a Change in Control or as increased thereafter with respect
to Employee; or
(D) the Company fails to continue in effect any material benefit or
compensation plan, including, but not limited to, the Company's 1990 Stock
Incentive Plan, 1995 Incentive Plan, 1997 Incentive Plan, qualified retirement
plan, executive life insurance plan, perquisite plan, and/or health and accident
plan, in which Employee is participating immediately prior to a Change in
Control, or plans providing Employee with substantially similar benefits, or the
Company takes any action that would materially adversely affect Employee's
participation in or reduce Employee's benefits under any of such plans
(excluding any such action by the Company that is required by law); or
3
(E) the Employee is required to relocate to a location more than 50
miles from where his office was located at the date of the Change in Control
(except for required travel on company business to an extent substantially
consistent with Employee's past business travel obligations to the Company); or
(F) the Company fails to obtain the assumption of the obligation to
perform this Agreement by any successor as contemplated in Section 6 hereof; or
(G) any purported termination of Employee's employment by the Company
that is not effected pursuant to a Notice of Termination satisfying the
requirements of subparagraph (iv) below and, if applicable, the procedures
described in subparagraph (ii) above; and for purposes of this Agreement, no
such purported termination shall be effective; or
(H) the amendment, modification or repeal of any provision of the
Articles of Incorporation or Bylaws of the Company that was in effect
immediately prior to such Change in Control, if such amendment, modification or
repeal would materially adversely affect Employee's rights to indemnification by
the Company; or
(I) the Company shall violate or breach any obligation of the Company
in effect immediately prior to such Change in Control, regardless whether such
obligation be set forth in the Bylaws of the Company and/or in a separate
agreement entered into between the Company and Employee, to indemnify Employee
against any claim, loss, expense or liability sustained or incurred by Employee
by reason, in whole or in part, of the fact that Employee is or was an officer
or director of the Company.
(iv) NOTICE OF TERMINATION. Any termination by the Company pursuant to
subparagraphs (i) or (ii) above or by Employee pursuant to subparagraph (iii)
above shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice that shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Employee's employment under the
provision so indicated.
(v) DATE OF TERMINATION. "Date of Termination" shall mean (A) if Employee
is terminated for Disability, 30 days after Notice of Termination is given,
provided that Employee shall not have returned to the performance of Employee's
duties on a full-time basis during such 30-day period, (B) if Employee's
employment is terminated pursuant to subparagraph (iii) above, the date
specified in the Notice of Termination, (C) with respect to a termination of
employment prior to a Change in Control, the date of such termination, and (D)
if Employee's employment is terminated for any other reason on or after a Change
in Control, the date on which a Notice of Termination is given, PROVIDED,
HOWEVER, in the event of any dispute or controversy concerning Employee's
entitlement to payment under this Agreement, solely for purposes of Section
3(iii), concerning the timing of the payment of amounts under this Agreement,
the "Date of Termination" shall mean the date of final resolution of such
dispute or controversy.
4
3. COMPENSATION DURING DISABILITY OR UPON TERMINATION.
(i) If during the Protected Period Employee fails to perform Employee's
normal duties as a result of incapacity due to physical or mental illness,
Employee shall continue during the period of disability to receive Employee's
full Base Salary at the rate then in effect and any awards, deferred and
non-deferred, payable during such period of disability under the Bonus Plan,
less any amounts paid to Employee during such period of disability pursuant
to the Company's sick-leave or disability program until Employee's employment
is terminated for Disability pursuant to Section 2(i) hereof. This Section
3(i) shall not reduce or impair Employee's rights to terminate his employment
for Good Reason (to the extent such rights existed prior to such Disability)
or with the consent of the Board as otherwise provided herein.
(ii) If during the Protected Period Employee's employment shall be
terminated for Cause, the Company shall pay Employee's earned but unpaid Base
Salary through the Date of Termination at the rate in effect at the time of
Notice of Termination is given and the Company shall have no further obligations
to Employee under this Agreement, except those arising hereunder or under the
terms of any Company benefit plans, prior to the Date of Termination.
(iii) If during the Protected Period the Company shall terminate Employee
other than pursuant to Section 2(i) or 2(ii) hereof, or if during the Protected
Period Employee shall terminate Employee's employment either for Good Reason or
with the consent of the Board, then, subject to Section 4 and the following
provisions hereof, the Company shall pay to Employee, in a single lump sum by
certified or bank cashier's check within five days of such Date of Termination,
the sum of the amounts specified in subparagraphs (A) through (E) below and also
shall provide Employee the continued employee welfare benefits as provided in
subparagraph (F) and the benefits in subparagraph (G) below:
(A) an amount equal to three times the sum of (i) Employee's Base
Salary and (ii) the bonus that Employee would receive using the Expected Value
guideline percentage under the Bonus Plan (the "EV Bonus Amount");
(B) an amount equal to the product of (i) the higher of (a) the EV
Bonus Amount or (b) the bonus that the Employee would receive under the Bonus
Plan based on the performance of the Company for the then current fiscal year,
as of the date of the Change in Control and (ii) a fraction, the numerator of
which is the number of days in the current fiscal year under the Bonus Plan that
have elapsed on the Date of Termination and the denominator of which is 365;
(C) an amount equal to that portion of Employee's Base Salary earned,
but not paid, and vacation earned, but not taken, in each case, to the Date of
Termination, and all other amounts previously deferred by Employee or earned but
not paid as of such date under all Company incentive or deferred compensation
plans or programs;
(D) an amount, with respect to all outstanding unvested and
unexercisable awards that have been granted Employee after a Change in Control
under the Company's 1990 Stock Incentive Plan, 1995 Incentive Plan, and 1997
Incentive Plan or any successor or similar stock
5
compensation plan, equal to the sum of (i) the value of all such unvested (or
unearned) shares of Performance Stock and Performance Units (determined as if
all restrictions had lapsed and all performance goals had been achieved to
the fullest extent) and (ii) the excess of the exercise price of each such
unexercisable option and appreciation right over the closing price of the
common shares of the Company stock on the Date of Termination as reported on
the national exchange on which the trading volume for such stock is highest;
(E) an amount equal to three times the value of the largest annual
long term incentive grant or grants made to Employee during the three years
prior to the Date of Termination. For purposes of this section, "long term
incentive grant" shall mean an award of stock options, performance units, or
other long term incentive awards and shall refer to the initial grant, not the
vesting of the award. The value of such awards shall be the value as of the
date they were granted. The Black-Scholes method of valuation shall be used in
the case of stock options. The value of the other awards shall be their present
value on the date of grant. The Executive Compensation Committee of the Board
of Directors of the Company shall have the authority to determine the value of
all such awards prior to the date of the Change in Control, and any
determination by them shall be final and binding.
(F) the Company shall at all times during the three year period
following the Date of Termination (the "Continuation Period") maintain in full
force and effect for the continued benefit of Employee and Employee's eligible
dependents all life (including executive life), accidental death and
dismemberment, and medical and dental insurance benefits available to Employee
and Employee's eligible dependents by virtue of being an employee of the Company
immediately prior to such termination, PROVIDED that Employee's continued
participation is possible under the general terms and provisions of such plans
and programs (or any successor thereto); PROVIDED, HOWEVER, if Employee retires
on the Date of Termination or if Employee would have been eligible to retire
within five years of the Date of Termination, Employee's participation shall
continue in such group plans and programs to the extent such group plans and
programs provide benefits for retirees. In the event that participation by
Employee in any such plan or program after the Date of Termination is barred
pursuant to the terms thereof, the Company shall obtain at the Company's expense
and without any additional cost or liability to the Employee comparable coverage
under individual policies for Employee (and Employee's dependents). At the end
of the Continuation Period (except as provided below with respect to COBRA
benefits, if elected by Employee), the Company shall arrange to make available
to Employee and his eligible dependents comparable insurance coverage by
enabling Employee to convert Employee's coverage under the Company's group plans
or programs to an individual policy for the benefit of Employee and Employee's
eligible dependents, or to assume any individual policies obtained by the
Company for Employee's benefit, with Employee paying the full premiums after the
end of the Continuation Period. Nothing in this subparagraph (F) shall operate
to reduce, or be construed as reducing, Employee's (or a beneficiary's) group
health plan continuation rights under COBRA in any manner and upon the end of
the Continuation Period Employee (or Employee's beneficiary(ies)), if otherwise
eligible, will be entitled to elect COBRA continuation coverage for the full
period applicable as if that were Employee's termination date. In the event
Employee becomes covered by another employer's group plan or programs as a
result of Employee's employment during the Continuation Period, the Company's
6
plans or programs shall be liable for benefits only to the extent such benefits
are not covered by the subsequent employer's plans or programs; and
(G) the Company shall, at its sole expense as incurred, provide the
Employee with outplacement services the scope and provider of which shall be
selected by the Employee in his or her sole discretion.
As a condition to the receipt of any benefit under this Agreement, Employee
must first execute and deliver to the Company a release, substantially in the
form attached hereto as Attachment A, releasing the Company, its officers,
directors, employees and agents from any and all claims and from any and all
causes of action of any kind or character that Employee may have arising out of
Employee's employment with the Company or the termination of such employment,
but excluding (i) any claims and causes of action that Employee may have arising
under or based upon this Agreement, (ii) rights under stock-based incentive
plans arising in connection with a change in control, (iii) rights under
directors' and officers' indemnification insurance, and (iv) rights of indemnity
under articles of incorporation, bylaws, contracts, law, or otherwise,
(v) rights under Company-sponsored retirement plans, including, without
limitation "401(k)" plans and "Rabbi trusts", and (vi) rights under the
Company's "KEYSOP" (Key Executive Stock Option Plan) and arrangements for
deferred compensation.
4. GROSS-UP OF PARACHUTE PAYMENTS.
(i) To provide Employee with adequate protection in connection with his
ongoing employment with the Company, this Agreement provides Employee with
various benefits in the event of termination of Employee's employment with the
Company during the Protected Period. If Employee's employment is terminated
following a "change in control" of the Company, within the meaning of Section
28OG of the Internal Revenue Code of 1986, as amended (the "Code"), a portion of
those benefits could be characterized as "excess parachute payments" within the
meaning of Section 28OG of the Code. The parties hereto acknowledge that the
protections set forth in this Section 4 are important, and it is agreed that
Employee should not have to bear the burden of any excise tax that might be
levied under Section 4999 of the Code, in the event that a portion of the
benefits payable to Employee pursuant to this Agreement are treated as an excess
parachute payment. The parties, therefore, have agreed as set forth in this
Section 4.
(ii) Anything in this Agreement to the contrary notwithstanding, if it
shall be determined that any payment or distribution by the Company or any other
person to or for the benefit of Employee (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
4) (including, without limitation, any cost associated with any continued
welfare plan coverage, welfare benefits, or any reimbursements of any
arbitration or litigation costs and expenses under Section 15) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Employee with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Company
shall pay, in accordance with Section 4(iii), an additional payment (a "Gross-Up
Payment") in an amount such that after payment by Employee of all taxes
(including any interest or penalties imposed
7
with respect to such taxes), including, without limitation, any income or
other taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, Employee retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(iii) Subject to the provisions of Section 4(iv), all determinations
required to be made under this Section 4, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by an
independent public accounting firm with a national reputation that is selected
by Employee (the "Accounting Firm") which shall provide detailed preliminary
calculations both to the Company and to Employee within 15 business days after
the receipt of notice from the Company that there has been a Payment, or such
earlier time as is requested by the Employee and shall provide the actual
amount of the Gross-Up Payment each year. In the event that the Accounting Firm
is serving as accountant or auditor for the individual, entity or group
effecting the Change in Control of the Company, Employee shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. (The Company shall indemnify and hold harmless Employee,
on an after-tax basis, for any Excise Tax or income or other tax (including
interest and penalties with respect thereto) imposed on Employee as a result of
such payment of fees and expenses.) Any Gross-Up Payment, as determined pursuant
to this Section 4, shall be paid by the Company on behalf of Employee to the
applicable tax authorities prior to the time any such payments are due to be
paid to the Internal Revenue Service. If the Accounting Firm determines that no
Excise Tax is payable by Employee, it shall furnish Employee with a written
opinion that failure to report the Excise Tax on Employee's applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the
Company and Employee; provided, however, that such determination may be changed
to reflect the outcome of a dispute under Section 4(iv). As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. If the Company exhausts its remedies pursuant to Section 4(iv) and
Employee thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Employee.
(iv) Employee shall notify the Company in writing of any claim (including
any threatened tax lien related to or based upon any such claim) by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid.
Employee shall not pay such claim prior to the expiration of the 30-day period
following the date on which Employee gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due or such tax lien would be imposed). If the Company notifies
Employee in writing prior to the
8
expiration of such period that it desires to contest such claim (or
threatened lien), Employee shall:
(A) give the Company any information reasonably requested by the
Company relating to such claim (or threatened lien);
(B) take such action in connection with contesting such claim (or
threatened lien) as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company;
(C) cooperate with the Company in good faith in order effectively to
contest such claim (or threatened lien); and
(D) permit the Company to participate in any proceedings relating to
such claim (or threatened lien);
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Employee harmless, on an
after-tax basis, for any Excise Tax or income or other tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 4(iv), the Company shall control all
proceedings taken in connection with such contest and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct Employee to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Employee shall determine (but in no event shall the
Company permit or direct Employee to allow a tax lien to be imposed on
Employee's property); PROVIDED, FURTHER, that if the Company directs Employee
to pay such claim and xxx for a refund, the Company shall advance the amount
of such payment to Employee, on an interest-free basis, and shall indemnify
and hold Employee harmless on an after-tax basis, from any Excise Tax or
income or other tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and FURTHER PROVIDED that any extension of the
statute of limitations relating to payment of taxes for the taxable year of
Employee with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. In addition, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and Employee shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(v) If, after the receipt by Employee of an amount advanced by the Company
pursuant to Section 4(iv), Employee becomes entitled to receive any refund with
respect to such claim, Employee shall (subject to the Company's complying with
the requirements of Section 4(iv)) promptly pay to the Company the amount of
such refund (together with any interest paid or
9
credited thereon after taxes applicable thereto). If after the receipt by
Employee of an amount advanced by the Company pursuant to Section 4(iv), a
determination is made that Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify Employee in writing of
its intent to contest such denial of refund prior to the expiration of 30
days after such determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.
5. NO MITIGATION OF DAMAGES AND EXPENSES.
(i) The provisions of this Agreement are not intended to, nor shall they
be construed to, require that Employee seek or accept other employment following
a termination of employment and, except to the extent provided in Section
3(iii)(F) of this Agreement, amounts payable and welfare benefits provided under
this Agreement to Employee shall not be reduced by Employee's acceptance of (or
failure to seek or accept) employment with another person. The Company's
obligations to make the payments and provide the welfare benefits required for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set off, counterclaim, recoupment, defense or other claim,
rights or action that the Company may have against the Employee or others.
(ii) If any contest or dispute (including, without limitation, in
accordance with Section 15) shall arise under this Agreement involving
termination of Employee's employment with the Company or involving the validity
or enforceability of, or liability under, any provision of this Agreement, then
(regardless of the outcome thereof, unless it shall be determined by a court of
competent jurisdiction in a final, non-appealable decision or by an arbitrator
in an arbitration proceeding in a final, non-appealable decision that Employee's
employment was properly terminated for Cause within the meaning of and in
accordance with Section 2(ii) hereof), the Company shall reimburse Employee, on
a current basis, for all legal fees and expenses, if any, incurred by Employee
in connection with such contest or dispute, together with interest in an amount
equal to the three-month U. S. Treasury xxxx rate, from time to time in effect
but in no event higher than the maximum legal rate permissible under applicable
law, such interest to accrue from the date such payment(s) become due through
the date of payment thereof.
6. SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor, whether direct or indirect, by
purchase, merger, consolidation or otherwise, of all or substantially all of the
business and/or assets of the Company, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent as the Company would
have been required if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Employee to
compensation from the Company in the same amount and on the same terms as
Employee would be entitled hereunder if Employee terminated Employee's
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as
10
aforesaid that executes and delivers the agreement provided for in this
Section 6 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(ii) This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Employee should die
while any amounts would still be payable or benefits provided to Employee
hereunder if Employee had continued to live, all such amounts and benefits,
unless otherwise provided herein, shall be paid and continue to be provided in
accordance with the terms of this Agreement to Employee's beneficiary.
7. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or five days after deposit in the United
States mail, registered and return receipt requested, postage prepaid, addressed
to the respective addresses set forth on the last page of this Agreement,
provided that all notices to the Company shall be directed to the office of
corporate secretary of the Company, with a copy to the Secretary of the Company,
or to such other address as either party shall have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. CHANGE IN CONTROL. For purposes of this Agreement, a Change in Control
shall be deemed to have occurred upon, and shall mean:
(i) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of
either (1) the then outstanding shares of Common Stock of the Company (the
"Outstanding Company Common Stock") or (2) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); PROVIDED,
HOWEVER, that the following acquisitions shall not constitute a Change of
Control: (v) any acquisition directly from the Company (excluding an acquisition
by virtue of the exercise of a conversion privilege, (w) any acquisition by the
Company, (x) any acquisition by any employee benefit plan(s) (or related
trust(s)) sponsored or maintained by the Company or any corporation controlled
by the Company or (y) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, immediately following such
reorganization, merger or consolidation, the conditions described in clauses
(1), (2) and (3) of subparagraph (iii) of this Section 8 are satisfied, or (z)
any such acquisition if the Board of Directors of the Company determines in good
faith that a Person which has acquired more than a 25% interest in the
Outstanding Company Common Stock or the Outstanding Company Voting Securities
has done so inadvertently (including, without limitation, because such person
was unaware that it beneficially owned a 25% interest) and without any intention
of changing or influencing control of the Company, and such Person, as promptly
as practicable (but no longer than ninety days) after being advised of such
determination divested or divests himself or itself of beneficial ownership of a
sufficient amount such that such Person no longer has beneficial ownership of
25% or more of either the Outstanding Company Common Stock or the Outstanding
Company Voting Securities; or
11
(ii) Individuals who, as of the date hereof, constitute the Company's
Board of Directors (the "Incumbent Board"), cease for any reason to constitute
at least a majority of the Company's Board of Directors; PROVIDED, HOWEVER, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either (1) an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act), or an actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Company's Board
of Directors or (2) a plan or agreement to replace a majority of the members of
the Company's Board of Directors then comprising the Incumbent Board; or
(iii) Approval by the stockholders of the Company of a reorganization,
merger or consolidation, in each case unless, immediately following such
reorganization, merger or consolidation, (1) more than 60% of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation (including, without limitation, a
corporation which as a result of such transaction owns the Company through one
or more subsidiaries) and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (2) no Person (excluding the Company, any employee benefit
plan(s) (or related trust(s)) of the Company and/or its subsidiaries or any
Person beneficially owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 25% or more of the Outstanding Company
Common Stock or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly 25% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors and (3) at least a majority of the members of the
board of directors of the corporation resulting from such reorganization, merger
or consolidation were members of the Incumben Board at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the stockholders of the Company of (1) a complete
liquidation or dissolution of the Company or (2) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which immediately following such sale or other
disposition, (A) more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
12
Outstanding Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case
may be, (B) no Person (excluding the Company and any employee benefit plan
(or related trust) of the Company and/or its subsidiaries or such corporation
and any Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 25% or more of the Outstanding Company
Stock or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of, respectively, the
then outstanding shares of common stock of such corporation or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (C) at least a
majority of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Company's Board of Directors providing for such
sale or other disposition of assets of the Company.
9. EMPLOYMENT WITH AFFILIATES. Employment with the Company for purposes of
this Agreement includes employment with any entity in which the Company has a
direct or indirect ownership interest of 50% or more of the total combined
voting power of all outstanding equity interests, and employment with any entity
which has a direct or indirect interest of 50% or more of the total combined
voting power of all outstanding equity interests of the Company, it being
understood that for purposes of Section 2(iii)(A) hereof, "Good Reason" shall be
construed to refer to the Employee's positions, duties, responsibilities
(reporting and other), status, title, and office in the position or positions in
which the Employee serves immediately before the Change in Control, but shall
not include titles or positions with subsidiaries and affiliates of the Company
that are held primarily for administrative convenience.
10. MISCELLANEOUS. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by Employee and by the President or other authorized officer of the
Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provisions of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. VALIDITY. The interpretation, construction and performance of this
Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of Texas without regard to the principle of conflicts
of laws. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
12. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
13. DESCRIPTIVE HEADINGS. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement.
13
14. CORPORATE APPROVAL. This Agreement has been approved by the Board, and has
been duly executed and delivered by Employee and on behalf of the Company by its
duly authorized representative.
15. ARBITRATION.
(i) Except as otherwise provided in subparagraph (ii) below, any
dispute or controversy arising out of or in connection with this Agreement as
to the existence, construction, validity, interpretation or meaning,
performance, non-performance, enforcement, operation, breach, continuance or
termination thereof shall be submitted to arbitration pursuant to the
following procedure:
(A) Either party may demand such arbitration in writing after the
controversy arises, which demand shall include the name of the arbitrator
appointed by the party demanding arbitration, together with a statement of the
matter in controversy.
(B) Within 15 days after such demand, the other party shall name an
arbitrator, or in default thereof, such arbitrator shall be named by the
Arbitration Committee of the American Arbitration Association, and the two
arbitrators so selected shall name a third arbitrator within 15 days or, in lieu
of such agreement on a third arbitrator by the two arbitrators so appointed, a
third arbitrator shall be appointed by the Arbitration Committee of the American
Arbitration Association.
(C) The Company shall bear all arbitration costs and expenses.
(D) The arbitration hearing shall be held at a site in Houston,
Texas, to be agreed to by a majority of the arbitrators on 10 business days
prior written notice to the parties.
(E) The arbitration hearing shall be concluded within 10 days unless
otherwise ordered by a majority of the arbitrators, and the award thereon shall
be made within 10 days after the close of the submission of evidence. An award
rendered by a majority of the arbitrators appointed pursuant to this Agreement
shall be final and binding on all parties to the proceeding during the period of
this Agreement, and judgment on such award may be entered by either party in the
highest court, state or federal, having jurisdiction
(ii) During the pendency of any dispute or controversy pursuant to this
Section 15, the Company will continue to pay Employee (or reinstate) Employee's
Base Salary as in effect preceding the date the Notice of Termination giving
rise to the dispute was given or, if Employee's employment was terminated prior
to a Change in Control, the date of such termination of employment (whichever
date is applicable being the "Dispute Date") and continue (or reinstate)
Employee as a participant in all compensation and employee benefit plans in
which Employee was participating preceding the Dispute Date, until the dispute
is finally resolved. Notwithstanding the foregoing, the Employee shall be
entitled to specific performance of Employee's right to be paid during the
pendency of any dispute or controversy arising under or in connection with this
Agreement and the Employee's right to receive legal fees on a current basis as
provided in Section 5(ii) of this Agreement, and Employee may commence a legal
action
14
to enforce such right. The Company shall promptly (and in no event later
than ten (10) business days after demand) reimburse Employee for any expenses
reasonably incurred for attorneys' fees and disbursements in bringing such
action.
Amounts paid under this Section 15 are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce any other amounts
due under this Agreement.
(iii) Except as otherwise provided, the parties stipulate that the
provisions hereof shall be a complete defense to any suit, action or proceeding
instituted in any federal, state or local court or before any administrative
tribunal with respect to any controversy or dispute arising during the period of
this Agreement and which is arbitrable as herein set forth. The arbitration
provisions hereof shall, with respect to such controversy or dispute, survive
the termination of this Agreement.
16. WITHHOLDING. The Company may, to the extent required by law, withhold
applicable federal, state and local income and other taxes from any payments due
to the Employee hereunder.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other prior agreements concerning the effect of a
Change in Control on the relationship between the Company and Employee.
IN WITNESS WHEREOF, the Company and Employee have entered into this
Agreement as of the day and year first above written.
BJ SERVICES COMPANY
By:____________________________________
X. X. Xxxxxxx
President, Chairman and
Chief Executive Officer
EMPLOYEE
---------------------------------------
Addresses:
15
If to the Company:
BJ Services Company
0000 Xxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Secretary and General Counsel
If to the Employee:
---------------------------------------
---------------------------------------
---------------------------------------
16
Attachment A
WAIVER AND RELEASE AGREEMENT
By this Waiver and Release Agreement ("Release"), except as provided below
with respect to the Executive Severance Agreement, I, _________________________
__________________________, waive and release all rights, claims, charges,
demands and causes of action against BJ Services Company (the "Company"), its
subsidiaries and affiliates (collectively, the "Employer"), and their officers,
directors, employees and agents, of any kind or character, both past and
present, known or unknown, including those arising under any state or federal
statute, regulation or the common law (contract, tort or other), which relate to
my employment or termination of employment with the Employer, including any
alleged discriminatory employment practices, including age discrimination
claims, or which relate to any other matter whatsoever, except as set out
below.
In exchange for this Release, I acknowledge the right to good and
sufficient consideration in the form of benefits under the Executive
Severance Agreement between the Company and myself, dated ______________,
2000, which provides, inter alia, for a lump sum payment, the continuation of
certain welfare benefits and outplacement services. I understand that I am
not entitled to receive any benefits under the Executive Severance Agreement
except in return for this Release. However, this Release shall not serve to
waive or release any rights or claims that I may have under the Executive
Severance Agreement or that may arise after the date this Release is
executed. In addition, this release shall not serve to waive or release any
rights or claims that I may have with respect to (i) rights under stock-based
incentive plans arising in connection with a change in control, (ii) rights
under directors' and officers' indemnification insurance, (iii) rights of
indemnity under articles of incorporation, bylaws, contracts, law, or
otherwise, (iv) rights under Company-sponsored retirement plans, including,
without limitation "401(k)" plans and "Rabbi trusts", and (v) rights under
the Company's "KEYSOP" (Key Executive Stock Option Plan) and arrangements for
deferred compensation.
I acknowledge that the Employer has advised me to consult with an attorney
prior to executing this Release. I understand that anyone who succeeds to my
rights and responsibilities, such as my heirs or the executor of my estate,
shall also be bound by the terms of this Release.
This Release shall be interpreted and construed in accordance with and
shall be governed by the laws of the State of Texas, except to the extent that
Federal law may apply.
I acknowledge that I have carefully read this Release, that I have had the
opportunity to review it with my attorney, that I fully understand the
provisions and their final and binding effect, that the only promises made to me
to sign this Release are those stated herein, that this Release is the only
agreement of its kind arising out of my employment relationship with the
Employer and that I am signing this Release knowingly and voluntarily.
After having the opportunity to consider this Release as stated above, I
hereby accept the terms and conditions stated in it.
1
SIGNED AND ACCEPTED this _________day of _____________, 2000.
_________________________________________
EMPLOYEE'S SIGNATURE
SIGNED AND ACCEPTED this _______ day of _______________, 2000.
EMPLOYER
By:______________________________________
Name:____________________________________
Title:_____________________________________
2
