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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into between
Southdown, Inc., a Louisiana corporation ("Company"), and ____________, a
resident of [Houston, Xxxxxx] County, Texas ("Executive"), effective as of
_________, 1997. The Company and the Executive are sometimes referred to
herein as the "Parties."
1. Introduction. In connection with the revision of existing
employment agreements, the Company believes that the assurance of the
Executive's continued employment by the Company and the benefit of his business
experience are of material importance. Therefore, the Company and the
Executive intend by this Agreement to rescind any existing employment
agreement and to specify the terms and conditions of the Executive's continuing
employment relationship with the Company.
2. Employment. The Company hereby employs the Executive and the
Executive hereby accepts continuing employment with the Company upon the terms
and conditions set forth herein.
3. Duties and Responsibilities.
3.1. Extent of Service. The Executive shall, during the term
of this Agreement, devote such of his entire time, attention, energies and
business efforts to his duties as an executive of the Company as are reasonably
necessary to carry out his duties specified in Paragraph 3.2 below. The
Executive shall not, during the term of this Agreement, engage in any other
business activity (whether or not such business activity is pursued for gain,
profit or other pecuniary advantage) if such business activity would impair the
Executive's ability to carry out his duties hereunder. This Paragraph 3.1,
however, shall not be construed to prevent the Executive from investing his
personal assets as a passive investor in such form or manner as will not
contravene the Company's Statement of Policy Regarding Corporate Ethics and
Conflicts of Interest ( "Policy Statement").
3.2. Position and Duties. Subject to the power of the Board of
Directors of the Company to elect and remove officers, the Executive shall
serve the Company as ____________ (or in such other office of comparable or
greater responsibility as the Board of Directors of the Company may determine)
and shall perform, faithfully and diligently, the services and functions
relating to such office or otherwise reasonably incident to such office as may
be designated from time to time by the Board of Directors of the Company;
provided that all such services and functions shall be reasonable and within
the Executive's area of expertise; and provided further that the Executive
shall be physically capable of performing the essential requirements of the job
with or without reasonable accommodation.
3.3. Place of Employment. During the term of this Agreement,
the Company shall maintain its principal executive offices in the greater
Houston, Texas area, and the Executive's primary place of employment shall be
at such principal executive offices. During the term of this Agreement, the
Company will provide the Executive with a private office, an executive
secretary
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and other customary staff support services, all as are commensurate with the
services and functions to be performed by him hereunder.
4. Salary and Other Benefits. Subject to the terms and conditions
of this Agreement:
4.1. Salary. As compensation for his services under and during
the term of his employment under this Agreement, the Executive shall be paid an
annual salary of not less than $__________, payable in accordance with the then
current payroll policies of the Company. Such salary shall be subject to
increase by the Board of Directors of the Company (or the appropriate committee
thereof) from time to time. The annual salary payable from time to time by the
Company to the Executive pursuant to this Paragraph 4.1 is herein sometimes
referred to as his "Base Salary."
4.2. Other Benefits. As long as the Executive is employed by
the Company, the Executive shall be entitled to receive the following benefits
in addition to his Base Salary:
(a) The Executive shall be entitled to participate in
the Company's discretionary bonus plan (the "Bonus Plan") for senior management
of the Company and its consolidated subsidiaries, pursuant to which he shall be
paid each year such additional compensation by way of bonus as the Board of
Directors of the Company (or the appropriate committee thereof) in its sole
discretion shall authorize or agree to pay, payable on such terms and
conditions as it shall determine.
(b) The Executive shall have the right to participate
in all group benefit and applicable retirement plans of the Company (including
without limitation, disability, accident, medical, life insurance,
hospitalization and pension), all in accordance with the Company's regular
practices with respect to its senior officers.
(c) The Executive shall be entitled to
reimbursement from the Company for reasonable out-of-pocket expenses incurred
by him in the course of the performance of his duties hereunder.
(d) The Company shall provide the Executive with an
automobile allowance in the amount of $1,000 per month, subject to statutory
withholdings. Executive shall bear all expenses incurred in connection with
owning or operating his personal automobile.
(e) In order to promote the interests of the Company,
the Company shall reimburse the Executive for the initiation fees and all
annual dues incurred by him in connection with his membership in one luncheon
club and one country club as may be agreed upon by the Executive and the
Company (and the Company agrees to post any bond required by such clubs and
each such bond will remain the property of the Company).
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(f) The Company shall reimburse Executive an amount up
to $5,000 per year for personal financial, tax and estate planning.
(g) The Executive shall be entitled to such vacation,
holidays and other paid or unpaid leaves of absence as are consistent with the
Company's normal policies or as are otherwise approved by the Company's Board
of Directors (or the appropriate committee thereof).
5. Term. The term of this Agreement shall be for one year and shall
be automatically extended each day, from ___________, 1997.
6. Termination and Resignation. The Company shall have the right to
terminate the Executive's employment hereunder at any time and for any reason,
and upon any such termination the Executive shall be entitled to receive from
the Company prompt payment of the amount determined pursuant to the applicable
subparagraph of Paragraph 7 below. The Executive shall have the right to
terminate his employment hereunder at any time by resignation, and he shall
thereupon be entitled to receive from the Company prompt payment of the amount
determined pursuant to the applicable subparagraph of Paragraph 7 below.
7. Payments Upon Termination and Resignation.
7.1. Pro Rata Payment. In the event of the following:
(i) the Company terminates the Executive's employment for Cause (as
defined below),
(ii) the Executive dies or becomes disabled (being the inability of
the Executive to perform the essential requirements of the job with or
without reasonable accommodation),
(iii) the Executive resigns prior to the occurrence of a Change in
Control (as defined below) of the Company at a time when there is no
uncured breach by the Company of any term of this Agreement, or
(iv) the Executive resigns after the occurrence of a Change in Control
for any reason other than for Good Reason (as defined below);
then in each case the Executive shall be entitled to receive only his Base
Salary on a pro rata basis to the date of termination or resignation.
7.2. Base Salary Payment. If prior to the occurrence of a
Change in Control (i) the Company terminates the Executive's employment for any
reason other than for Cause or the Executive's death or disability or (ii) the
Executive resigns because of the breach by the Company of any term of this
Agreement (but only if such breach is not remedied by the Company promptly
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after it receives notice thereof from Executive), then in each case the
Executive shall be entitled to receive a lump sum payment equal to two times
his Base Salary.
7.3. Multiple Base Salary Payment. If after the occurrence of
a Change in Control of the Company, (a) the Company terminates the Executive's
employment hereunder for any reason other than for Cause, or (b) the Executive
voluntarily resigns his employment hereunder for Good Reason within one year
(as defined below) of the Change in Control, then in each case the Company will
pay to the Executive a lump sum termination payment equal to 2.99 times the sum
of his Base Salary and his Target Bonus (as defined below) (collectively, the
"Lump Sum Payment"), subject to adjustment as provided in Paragraph 9 below.
7.4. Certain Definitions.
(a) "Target Bonus" shall mean the target bonus for
Executive specified under the Company's Bonus Plan (as defined in Paragraph
4.2(a)) for the year in which a Change in Control of the Company occurs.
(b) Termination by the Company of the Executive's
employment for "Cause" shall mean termination upon the willful misappropriation
of funds or properties of the Company or the willful contravention of the
standards referred to in the last sentence of Paragraph 10 below. For purposes
of this definition, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by the Executive not
in good faith and without reasonable belief that the Executive's action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board of Directors of the Company at a meeting
of the Board duly called and held (after reasonable notice to the Executive and
an opportunity for the Executive, together with his counsel, to be heard before
the Board) finding that in the good faith opinion of the Board the Executive
was guilty of the conduct set forth above and specifying the particulars
thereof in detail.
(c) A "Change in Control" shall be conclusively deemed
to have occurred if (and only if) any of the following shall have taken place:
(i) a change in control is reported by the Company in response to either Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or Item 1 of Form 8-K
promulgated under the Exchange Act, or any similar reporting requirement
hereafter promulgated by the Securities and Exchange Commission; (ii) any
person, entity or group (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than any employee benefit plan sponsored by the
Company, is or becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent or more of the combined voting power of the
Company's then outstanding securities (as determined under
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paragraph (d) of Rule 13d-3 promulgated under the Exchange Act, in the case of
rights to acquire common stock); or (iii) following the election or removal of
directors, a majority of the Board consists of individuals who were not members
of the Board two years before such election or removal, unless the election of
each director who was not a director at the beginning of such two-year period
has been approved in advance by directors representing at least a majority of
the directors then in office who were directors at the beginning of the two-
year period.
(d) "Good Reason" shall mean, in any case only if an
action or event described in this Paragraph 7.4(d) is not remedied by the
Company promptly after it receives notice thereof from Executive,
(i) the assignment to the Executive of any duties
substantially inconsistent with the Executive's position
(including offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by
Paragraph 3.2 hereof;
(ii) the failure of the Company to comply with any of the
provisions of Section 4.2 hereof; or
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Paragraph 3.3 hereof
.
8. Acceleration of Options. Contemporaneously with the occurrence
of a Change in Control of the Company, the Board of Directors of the Company
(or the appropriate committee thereof) will accelerate all outstanding options
previously granted to the Executive under any then existing Company stock
option, stock appreciation or other employee incentive plan that are not
otherwise exercisable by the Executive at the time the Change in Control of the
Company occurs.
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 or any of its affiliates to or for the benefit of
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (any such payments or distributions
being individually referred to herein as a "Payment," and any two or more of
such payments or distributions being referred to herein as "Payments"), would
be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended ("Code") (such excise tax, together with any interest
thereon, any penalties, additions to tax, or additional amounts with respect to
such excise tax, and any interest in respect of such penalties, additions to
tax or additional amounts, being collectively referred herein to as the "Excise
Tax"), then Executive shall be entitled to receive and the Company shall make
an additional payment or payments (individually referred to herein as a "Gross-
Up Payment," and any two or more of such additional payments being referred to
herein as "Gross-Up Payments") in an
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amount such that after payment by Executive of all taxes (as defined in
Paragraph 9(k) imposed upon the Gross-Up Payment, Executive retains an amount
of such Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Paragraph 9(c) through (i),
any determination (individually, a "Determination") required to be made under
Paragraphs 9(a) or 9(b), including whether a Gross-Up Payment is required and
the amount of such Gross-Up Payment, shall initially be made, at the Company's
expense, by nationally recognized tax counsel mutually acceptable to the
Company and Executive ("Tax Counsel"). Tax Counsel shall provide detailed
supporting legal authorities, calculations, and documentation both to the
Company and Executive within 15 business days of the termination of Executive's
employment, if applicable, or such other time or times as is reasonably
requested by the Company or Executive. If Tax Counsel makes the initial
Determination that no Excise Tax is payable by Executive with respect to a
Payment or Payments, it shall furnish Executive with an opinion that no Excise
Tax will be imposed with respect to any such Payment or Payments. Executive
shall have the right to dispute any Determination (a "Dispute") within 15
business days after delivery of Tax Counsel's opinion with respect to such
Determination. The Gross-Up Payment, if any, as determined pursuant to such
Determination shall, at the Company's expense, be paid by the Company to
Executive within five business days of Executive's receipt of such
Determination. The existence of a Dispute shall not in any way affect
Executive's right to receive the Gross-Up Payment in accordance with such
Determination. If there is no Dispute, such Determination shall be binding,
final and conclusive upon the Company and Executive, subject in all respects,
however, to the provisions of Paragraph 9(c) through (i) below. As a result of
the uncertainty in the application of Sections 4999 and 280G of the Code, it is
possible that Gross-Up Payments (or portions thereof) which will not have been
made by the Company should have been made ("Underpayment"), and if upon any
reasonable written request from Executive or the Company to Tax Counsel, or
upon Tax Counsel's own initiative, Tax Counsel, at the Company's expense,
thereafter determines that Executive is required to make a payment of any
Excise Tax or any additional Excise Tax, as the case may be, Tax Counsel shall,
at the Company's expense, determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to
Executive.
(c) The Company shall defend, hold harmless, and indemnify
Executive on a fully grossed-up after tax basis from and against any and all
claims, losses, liabilities, obligations, damages, impositions, assessments,
demands, judgments, settlements, costs and expenses (including reasonable
attorneys', accountants', and experts' fees and expenses) with respect to any
tax liability of Executive resulting from any Final Determination (as defined
in Paragraph 9(j)) that any Payment is subject to the Excise Tax.
(d) If a party hereto receives any written or oral
communication with respect to any question, adjustment, assessment or pending
or threatened audit, examination, investigation or administrative, court or
other proceeding which, if pursued successfully, could result in or give rise
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to a claim by Executive against the Company under this Paragraph 9(d)
("Claim"), including, but not limited to, a claim for indemnification of
Executive by the Company under Paragraph 9(c), then such party shall promptly
notify the other party hereto in writing of such Claim ("Tax Claim Notice").
(e) If a Claim is asserted against Executive ("Executive
Claim"), Executive shall take or cause to be taken such action in connection
with contesting such Executive Claim as the Company shall reasonably request in
writing from time to time, including the retention of counsel and experts as
are reasonably designated by the Company (it being understood and agreed by the
parties hereto that the terms of any such retention shall expressly provide
that the Company shall be solely responsible for the payment of any and all
fees and disbursements of such counsel and any experts) and the execution of
powers of attorney, provided that:
(i) within 30 calendar days after the Company receives
or delivers, as the case may be, the Tax Claim Notice relating to such
Executive Claim (or such earlier date that any payment of the taxes
claimed is due from Executive, but in no event sooner than five calendar
days after the Company receives or delivers such Tax Claim Notice), the
Company shall have notified Executive in writing ("Election Notice")
that the Company does not dispute its obligations (including, but not
limited to, its indemnity obligations) under this Agreement and that the
Company elects to contest, and to control the defense or prosecution of,
such Executive Claim at the Company's sole risk and sole cost and
expense; and
(ii) the Company shall have advanced to Executive on an
interest-free basis, the total amount of the tax claimed in order for
Executive, at the Company's request, to pay or cause to be paid the tax
claimed, file a claim for refund of such tax and, subject to the
provisions of the last sentence of Paragraph 9(g), xxx for a refund of
such tax if such claim for refund is disallowed by the appropriate
taxing authority (it being understood and agreed by the parties hereto
that the Company shall only be entitled to xxx for a refund and the
Company shall not be entitled to initiate any proceeding in, for
example, United States Tax Court) and shall indemnify and hold Executive
harmless, on a fully grossed-up after tax basis, from any tax imposed
with respect to such advance or with respect to any imputed income with
respect to such advance; and
(iii) the Company shall reimburse Executive for any and
all costs and expenses resulting from any such request by the Company
and shall indemnify and hold Executive harmless, on fully grossed-up
after-tax basis, from any tax imposed as a result of such reimbursement.
(f) Subject to the provisions of Paragraph 9(e), hereof, the
Company shall have the right to defend or prosecute, at the sole cost, expense
and risk of the Company, such Executive Claim by all appropriate proceedings,
which proceedings shall be defended or prosecuted diligently
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by the Company to a Final Determination; provided, however, that (i) the
Company shall not, without Executive's prior written consent, enter into any
compromise or settlement of such Executive Claim that would adversely affect
Executive, (ii) any request from the Company to Executive regarding any
extension of the statute of limitations relating to assessment, payment, or
collection of taxes for the taxable year of Executive with respect to which the
contested issues involved in, and amount of, the Executive Claim relate is
limited solely to such contested issues and amount, and (iii) the Company's
control of any contest or proceeding shall be limited to issues with respect to
the Executive Claim and Executive shall be entitled to settle or contest, in
his sole and absolute discretion, any other issue raised by the Internal
Revenue Service or any other taxing authority. So long as the Company is
diligently defending or prosecuting such Executive Claim, Executive shall
provide or cause to be provided to the Company any information reasonably
requested by the Company that relates to such Executive Claim, and shall
otherwise cooperate with the Company and its representatives in good faith in
order to contest effectively such Executive Claim. The Company shall keep
Executive informed of all developments and events relating to any such
Executive Claim (including, without limitation, providing to Executive copies
of all written materials pertaining to any such Executive Claim), and Executive
or his authorized representatives shall be entitled, at Executive's expense, to
participate in all conferences, meetings and proceedings relating to any such
Executive Claim.
(g) If, after actual receipt by Executive of an amount of a
tax claimed (pursuant to an Executive Claim) that has been advanced by the
Company pursuant to Paragraph 9(e)(ii), hereof, the extent of the liability of
the Company hereunder with respect to such tax claimed has been established by
a Final Determination, Executive shall promptly pay or cause to be paid to the
Company any refund actually received by, or actually credited to, Executive
with respect to such tax (together with any interest paid or credited thereon
by the taxing authority and any recovery of legal fees from such taxing
authority related thereto), except to the extent that any amounts are then due
and payable by the Company to Executive, whether under the provisions of this
Agreement or otherwise. If, after the receipt by Executive of an amount
advanced by the Company pursuant to Paragraph 9(e)(ii), a determination is made
by the Internal Revenue Service or other appropriate taxing authority that
Executive shall not be entitled to any refund with respect to such tax claimed
and the Company does not notify Executive 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 any Gross-Up Payments and other payments required to be paid
hereunder.
(h) With respect to any Executive Claim, if the Company fails
to deliver an Election Notice to Executive within the period provided in
Paragraph 9(e)(i), hereof or, after delivery of such Election Notice, the
Company fails to comply with the provisions of Paragraph 9(e)(ii), and (iii)
and (f) hereof, then Executive shall at any time thereafter have the right (but
not the obligation), at his election and in his sole and absolute discretion,
to defend or prosecute, at the sole cost, expense and risk of the Company, such
Executive Claim. Executive shall have full control of such defense
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or prosecution and such proceedings, including any settlement or compromise
thereof. If requested by Executive, the Company shall cooperate, and shall
cause its affiliates to cooperate, in good faith with Executive and his
authorized representatives in order to contest effectively such Executive
Claim. The Company may attend, but not participate in or control, any defense,
prosecution, settlement or compromise of any Executive Claim controlled by
Executive pursuant to this Paragraph 9(h) and shall bear its own costs and
expenses with respect thereto. In the case of any Executive Claim that is
defended or prosecuted by Executive, Executive shall, from time to time, be
entitled to current payment, on a fully grossed-up after tax basis, from the
Company with respect to costs and expenses incurred by Executive in connection
with such defense or prosecution.
(i) In the case of any Executive Claim that is defended or
prosecuted to a Final Determination pursuant to the terms of this Paragraph
9(i), the Company shall pay, on a fully grossed-up after tax basis, to
Executive in immediately available funds the full amount of any taxes arising
or resulting from or incurred in connection with such Executive Claim that have
not theretofore been paid by the Company to Executive, together with the costs
and expenses, on a fully grossed-up after tax basis, incurred in connection
therewith that have not theretofore been paid by the Company to Executive,
within ten calendar days after such Final Determination. In the case of any
Executive Claim not covered by the preceding sentence, the Company shall pay,
on a fully grossed-up after tax basis, to Executive in immediately available
funds the full amount of any taxes arising or resulting from or incurred in
connection with such Executive Claim at least ten calendar days before the date
payment of such taxes is due from Executive, except where payment of such taxes
is sooner required under the provisions of this Paragraph 9(i), in which case
payment of such taxes (and payment, on a fully grossed-up after tax basis, of
any costs and expenses required to be paid under this Paragraph 9(i) shall be
made within the time and in the manner otherwise provided in this Paragraph
9(i).
(j) For purposes of this Agreement, the term "Final
Determination" shall mean (A) a decision, judgment, decree or other order by a
court or other tribunal with appropriate jurisdiction, which has become final
and non-appealable; (B) a final and binding settlement or compromise with an
administrative agency with appropriate jurisdiction, including, but not limited
to, a closing agreement under Section 7121 of the Code; (C) any disallowance of
a claim for refund or credit in respect to an overpayment of tax unless a suit
is filed on a timely basis; or (D) any final disposition by reason of the
expiration of all applicable statutes of limitations.
(k) For purposes of this Agreement, the terms "tax" and
"taxes" mean any and all taxes of any kind whatsoever (including, but not
limited to, any and all Excise Taxes, income taxes, and employment taxes),
together with any interest thereon, any penalties, additions to tax, or
additional amounts with respect to such taxes and any interest in respect of
such penalties, additions to tax, or additional amounts.
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(l) For purposes of this Agreement, the terms "affiliate" and
"affiliates" mean, when used with respect to any entity, individual, or other
person, any other entity, individual, or other person which, directly or
indirectly, through one or more intermediaries controls, or is controlled by,
or is under common control with such entity, individual or person. The term
"control" and derivations thereof when used in the immediately preceding
sentence means the ownership, directly or indirectly, of 50% or more of the
voting securities of an entity or other person or possessing the power to
direct or cause the direction of the management and policies of such entity or
other person, whether through the ownership of voting securities, by contract
or otherwise.
10. Preservation of Business; Fiduciary Responsibility. The
Executive shall use his best efforts to preserve the business and organization
of the Company and the Company's consolidated subsidiaries (collectively, the
"Consolidated Company"), to keep available to the Consolidated Company the
services of present employees and to preserve the business relations of the
Consolidated Company with suppliers, distributors, customers and others. The
Executive shall not commit any act, or in any way assist others to commit any
act, which would injure the Consolidated Company. So long as the Executive is
employed by the Company, the Executive shall observe and fulfill proper
standards of fiduciary responsibility attendant upon his service and office and
shall comply with the terms of the Company's Statement of Policy Concerning
Corporate Ethics and Conflicts of Interest, as may be amended from time to
time.
11. Competitive Activities.
11.1. As an independent covenant, Executive agrees to refrain
for one (1) year after the termination of his employment for any reason,
without written permission from the Company, from becoming involved in any way,
within the boundaries of the United States, in the business of manufacturing or
selling any cement or ready-mix concrete products, or other products or
services competitive at the time of the termination with those sold and
furnished by the Consolidated Company as an employee, director, officer,
shareholder, consultant, partner, proprietor, or in any other capacity, except
as a shareholder owning less than five percent of the shares of a corporation
whose shares are publicly traded.
11.2 As an independent covenant, Executive agrees to refrain
during his employment by the Company, and in the event of the termination of
his employment for any reason, for one (1) year thereafter, without written
permission from the Company, from diverting, taking, soliciting and/or
accepting on his own behalf or on the behalf of another person, firm, or
company, the business of any customer of the Consolidated Company or any
potential customer of the Consolidated Company whose identity became known to
Executive through his employment by the Company.
11.3 As an independent covenant, Executive agrees to refrain
during his employment by the Company, and in the event of the termination of
his employment for any reason
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for a period of one (1) year, thereafter, from inducing or attempting to
influence any employee of the Consolidated Company to terminate his employment.
11.4 Executive further agrees that these covenants are made to
protect the legitimate business interests of the Company, including interests
in the Company's "confidential information" as defined in Paragraph 12, and not
to restrict his mobility or to prevent him from utilizing his general technical
skills. Executive understands as a part of these covenants that the Company
intends to exercise whatever legal recourse against him for any breach of this
Agreement and in particular for any breach of these covenants.
12. Non-Disclosure of Confidential Information. Executive agrees
not to make any unauthorized use, publication, or disclosure, during or
subsequent to his employment by the Company, of any confidential information,
generated or acquired by him during the course of his employment, except to the
extent that the disclosure of confidential information is necessary to fulfill
his responsibilities as an employee of the Company. Executive understands that
"confidential information" includes confidential or trade information not
generally known by or available to the public about or belonging to the
Consolidated Company or belonging to other companies to whom the Consolidated
Company may have an obligation to maintain information in confidence, and that
authorization for public disclosure may only be obtained through the Company's
written consent. Executive also understands and agrees that the information
protected by this provision includes, but is not limited to, information of a
technical and a business nature such as ideas, discoveries, designs,
inventions, improvements, trade secrets, know-how, manufacturing processes,
product formulae, design specifications, writings and other works of
authorship, computer programs, financial figures, marketing plans, customer
lists and data, business plans or methods and the like, which relate in any
manner to the actual or anticipated business of the Consolidated Company or
related to its actual or anticipated areas of research and development.
13. Notice. All notices, requests, demands and other communications
given under or by reason of this Agreement shall be in writing and shall be
deemed given when delivered in person or when mailed, by certified mail (return
receipt requested), postage prepaid, addressed as follows (or to such other
address as a party may specify by notice pursuant to this provision):
(a) To the Company:
Southdown, Inc.
Attention: Secretary
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
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(b) To the Executive:
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14. Controlling Law and Performability. The execution, validity,
interpretation and performance of this Agreement shall be governed by the law
of the State of Texas.
15. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration in
Houston, Texas by one arbitrator appointed in the manner set forth by the
American Arbitration Association. Any arbitration proceeding pursuant to this
Paragraph 15 shall be conducted in accordance with the Employment Dispute
Resolution Rules of the American Arbitration Association. Judgment may be
entered on the arbitrators' award in any court having jurisdiction.
16. Expenses. The Company will pay or reimburse the Executive for
all costs and expenses (including arbitration and court costs and attorneys'
fees) incurred by the Executive as a result of any claim, action or proceeding
arising out of, or challenging the validity, advisability or enforceability of,
this Agreement or any provision thereof.
17. No Obligation to Mitigate. The Executive shall not be required
to mitigate the amount of any payment provided for in Paragraph 7 by seeking
other employment or otherwise, nor shall the amount of any payment provided for
in Paragraph 7 be reduced by any compensation earned by the Executive as a
result of employment by another employer or otherwise.
18. Additional Instruments. The Parties shall execute and deliver
any and all additional instruments and agreements that may be necessary or
proper to carry out the purposes of this Agreement.
19. Entire Agreement and Amendments. This Agreement contains the
entire agreement of the Parties relating to the matters contained herein and
supersedes all prior agreements and understandings, oral or written, between
the Parties with respect to the subject matter hereof; provided, however, that
nothing herein shall affect in any respect the rights and obligations of the
Company and the Executive under any Incentive Agreements implemented prior to
the date of this Agreement and not expressly referred to herein or under any
Indemnity Agreement entered into between the Company and Executive. This
Agreement may be changed only by an agreement in writing signed by the Party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
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13
20. Separability. If any provision of the Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by the decision of any arbitrator or by decree of a
court of last resort, the Parties shall promptly meet and negotiate substitute
provisions for those rendered or declared illegal or unenforceable to preserve
the original intent of this Agreement to the extent legally possible, but all
other provisions of this Agreement shall remain in full force and effect.
21. Assignments. The Company may assign (whether by operation of law
or otherwise) this Agreement only with the written consent of the Executive,
which consent shall not be withheld unreasonably, and in the event of an
assignment of this Agreement, all covenants, conditions and provisions
hereunder shall inure to the benefit of and be enforceable against the
Company's successors and assigns. The rights and obligations of Executive
under this Agreement are personal to him, and no such rights, benefits or
obligations shall be subject to voluntary or involuntary alienation, assignment
or transfer.
22. Effect of Agreement. Subject to the provisions of Paragraph 21
with respect to assignments, this Agreement shall be binding upon the Executive
and his heirs, executors, administrators, legal representatives and assigns and
upon the Company and its respective successors and assigns (whether direct or
indirect, by purchase, merger, consolidation or otherwise).
23. Execution. This Agreement may be executed in multiple
counterparts each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
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14
24. Waiver of Breach. The waiver by either Party of a breach of any
provision of the Agreement by the other Party shall not operate or be construed
as a waiver by such Party of any subsequent breach by such other Party.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective
as of the date first above written.
"COMPANY"
SOUTHDOWN, INC.
By:
------------------------------
Name:
-----------------------------
Title:
----------------------------
"EXECUTIVE"
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
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15
VERSION "B"
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into between
Southdown, Inc., a Louisiana corporation ("Company"), and ____________, a
resident of [Houston, Xxxxxx] County, Texas ("Executive"), effective as of
_________, 1997. The Company and the Executive are sometimes referred to
herein as the "Parties."
1. Introduction. In connection with the revision of existing
employment agreements, the Company believes that the assurance of the
Executive's continued employment by the Company and the benefit of his business
experience are of material importance. Therefore, the Company and the
Executive intend by this Agreement to rescind any existing employment agreement
and to specify the terms and conditions of the Executive's continuing
employment relationship with the Company.
2. Employment. The Company hereby employs the Executive and the
Executive hereby accepts continuing employment with the Company upon the terms
and conditions set forth herein.
3. Duties and Responsibilities.
3.1. Extent of Service. The Executive shall, during the
term of this Agreement, devote such of his entire time, attention, energies and
business efforts to his duties as an executive of the Company as are reasonably
necessary to carry out his duties specified in Paragraph 3.2 below. The
Executive shall not, during the term of this Agreement, engage in any other
business activity (whether or not such business activity is pursued for gain,
profit or other pecuniary advantage) if such business activity would impair the
Executive's ability to carry out his duties hereunder. This Paragraph 3.1,
however, shall not be construed to prevent the Executive from investing his
personal assets as a passive investor in such form or manner as will not
contravene the Company's Statement of Policy Regarding Corporate Ethics and
Conflicts of Interest ( "Policy Statement").
3.2. Position and Duties. Subject to the power of the
Board of Directors of the Company to elect and remove officers, the Executive
shall serve the Company as ____________ (or in such other office of comparable
or greater responsibility as the Board of Directors of the Company may
determine) and shall perform, faithfully and diligently, the services and
functions relating to such office or otherwise reasonably incident to such
office as may be designated from time to time by the Board of Directors of the
Company; provided that all such services and functions shall be reasonable and
within the Executive's area of expertise; and provided further that the
Executive shall be physically capable of performing the essential requirements
of the job with or without reasonable accommodation.
3.3. Place of Employment. During the term of this
Agreement, the Company shall maintain its principal executive offices in the
greater Houston, Texas area, and the Executive's primary place of employment
shall be at such principal executive offices. During the term of this
Agreement, the Company will provide the Executive with a private office, an
executive secretary
16
and other customary staff support services, all as are commensurate with the
services and functions to be performed by him hereunder.
4. Salary and Other Benefits. Subject to the terms and
conditions of this Agreement:
4.1. Salary. As compensation for his services under and
during the term of his employment under this Agreement, the Executive shall be
paid an annual salary of not less than $__________, payable in accordance with
the then current payroll policies of the Company. Such salary shall be subject
to increase by the Board of Directors of the Company (or the appropriate
committee thereof) from time to time. The annual salary payable from time to
time by the Company to the Executive pursuant to this Paragraph 4.1 is herein
sometimes referred to as his "Base Salary."
4.2. Other Benefits. As long as the Executive is employed
by the Company, the Executive shall be entitled to receive the following
benefits in addition to his Base Salary:
(a) The Executive shall be entitled to
participate in the Company's discretionary bonus plan (the "Bonus Plan") for
senior management of the Company and its consolidated subsidiaries, pursuant to
which he shall be paid each year such additional compensation by way of bonus
as the Board of Directors of the Company (or the appropriate committee thereof)
in its sole discretion shall authorize or agree to pay, payable on such terms
and conditions as it shall determine.
(b) The Executive shall have the right to
participate in all group benefit and applicable retirement plans of the Company
(including without limitation, disability, accident, medical, life insurance,
hospitalization and pension), all in accordance with the Company's regular
practices with respect to its senior officers.
(c) The Executive shall be entitled
to reimbursement from the Company for reasonable out-of-pocket expenses
incurred by him in the course of the performance of his duties hereunder.
(d) The Company shall provide the Executive with
an automobile allowance in the amount of $1,000 per month, subject to statutory
withholdings. Executive shall bear all expenses incurred in connection with
owning or operating his personal automobile.
(e) In order to promote the interests of the
Company, the Company shall reimburse the Executive for the initiation fees and
all annual dues incurred by him in connection with his membership in one
luncheon club and one country club as may be agreed upon by the Executive and
the Company (and the Company agrees to post any bond required by such clubs and
each such bond will remain the property of the Company).
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17
(f) The Company shall reimburse Executive an
amount up to $5,000 per year for personal financial, tax and estate planning.
(g) The Executive shall be entitled to such
vacation, holidays and other paid or unpaid leaves of absence as are consistent
with the Company's normal policies or as are otherwise approved by the
Company's Board of Directors (or the appropriate committee thereof).
5. Term. The term of this Agreement shall be for one year and
shall be automatically extended each day, from ___________, 1997.
6. Termination and Resignation. The Company shall have the right
to terminate the Executive's employment hereunder at any time and for any
reason, and upon any such termination the Executive shall be entitled to
receive from the Company prompt payment of the amount determined pursuant to
the applicable subparagraph of Paragraph 7 below. The Executive shall have the
right to terminate his employment hereunder at any time by resignation, and he
shall thereupon be entitled to receive from the Company prompt payment of the
amount determined pursuant to the applicable subparagraph of Paragraph 7 below.
7. Payments Upon Termination and Resignation.
7.1. Pro Rata Payment. In the event of the following:
(i) the Company terminates the Executive's employment for Cause
(as defined below),
(ii) the Executive dies or becomes disabled (being the inability of
the Executive to perform the essential requirements of the job with or
without reasonable accommodation),
(iii) the Executive resigns prior to the occurrence of a Change in
Control (as defined below) of the Company at a time when there is no
uncured breach by the Company of any term of this Agreement, or
(iv) the Executive resigns after the occurrence of a Change in
Control for any reason other than for Good Reason (as defined below);
then in each case the Executive shall be entitled to receive only his Base
Salary on a pro rata basis to the date of termination or resignation.
7.2. Base Salary Payment. If prior to the occurrence of a
Change in Control (i) the Company terminates the Executive's employment for any
reason other than for Cause or the Executive's death or disability or (ii) the
Executive resigns because of the breach by the Company of any term of this
Agreement (but only if such breach is not remedied by the Company promptly
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18
after it receives notice thereof from Executive), then in each case the
Executive shall be entitled to receive a lump sum payment equal to his Base
Salary.
7.3. Multiple Base Salary Payment. If after the
occurrence of a Change in Control of the Company, (a) the Company terminates
the Executive's employment hereunder for any reason other than for Cause, or
(b) the Executive voluntarily resigns his employment hereunder for Good Reason
within one year (as defined below) of the Change in Control, then in each case
the Company will pay to the Executive a lump sum termination payment equal to
2.99 times the sum of his Base Salary and his Target Bonus (as defined below)
(collectively, the "Lump Sum Payment"), subject to adjustment as provided in
Paragraph 9 below.
7.4. Certain Definitions.
(a) "Target Bonus" shall mean the target bonus
for Executive specified under the Company's Bonus Plan (as defined in Paragraph
4.2(a)) for the year in which a Change in Control of the Company occurs.
(b) Termination by the Company of the Executive's
employment for "Cause" shall mean termination upon the willful misappropriation
of funds or properties of the Company or the willful contravention of the
standards referred to in the last sentence of Paragraph 10 below. For purposes
of this definition, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by the Executive not
in good faith and without reasonable belief that the Executive's action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board of Directors of the Company at a meeting
of the Board duly called and held (after reasonable notice to the Executive and
an opportunity for the Executive, together with his counsel, to be heard before
the Board) finding that in the good faith opinion of the Board the Executive
was guilty of the conduct set forth above and specifying the particulars
thereof in detail.
(c) A "Change in Control" shall be conclusively
deemed to have occurred if (and only if) any of the following shall have taken
place: (i) a change in control is reported by the Company in response to either
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or Item 1 of Form 8-K
promulgated under the Exchange Act, or any similar reporting requirement
hereafter promulgated by the Securities and Exchange Commission; (ii) any
person, entity or group (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than any employee benefit plan sponsored by the
Company, is or becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent or more of the combined voting power of the
Company's then outstanding securities (as determined under
- 4 -
19
paragraph (d) of Rule 13d-3 promulgated under the Exchange Act, in the case of
rights to acquire common stock); or (iii) following the election or removal of
directors, a majority of the Board consists of individuals who were not members
of the Board two years before such election or removal, unless the election of
each director who was not a director at the beginning of such two-year period
has been approved in advance by directors representing at least a majority of
the directors then in office who were directors at the beginning of the
two-year period.
(d) "Good Reason" shall mean, in any case only if
an action or event described in this Paragraph 7.4(d) is not remedied by the
Company promptly after it receives notice thereof from Executive,
(i) the assignment to the Executive of any duties
substantially inconsistent with the Executive's position
(including offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by
Paragraph 3.2 hereof;
(ii) the failure of the Company to comply with any of the
provisions of Section 4.2 hereof; or
(iii) the Company's requiring the Executive to be based at
any office or location other than as provided in Paragraph 3.3
hereof.
8. Acceleration of Options. Contemporaneously with the
occurrence of a Change in Control of the Company, the Board of Directors of the
Company (or the appropriate committee thereof) will accelerate all outstanding
options previously granted to the Executive under any then existing Company
stock option, stock appreciation or other employee incentive plan that are not
otherwise exercisable by the Executive at the time the Change in Control of the
Company occurs.
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 or any of its affiliates to or for the benefit of
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (any such payments or distributions
being individually referred to herein as a "Payment," and any two or more of
such payments or distributions being referred to herein as "Payments"), would
be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended ("Code") (such excise tax, together with any interest
thereon, any penalties, additions to tax, or additional amounts with respect to
such excise tax, and any interest in respect of such penalties, additions to
tax or additional amounts, being collectively referred herein to as the "Excise
Tax"), then Executive shall be entitled to receive and the Company shall make
an additional payment or payments (individually referred to herein as a
"Gross-Up Payment," and any two or more of such additional payments being
referred to herein as "Gross-Up Payments") in an
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20
amount such that after payment by Executive of all taxes (as defined in
Paragraph 9(k) imposed upon the Gross-Up Payment, Executive retains an amount
of such Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Paragraph 9(c) through
(i), any determination (individually, a "Determination") required to be made
under Paragraphs 9(a) or 9(b), including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall initially be made, at
the Company's expense, by nationally recognized tax counsel mutually acceptable
to the Company and Executive ("Tax Counsel"). Tax Counsel shall provide
detailed supporting legal authorities, calculations, and documentation both to
the Company and Executive within 15 business days of the termination of
Executive's employment, if applicable, or such other time or times as is
reasonably requested by the Company or Executive. If Tax Counsel makes the
initial Determination that no Excise Tax is payable by Executive with respect
to a Payment or Payments, it shall furnish Executive with an opinion that no
Excise Tax will be imposed with respect to any such Payment or Payments.
Executive shall have the right to dispute any Determination (a "Dispute")
within 15 business days after delivery of Tax Counsel's opinion with respect to
such Determination. The Gross-Up Payment, if any, as determined pursuant to
such Determination shall, at the Company's expense, be paid by the Company to
Executive within five business days of Executive's receipt of such
Determination. The existence of a Dispute shall not in any way affect
Executive's right to receive the Gross-Up Payment in accordance with such
Determination. If there is no Dispute, such Determination shall be binding,
final and conclusive upon the Company and Executive, subject in all respects,
however, to the provisions of Paragraph 9(c) through (i) below. As a result of
the uncertainty in the application of Sections 4999 and 280G of the Code, it is
possible that Gross-Up Payments (or portions thereof) which will not have been
made by the Company should have been made ("Underpayment"), and if upon any
reasonable written request from Executive or the Company to Tax Counsel, or
upon Tax Counsel's own initiative, Tax Counsel, at the Company's expense,
thereafter determines that Executive is required to make a payment of any
Excise Tax or any additional Excise Tax, as the case may be, Tax Counsel shall,
at the Company's expense, determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to
Executive.
(c) The Company shall defend, hold harmless, and
indemnify Executive on a fully grossed-up after tax basis from and against any
and all claims, losses, liabilities, obligations, damages, impositions,
assessments, demands, judgments, settlements, costs and expenses (including
reasonable attorneys', accountants', and experts' fees and expenses) with
respect to any tax liability of Executive resulting from any Final
Determination (as defined in Paragraph 9(j)) that any Payment is subject to the
Excise Tax.
(d) If a party hereto receives any written or oral
communication with respect to any question, adjustment, assessment or pending
or threatened audit, examination, investigation or administrative, court or
other proceeding which, if pursued successfully, could result in or give rise
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21
to a claim by Executive against the Company under this Paragraph 9(d)
("Claim"), including, but not limited to, a claim for indemnification of
Executive by the Company under Paragraph 9(c), then such party shall promptly
notify the other party hereto in writing of such Claim ("Tax Claim Notice").
(e) If a Claim is asserted against Executive ("Executive
Claim"), Executive shall take or cause to be taken such action in connection
with contesting such Executive Claim as the Company shall reasonably request in
writing from time to time, including the retention of counsel and experts as
are reasonably designated by the Company (it being understood and agreed by the
parties hereto that the terms of any such retention shall expressly provide
that the Company shall be solely responsible for the payment of any and all
fees and disbursements of such counsel and any experts) and the execution of
powers of attorney, provided that:
(i) within 30 calendar days after the Company
receives or delivers, as the case may be, the Tax Claim Notice
relating to such Executive Claim (or such earlier date that any
payment of the taxes claimed is due from Executive, but in no event
sooner than five calendar days after the Company receives or delivers
such Tax Claim Notice), the Company shall have notified Executive in
writing ("Election Notice") that the Company does not dispute its
obligations (including, but not limited to, its indemnity obligations)
under this Agreement and that the Company elects to contest, and to
control the defense or prosecution of, such Executive Claim at the
Company's sole risk and sole cost and expense; and
(ii) the Company shall have advanced to Executive
on an interest-free basis, the total amount of the tax claimed in
order for Executive, at the Company's request, to pay or cause to be
paid the tax claimed, file a claim for refund of such tax and, subject
to the provisions of the last sentence of Paragraph 9(g), xxx for a
refund of such tax if such claim for refund is disallowed by the
appropriate taxing authority (it being understood and agreed by the
parties hereto that the Company shall only be entitled to xxx for a
refund and the Company shall not be entitled to initiate any
proceeding in, for example, United States Tax Court) and shall
indemnify and hold Executive harmless, on a fully grossed-up after tax
basis, from any tax imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and
(iii) the Company shall reimburse Executive for any
and all costs and expenses resulting from any such request by the
Company and shall indemnify and hold Executive harmless, on fully
grossed-up after-tax basis, from any tax imposed as a result of such
reimbursement.
(f) Subject to the provisions of Paragraph 9(e), hereof,
the Company shall have the right to defend or prosecute, at the sole cost,
expense and risk of the Company, such Executive Claim by all appropriate
proceedings, which proceedings shall be defended or prosecuted diligently
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22
by the Company to a Final Determination; provided, however, that (i) the
Company shall not, without Executive's prior written consent, enter into any
compromise or settlement of such Executive Claim that would adversely affect
Executive, (ii) any request from the Company to Executive regarding any
extension of the statute of limitations relating to assessment, payment, or
collection of taxes for the taxable year of Executive with respect to which the
contested issues involved in, and amount of, the Executive Claim relate is
limited solely to such contested issues and amount, and (iii) the Company's
control of any contest or proceeding shall be limited to issues with respect to
the Executive Claim and Executive shall be entitled to settle or contest, in
his sole and absolute discretion, any other issue raised by the Internal
Revenue Service or any other taxing authority. So long as the Company is
diligently defending or prosecuting such Executive Claim, Executive shall
provide or cause to be provided to the Company any information reasonably
requested by the Company that relates to such Executive Claim, and shall
otherwise cooperate with the Company and its representatives in good faith in
order to contest effectively such Executive Claim. The Company shall keep
Executive informed of all developments and events relating to any such
Executive Claim (including, without limitation, providing to Executive copies
of all written materials pertaining to any such Executive Claim), and Executive
or his authorized representatives shall be entitled, at Executive's expense, to
participate in all conferences, meetings and proceedings relating to any such
Executive Claim.
(g) If, after actual receipt by Executive of an amount of
a tax claimed (pursuant to an Executive Claim) that has been advanced by the
Company pursuant to Paragraph 9(e)(ii), hereof, the extent of the liability of
the Company hereunder with respect to such tax claimed has been established by
a Final Determination, Executive shall promptly pay or cause to be paid to the
Company any refund actually received by, or actually credited to, Executive
with respect to such tax (together with any interest paid or credited thereon
by the taxing authority and any recovery of legal fees from such taxing
authority related thereto), except to the extent that any amounts are then due
and payable by the Company to Executive, whether under the provisions of this
Agreement or otherwise. If, after the receipt by Executive of an amount
advanced by the Company pursuant to Paragraph 9(e)(ii), a determination is made
by the Internal Revenue Service or other appropriate taxing authority that
Executive shall not be entitled to any refund with respect to such tax claimed
and the Company does not notify Executive 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 any Gross-Up Payments and other payments required to be paid
hereunder.
(h) With respect to any Executive Claim, if the Company
fails to deliver an Election Notice to Executive within the period provided in
Paragraph 9(e)(i), hereof or, after delivery of such Election Notice, the
Company fails to comply with the provisions of Paragraph 9(e)(ii), and (iii)
and (f) hereof, then Executive shall at any time thereafter have the right (but
not the obligation), at his election and in his sole and absolute discretion,
to defend or prosecute, at the sole cost, expense and risk of the Company, such
Executive Claim. Executive shall have full control of such defense
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23
or prosecution and such proceedings, including any settlement or compromise
thereof. If requested by Executive, the Company shall cooperate, and shall
cause its affiliates to cooperate, in good faith with Executive and his
authorized representatives in order to contest effectively such Executive
Claim. The Company may attend, but not participate in or control, any defense,
prosecution, settlement or compromise of any Executive Claim controlled by
Executive pursuant to this Paragraph 9(h) and shall bear its own costs and
expenses with respect thereto. In the case of any Executive Claim that is
defended or prosecuted by Executive, Executive shall, from time to time, be
entitled to current payment, on a fully grossed-up after tax basis, from the
Company with respect to costs and expenses incurred by Executive in connection
with such defense or prosecution.
(i) In the case of any Executive Claim that is defended
or prosecuted to a Final Determination pursuant to the terms of this Paragraph
9(i), the Company shall pay, on a fully grossed-up after tax basis, to
Executive in immediately available funds the full amount of any taxes arising
or resulting from or incurred in connection with such Executive Claim that have
not theretofore been paid by the Company to Executive, together with the costs
and expenses, on a fully grossed-up after tax basis, incurred in connection
therewith that have not theretofore been paid by the Company to Executive,
within ten calendar days after such Final Determination. In the case of any
Executive Claim not covered by the preceding sentence, the Company shall pay,
on a fully grossed-up after tax basis, to Executive in immediately available
funds the full amount of any taxes arising or resulting from or incurred in
connection with such Executive Claim at least ten calendar days before the date
payment of such taxes is due from Executive, except where payment of such taxes
is sooner required under the provisions of this Paragraph 9(i), in which case
payment of such taxes (and payment, on a fully grossed-up after tax basis, of
any costs and expenses required to be paid under this Paragraph 9(i) shall be
made within the time and in the manner otherwise provided in this Paragraph
9(i).
(j) For purposes of this Agreement, the term "Final
Determination" shall mean (A) a decision, judgment, decree or other order by a
court or other tribunal with appropriate jurisdiction, which has become final
and non-appealable; (B) a final and binding settlement or compromise with an
administrative agency with appropriate jurisdiction, including, but not limited
to, a closing agreement under Section 7121 of the Code; (C) any disallowance of
a claim for refund or credit in respect to an overpayment of tax unless a suit
is filed on a timely basis; or (D) any final disposition by reason of the
expiration of all applicable statutes of limitations.
(k) For purposes of this Agreement, the terms "tax" and
"taxes" mean any and all taxes of any kind whatsoever (including, but not
limited to, any and all Excise Taxes, income taxes, and employment taxes),
together with any interest thereon, any penalties, additions to tax, or
additional amounts with respect to such taxes and any interest in respect of
such penalties, additions to tax, or additional amounts.
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(l) For purposes of this Agreement, the terms "affiliate"
and "affiliates" mean, when used with respect to any entity, individual, or
other person, any other entity, individual, or other person which, directly or
indirectly, through one or more intermediaries controls, or is controlled by,
or is under common control with such entity, individual or person. The term
"control" and derivations thereof when used in the immediately preceding
sentence means the ownership, directly or indirectly, of 50% or more of the
voting securities of an entity or other person or possessing the power to
direct or cause the direction of the management and policies of such entity or
other person, whether through the ownership of voting securities, by contract
or otherwise.
10. Preservation of Business; Fiduciary Responsibility. The
Executive shall use his best efforts to preserve the business and organization
of the Company and the Company's consolidated subsidiaries (collectively, the
"Consolidated Company"), to keep available to the Consolidated Company the
services of present employees and to preserve the business relations of the
Consolidated Company with suppliers, distributors, customers and others. The
Executive shall not commit any act, or in any way assist others to commit any
act, which would injure the Consolidated Company. So long as the Executive is
employed by the Company, the Executive shall observe and fulfill proper
standards of fiduciary responsibility attendant upon his service and office and
shall comply with the terms of the Company's Statement of Policy Concerning
Corporate Ethics and Conflicts of Interest, as may be amended from time to
time.
11. Competitive Activities.
11.1. As an independent covenant, Executive agrees to
refrain for one (1) year after the termination of his employment for any
reason, without written permission from the Company, from becoming involved in
any way, within the boundaries of the United States, in the business of
manufacturing or selling any cement or ready-mix concrete products, or other
products or services competitive at the time of the termination with those sold
and furnished by the Consolidated Company as an employee, director, officer,
shareholder, consultant, partner, proprietor, or in any other capacity, except
as a shareholder owning less than five percent of the shares of a corporation
whose shares are publicly traded.
11.2 As an independent covenant, Executive agrees to
refrain during his employment by the Company, and in the event of the
termination of his employment for any reason, for one (1) year thereafter,
without written permission from the Company, from diverting, taking, soliciting
and/or accepting on his own behalf or on the behalf of another person, firm, or
company, the business of any customer of the Consolidated Company or any
potential customer of the Consolidated Company whose identity became known to
Executive through his employment by the Company.
11.3 As an independent covenant, Executive agrees to
refrain during his employment by the Company, and in the event of the
termination of his employment for any reason
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25
for a period of one (1) year, thereafter, from inducing or attempting to
influence any employee of the Consolidated Company to terminate his employment.
11.4 Executive further agrees that these covenants are
made to protect the legitimate business interests of the Company, including
interests in the Company's "confidential information" as defined in Paragraph
12, and not to restrict his mobility or to prevent him from utilizing his
general technical skills. Executive understands as a part of these covenants
that the Company intends to exercise whatever legal recourse against him for
any breach of this Agreement and in particular for any breach of these
covenants.
12. Non-Disclosure of Confidential Information. Executive
agrees not to make any unauthorized use, publication, or disclosure, during or
subsequent to his employment by the Company, of any confidential information,
generated or acquired by him during the course of his employment, except to the
extent that the disclosure of confidential information is necessary to fulfill
his responsibilities as an employee of the Company. Executive understands that
"confidential information" includes confidential or trade information not
generally known by or available to the public about or belonging to the
Consolidated Company or belonging to other companies to whom the Consolidated
Company may have an obligation to maintain information in confidence, and that
authorization for public disclosure may only be obtained through the Company's
written consent. Executive also understands and agrees that the information
protected by this provision includes, but is not limited to, information of a
technical and a business nature such as ideas, discoveries, designs,
inventions, improvements, trade secrets, know-how, manufacturing processes,
product formulae, design specifications, writings and other works of
authorship, computer programs, financial figures, marketing plans, customer
lists and data, business plans or methods and the like, which relate in any
manner to the actual or anticipated business of the Consolidated Company or
related to its actual or anticipated areas of research and development.
13. Notice. All notices, requests, demands and other
communications given under or by reason of this Agreement shall be in writing
and shall be deemed given when delivered in person or when mailed, by certified
mail (return receipt requested), postage prepaid, addressed as follows (or to
such other address as a party may specify by notice pursuant to this
provision):
(a) To the Company:
Southdown, Inc.
Attention: Secretary
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
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(b) To the Executive:
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14. Controlling Law and Performability. The execution, validity,
interpretation and performance of this Agreement shall be governed by the law
of the State of Texas.
15. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration in
Houston, Texas by one arbitrator appointed in the manner set forth by the
American Arbitration Association. Any arbitration proceeding pursuant to this
Paragraph 15 shall be conducted in accordance with the Employment Dispute
Resolution Rules of the American Arbitration Association. Judgment may be
entered on the arbitrators' award in any court having jurisdiction.
16. Expenses. The Company will pay or reimburse the Executive for
all costs and expenses (including arbitration and court costs and attorneys'
fees) incurred by the Executive as a result of any claim, action or proceeding
arising out of, or challenging the validity, advisability or enforceability of,
this Agreement or any provision thereof.
17. No Obligation to Mitigate. The Executive shall not be
required to mitigate the amount of any payment provided for in Paragraph 7 by
seeking other employment or otherwise, nor shall the amount of any payment
provided for in Paragraph 7 be reduced by any compensation earned by the
Executive as a result of employment by another employer or otherwise.
18. Additional Instruments. The Parties shall execute and deliver
any and all additional instruments and agreements that may be necessary or
proper to carry out the purposes of this Agreement.
19 Entire Agreement and Amendments. This Agreement contains the
entire agreement of the Parties relating to the matters contained herein and
supersedes all prior agreements and understandings, oral or written, between
the Parties with respect to the subject matter hereof; provided, however, that
nothing herein shall affect in any respect the rights and obligations of the
Company and the Executive under any Incentive Agreements implemented prior to
the date of this Agreement and not expressly referred to herein or under any
Indemnity Agreement entered into between the Company and Executive. This
Agreement may be changed only by an agreement in writing signed by the Party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
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20. Separability. If any provision of the Agreement is rendered
or declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by the decision of any arbitrator or by decree of a
court of last resort, the Parties shall promptly meet and negotiate substitute
provisions for those rendered or declared illegal or unenforceable to preserve
the original intent of this Agreement to the extent legally possible, but all
other provisions of this Agreement shall remain in full force and effect.
21. Assignments. The Company may assign (whether by operation of
law or otherwise) this Agreement only with the written consent of the
Executive, which consent shall not be withheld unreasonably, and in the event
of an assignment of this Agreement, all covenants, conditions and provisions
hereunder shall inure to the benefit of and be enforceable against the
Company's successors and assigns. The rights and obligations of Executive
under this Agreement are personal to him, and no such rights, benefits or
obligations shall be subject to voluntary or involuntary alienation, assignment
or transfer.
22. Effect of Agreement. Subject to the provisions of Paragraph
21 with respect to assignments, this Agreement shall be binding upon the
Executive and his heirs, executors, administrators, legal representatives and
assigns and upon the Company and its respective successors and assigns (whether
direct or indirect, by purchase, merger, consolidation or otherwise).
23. Execution. This Agreement may be executed in multiple
counterparts each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
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24. Waiver of Breach. The waiver by either Party of a breach of
any provision of the Agreement by the other Party shall not operate or be
construed as a waiver by such Party of any subsequent breach by such other
Party.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective
as of the date first above written.
"COMPANY"
SOUTHDOWN, INC.
By:
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Name:
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Title:
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"EXECUTIVE"
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Name:
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Title:
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