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EXHIBIT 10.7
EXECUTIVE SEVERANCE AGREEMENT
AGREEMENT by and between Keystone International, Inc. (the "Company")
and Xxxxx X. Xxxxx (the "Employee"), dated as of the 5th day of August, 1996.
The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Employee,
notwithstanding the possibility, threat, or occurrence of a Change of Control
(as defined below) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Employee by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control,
to encourage the Employee's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Employee with compensation arrangements upon a Change of Control
which provide the Employee with individual financial security and which are
competitive with those of other corporations and, in order to accomplish
these objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
(a) Certain Definitions. (a) The "Effective Date" shall be the
first date during the "Change of Control Period" (as defined in Section 1(b))
on which a Change of Control occurs. Anything in this Agreement to the
contrary notwithstanding, if the Employee's employment with the Company is
terminated involuntarily prior to the date on which a Change of Control occurs,
and it is reasonably demonstrated that such termination (1) was at the request
of a third party who has taken steps reasonably calculated to effect a Change
of Control or (2) otherwise arose in connection with or in
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anticipation of a Change of Control, then for all purposes of this Agreement
the "Effective Date" shall mean the date immediately prior to the date of such
termination
(b) The "Change of Control Period" is the period commencing on the
date hereof and ending on the fifth anniversary of such date.
2. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall mean:
(i) The acquisition (other than from the Company) by any person,
entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act"), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act), of 30%
or more of either the then outstanding shares of common stock or the combined
voting power of the Company's then outstanding voting securities entitled to
vote generally in the election of directors; or
(ii) Individuals who, as of the date hereof, constitute the Board
(as of the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided, however, that any person
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent
Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which
persons who were the stockholders of the Company
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immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of the combined voting power entitled
to vote generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, or a liquidation or
dissolution of the Company or of the sale of all or substantially all of the
assets of the Company; provided, however, that a judicially supervised
reorganization under 11 U.S.C. Section 101 et. seq. shall not be considered a
Change of Control.
3. Employment Period. The Company hereby agrees to continue the
Employee in its employ, and the Employee hereby agrees to remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement
for the period commencing on the Effective Date and ending on the second
anniversary of such date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties.
(i) During the Employment Period, (A) the Employee's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 90-day period immediately preceding the Effective Date and (B)
the Employee's services shall be performed at the location where the Employee
was employed immediately preceding the Effective Date or any office or location
which is the headquarters of the Company and is less than thirty-five (35)
miles from such pre-Effective Date location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Employee hereunder, to use the Employee's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it
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shall not be a violation of this Agreement for the Employee to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C)
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Employee's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Employee prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Employee's responsibilities to the
Company.
(b) Compensation. (i) Base Salary. During the Employment Period,
the Employee shall receive an annual base salary (the "Annual Base Salary")
which shall be paid in equal installments on a monthly basis (or pursuant to
the Company's normal payroll practices, if different), at least equal to twelve
times the highest monthly base salary paid or payable to the Employee by the
Company and its affiliates in respect of the twelve month period immediately
preceding the month in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be substantially
consistent with increases in base salary awarded in the ordinary course of
business to other key employees of the Company and its affiliates. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Employee under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used
in this Agreement, the term "affiliates" shall include any company controlled
by, controlling or under common control with the Company.
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(ii) Annual Bonus. In addition to Annual Base Salary, the Employee
shall be awarded, for each fiscal year during the Employment Period, an annual
bonus (an "Annual Bonus") in cash (or cash and stock if the Employee is then
required to take a percentage of his bonus in stock pursuant to the Company's
executive stock ownership policy) at least equal to the highest annual bonus
payable to the Employee from the Company and its subsidiaries in respect of the
three fiscal years immediately preceding the fiscal year in which the Effective
Date occurs (or the annualized bonus for any fiscal year consisting of less
than twelve full months or with respect to which the Employee has been employed
by the Company for less than twelve full months).
(iii) Incentives Savings and Retirement Plans. In addition to
Annual Base Salary and Annual Bonus payable as herein provided, the Employee
shall be entitled to participate during the Employment Period in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other key employees of the Company and its subsidiaries. Such
plans, practices, policies and programs, in the aggregate, shall provide the
Employee with compensation, benefits and reward opportunities at least as
favorable as the most favorable of such compensation, benefits and reward
opportunities provided by the Company for the Employee under such plans,
practices, policies and programs as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Employee, as provided at any time thereafter with respect to other key
employees of the Company and its subsidiaries.
(iv) Welfare Benefit Plans. During the Employment Period, the
Employee and/or the Employee's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs), at least as
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favorable as the most favorable of such plans, practices, policies and programs
in effect at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Employee and/or the Employee's
family, as in effect at any time thereafter with respect to other key employees
of the Company and its subsidiaries.
(v) Expenses. During the Employment Period, the Employee shall be
entitled to receive prompt reimbursement for all reasonable employment expenses
incurred by the Employee in accordance with the most favorable policies,
practices and procedures of the Company and its subsidiaries in effect at any
time during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Employee, as in effect at any time thereafter with
respect to other key employees of the Company and its subsidiaries.
(vi) Fringe Benefits. During the Employment Period, the Employee
shall be entitled to fringe benefits in accordance with the most favorable
plans, practices, programs and policies of the Company and its subsidiaries in
effect at any time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Employee, as in effect at any time thereafter
with respect to other key employees of the Company and its subsidiaries.
(vii) Office and Support Staff. During the Employment Period, the
Employee shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Employee by
the Company and its subsidiaries at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Employee,
as provided at any time thereafter with respect to other key employees of the
Company and its subsidiaries.
(viii) Vacation. During the Employment Period, the Employee shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company
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and its subsidiaries as in effect for the Employee at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Employee, as in effect at any time thereafter with respect to other key
employees of the Company and its subsidiaries.
5. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Employee's death
during the Employment Period. If the Company determines in good faith that
Disability of the Employee has occurred during the Employment Period (pursuant
to the definition of "Disability" set forth below), it may give to the Employee
written notice of its intention to terminate the Employee's employment. In
such event, the Employee's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the Employee (the
"Disability Effective Date"), provided that, within the 30 days after such
receipt, the Employee shall not have returned to full-time performance of the
Employee's duties. For purposes of this Agreement, "Disability" shall mean the
absence of the Employee from the Employee's duties with the Company on a
full-time basis for 180 calendar days as a result of incapacity due to mental
or physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Employee or the Employee's legal representatives (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Employee's employment
during the Employment Period for "Cause." For purposes of this Agreement,
"Cause" means (i) an act or acts of personal dishonesty taken by the Employee
and intended to result in personal enrichment of the Employee at the expense of
the Company, (ii) repeated material breaches by the Employee of the Employee's
obligations under Section 4(a) of this Agreement (other than as a result of
incapacity due to physical or mental illness) which are demonstrably willful
and deliberate on the Employee's part and
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which are not remedied in a reasonable period of time after receipt of written
notice from the Company specifying such breach or (iii) the conviction of the
Employee of a felony.
(c) Good Reason. The Employee's employment may be terminated by
the Employee during the Employment Period for Good Reason. For purposes of
this Agreement, "Good Reason" means:
(i) the assignment to the Employee of any duties
inconsistent in any respect with the Employee's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 4(a) of this Agreement,
or any other action by the Company or any affiliate which results in a
diminution in such position, authority, duties or responsibilities,
excluding for this purpose 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 the Employee;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Employee;
(iii) the Company's requiring the Employee to be based at
any office or location other than that described in Section 4(a)(i)(B)
hereof, except for travel reasonably required in the performance of
the Employee's responsibilities;
(iv) any purported termination by the Company of the
Employee's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
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For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Employee shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause or by the Employee for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Employee's
employment under the provisions so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
fifteen (15) days after the giving of such notice). The failure by the
Employee or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Employee or the Company hereunder or preclude the
Employee or the Company from asserting such fact or circumstance in enforcing
the Employee's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if the Employee's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Employee of
such termination, and (ii) if the Employee's employment is terminated by reason
of death or Disability, the Date shall be the date of death of the Employee or
the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination. (a) Good Reason;
Other than for Cause, Death or Disability. If, during the Employment Period,
the Company shall terminate the
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Employee's employment other than for Cause, Disability or death or if the
Employee shall terminate his employment for Good Reason:
(i) the Company shall pay to the Employee in a lump sum
in cash within 30 days after the Date of Termination the
aggregate of the following amounts;
(A) to the extent not theretofore paid, the
Employee's Annual Base Salary through the Date of
Termination; and
(B) the product of (x) the Annual Bonus (computed
as if any bonus amount paid in stock pursuant to the Company's
executive stock ownership policy was paid in cash) paid to the
Employee for the last full fiscal year (if any) ending during
the Employment Period or, if higher, the Annual Bonus paid to
the Employee for the last full fiscal year prior to the
Effective Date (as applicable, the "Recent Bonus") and (y) a
fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination and the
denominator of which is 365; and
(C) in the case of compensation previously
deferred by the Employee, all amounts previously deferred
(together with any accrued interest thereon) and not yet paid
by the Company, and any accrued vacation pay not yet paid by
the Company (the sum of the amounts in clauses (A), (B), and
(C) shall be hereinafter referred to as the "Accrued
Obligations"); and
(D) the product of (x) 2.00 and (y) the sum of
(i) the Annual Base Salary and the Recent Bonus; and
(E) all amounts in the Employee's retirement plan
accounts which will become fully vested upon the Date of
Termination notwithstanding the existing vesting schedule; and
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(ii) for two years from the Date of Termination, or such
longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Employee
and/or the Employee's family at least equal to those which
would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv)
of this Agreement if the Employee's employment had not been
terminated, including health insurance and life insurance, in
accordance with the most favorable plans, practices, programs
or policies of the Company and its subsidiaries during the
90-day period immediately preceding the Effective Date or, if
more favorable to the Employee, as in effect at any time
thereafter with respect to other key employees of the Company
and its subsidiaries and their families and for purposes of
eligibility for retiree benefits pursuant to such plans,
practices, programs and policies, the Employee shall be
considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such
period. If the terms of any benefit plan referred to in this
section do not permit continued participation by the Employee,
then the Company will arrange for other coverage, providing
substantially similar benefits.
(iii) all options and similar awards granted to Employee by
the Company shall immediately vest notwithstanding any vesting
schedule in any option or award agreement.
(b) Death. If the Employee's employment is terminated by reason
of the Employee's death during the Employment Period, this Agreement shall
terminate without further obligations to the Employee's legal representatives
under this Agreement, other than payment of the Accrued Obligations. All such
Accrued Obligations shall be paid to the Employee's estate or beneficiary, as
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applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination. Anything in this Agreement to the contrary notwithstanding, the
Employee's family shall be entitled to receive benefits at least equal to the
most favorable benefits provided by the Company and any of its subsidiaries to
surviving families of employees of the Company and such subsidiaries under such
plans, programs, practices and policies relating to family death benefits, if
any, in accordance with the most favorable plans, programs, practices and
policies of the Company and its subsidiaries in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Employee and/or the Employee's family, as in effect on the date of the
Employee's death with respect to other key employees of the Company and its
subsidiaries and their families.
(c) Disability. If the Employee's employment is terminated by
reason of the Employee's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Employee, other
than payment of all Accrued Obligations. All such Accrued Obligations shall be
paid to the Employee in a lump sum in cash within 30 days of the Date of
Termination. Anything in this Agreement to the contrary notwithstanding, the
Employee shall also be entitled after the Disability Effective Date to receive
disability and other benefits at least equal to the most favorable of those
provided by the Company and its subsidiaries to disabled employees and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, in accordance with the most favorable plans,
programs, practices and policies of the Company and its subsidiaries in effect
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Employee and/or the Employee's family, as in
effect at any time thereafter with respect to other key employees of the
Company and its subsidiaries and their families.
(d) Cause; Other than for Good Reason. If the Employee's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further
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obligations to the Employee other than the obligation to pay to the Employee
the Annual Base Salary through the Date of Termination plus the amount of any
compensation previously deferred by the Employee (together with accrued
interest thereon) in each case to the extent theretofore unpaid. If the
Employee terminates employment other than for Good Reason, this Agreement shall
terminate without further obligations to the Employee, other than those
obligations accrued or earned and vested (if applicable) by the Employee
through the Date of Termination, including for this purpose, all Accrued
Obligations. All such Accrued Obligations shall be paid to the Employee in a
lump sum in cash within 30 days of the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or practices
provided by the Company or any of its subsidiaries and for which the Employee
may qualify, nor shall anything herein limit or otherwise affect such rights as
the Employee may have under any stock option or other agreements with the
Company or any of its subsidiaries. Amounts which are vested benefits or which
the Employee is otherwise entitled to receive under any plan, policy, practice
or program of the Company or any of its subsidiaries at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program.
8. Full Settlement; Resolution of Disputes. (a) 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 set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Employee or others. In no event shall the
Employee be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Employee under any of the
provisions of this Agreement. The Company agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Employee may incur as a
result of any
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contest (regardless of the outcome thereof) by the Company or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof, plus in each case interest
at the applicable Federal rate provided for in Section 7872(f)(2) of the Code
for any period during which the Company is in default in its obligation to make
any payment hereunder.
(b) If there shall be any dispute between the Company and the
Employee (i) in the event of any termination of the Employee's employment by
the Company, whether such termination was for Cause, or (ii) in the event of
any termination of employment by the Employee, whether Good Reason existed,
then, unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or that
the determination by the Employee of the existence of Good Reason was not made
in good faith, the Company shall pay all amounts, and provide all benefits, to
the Employee's family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 6 as though
such termination were by the Company without Cause or by the Employee for Good
Reason; provided, however, that the Company shall not be required to pay any
disputed amounts pursuant to this paragraph except upon receipt of an
undertaking by or on behalf of the Employee to repay all such amounts to which
the Employee is ultimately adjudged by such court not to be entitled.
9. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") or any interest or
penalties 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 Employee shall be
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entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Employee of all taxes, including any income or
Excise Tax imposed upon the Gross-Up Payment, the net amount payable to
Employee hereunder shall be equal to the aggregate amount Employee would have
received hereunder if such Excise Tax were not applicable.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment, shall be made by Xxxxxx
Xxxxxxxx & Co. (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Employee within 25 days of the Date of
Termination, if applicable, or such earlier time as is requested by the
Company. The initial Gross-Up Payment, if any, as determined pursuant to this
Section 9(b), shall be paid to the Employee within 5 days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable to the Employee, it shall furnish the Employee with an
opinion that he has substantial authority not to report any Excise Tax on his
federal income tax return. Any determination by the Accounting Firm shall be
binding upon the Company and the Employee. 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. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the 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 the Employee.
(c) The Employee shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up
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Payment. Such notification shall be given as soon as practicable but no later
than ten business days after the Employee knows of such claim and shall apprise
the Company of the nature of such claim and the date on which such claim is
requested to be paid. The Employee shall not pay such claim prior to the
expiration of the thirty-day period following the date on which the 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). If the Company
notifies the Employee in writing prior to the expiration of such period that it
desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim 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;
(iii) cooperate with the Company in good faith in order effectively
to contest such claim;
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including attorneys fees and any additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Employee harmless, on an after-tax basis, for any Excise Tax or income 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 9(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo 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 the Employee to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and the Employee
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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 the Company shall determine; provided, however, that if the Company
directs the Employee to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to the Employee, on an interest-free basis
and shall indemnify and hold the Employee harmless, on an after-tax basis, from
any Excise Tax or income 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
the Employee with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, 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 the 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 authority.
(d) If, after the receipt by the Employee of an amount advanced by
the Company pursuant to Section 9(c), the Employee becomes entitled to receive
any refund with respect to such claim, the Employee shall (subject to the
Company's complying with the requirements of Section 9(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Employee
of an amount advanced by the Company pursuant to Section 9(c), a determination
is made that the Employee shall not be entitled to any refund with respect to
such claims and the Company does not notify the Employee in writing of its
intent to contest such denial of refund prior to the expiration of thirty 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.
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10. Confidential Information. The Employee shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
subsidiaries, and their respective businesses, which shall have been obtained
by the Employee during the Employee's employment by the Company or any of its
subsidiaries and which shall not be or become public knowledge (other than by
acts by the Employee or his representatives in violation of this Agreement).
After termination of the Employee's employment with the Company, the Employee
shall not, without the prior written consent of the Company, communicate or
divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Employee under this Agreement.
11. Successors. (a) This Agreement is personal to the Employee and
without the prior written consent of the Company shall not be assignable by the
Employee otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Employee's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets.
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12. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee:
Xxxxx X. Xxxxx
Keystone International, Inc.
0000 Xxxx Xxxx Xxxx Xxxx
Xxxxxxx, Xxxxx, 00000
If to the Company:
Keystone International, Inc.
0000 Xxxx Xxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Board of Directors
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressees.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
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(e) The Employee's or the Company's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a waiver of such
provision or any other provision hereof.
(f) This Agreement contains the entire understanding of the
Company and the Employee with respect to the subject matter hereof.
(g) The Employee and the Company acknowledge the employment of the
Employee by the Company is "at will", and, prior to the Effective Date, may be
terminated by either the Employee or the Company at any time. Upon a
termination of the Employee's employment prior to the Effective Date, there
shall be no further rights under this Agreement.
IN WITNESS WHEREOF, the Employee has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx X. Xxxxx
KEYSTONE INTERNATIONAL, INC.
By: /s/ Nishan Teshoian
--------------------------------
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