EXHIBIT 10-K
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this "Agreement") is
made and entered into by and between Veritas DGC Inc., a Delaware corporation
(hereinafter referred to as "Employer"), and Xxxxxxx X. Xxxxx, an individual
currently resident in Houston, Texas (hereinafter referred to as "Employee"),
effective as of October 22, 2001 (the "Effective Date").
WITNESSETH:
WHEREAS, attendant to Employee's employment by Employer, Employer and
Employee wish for there to be a complete understanding and agreement between
Employer and Employee with respect to, among other terms, Employee's duties and
responsibilities to Employer; the compensation and benefits owed to Employee;
the fiduciary duties owed by Employee to Employer; Employee's obligation to
avoid conflicts of interest, disclose pertinent information to Employer, and
refrain from using or disclosing Employer's information; and the term of
Employee's employment;
WHEREAS, Employer considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing its best
interests and the best interests of its stockholders;
WHEREAS, Employer recognizes that, because Employer is a publicly held
company and as is the case with many such companies, the possibility of a change
in control may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of Employer and its
stockholders;
WHEREAS, the Board of Directors of Employer (the "Board") has
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of Employer's management,
including Employee, to their assigned duties without distraction in the face of
the potentially disturbing circumstances arising from the possibility of a
change in control of Employer;
WHEREAS, Employer recognizes that Employee could suffer adverse
financial and professional consequences if a change in control of Employer were
to occur;
WHEREAS, Employer and Employee have previously entered into that
certain Employment Agreement effective as of July 1, 1999 (the "Original
Employment Agreement"); and
WHEREAS, Employer and Employee wish to enter into this Agreement to
amend and restate the Original Employment Agreement to, among other things,
protect Employee if a change in control of Employer occurs, thereby encouraging
Employee to remain in the employ of Employer and not to be distracted from the
performance of his duties to Employer by the possibility of a change in control
of Employer;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employer and Employee agree as
follows:
Section 1. General Duties of Employer and Employee.
(a) Employer agrees to employ Employee and Employee agrees to accept
employment by Employer and to serve Employer in an executive capacity as its
President & Chief Operating Officer. At the commencement of this Agreement,
Employee will report to the Chairman & Chief Executive Officer of Employer. The
powers, duties and responsibilities of Employee as President & Chief Operating
Officer include those duties that are the usual and customary powers, duties and
responsibilities of such office, including those powers, duties and
responsibilities specified in Employer's Bylaws, and such other and further
duties appropriate to such position as may from time to time be assigned to
Employee by the Chairman & Chief Executive Officer of Employer or the Board.
(b) While employed hereunder, Employee will devote substantially all
reasonable and necessary time, efforts, skills and attention for the benefit of
and with his primary attention to the affairs of Employer in order that he may
faithfully perform his duties and obligations. The preceding sentence will not,
however, be deemed to restrict Employee from attending to matters or engaging in
activities not directly related to the business of Employer, provided that (i)
such activities or matters are reasonable in scope and time commitment and not
otherwise in violation of this Agreement, and (ii) Employee will not become a
director of any corporation or other entity (excluding charitable or other
non-profit organizations) without prior written disclosure to, and consent of,
Employer.
(c) Employee is currently based at Employer's headquarters located
at 00000 Xxxx Xxxx, Xxxxxxx, Xxxxx (the "Place of Employment").
(d) Employee agrees and acknowledges that during the term of this
Agreement, he owes a fiduciary duty of loyalty, fidelity and allegiance to act
at all times in the best interests of Employer and to do no act knowingly which
would injure Employer's business, its interests or its reputation.
Section 2. Compensation and Benefits.
(a) Employer will pay to Employee during the term of this Agreement
a base salary at the rate of $260,000 per annum (such base salary as increased
by the Compensation Committee of the Board as hereinafter provided is referred
to herein as the "Base Salary"). The Compensation Committee of the Board will
review the Base Salary from time to time and, during the term of this Agreement,
may increase, but may not decrease, the Base Salary. The Base Salary will be
paid to Employee in equal installments every two weeks or on such other schedule
as Employer may establish from time to time for its management personnel.
(b) During each fiscal year during the term of this Agreement,
Employee will be eligible to participate in that year's Key Contributor
Incentive Compensation Plan or other replacement incentive or bonus plan
Employer establishes for its key executives.
-2-
(c) Employee will be eligible for option grants to purchase shares
of Employer's common stock, $.01 par value ("Common Stock"), or other equity
securities of Employer as provided under Employer's Key Contributor Incentive
Compensation Plan (or other replacement incentive or bonus plan Employer
establishes for its key executives).
(d) Employee will be entitled to paid vacation of not less than four
(4) weeks each year. Vacation may be taken by Employee at the time and for such
periods as may be mutually agreed upon between Employer and Employee.
(e) Employee will be reimbursed in accordance with Employer's normal
expense reimbursement policy for all of the actual and reasonable costs and
expenses incurred by him in the performance of his services and duties
hereunder, including, but not limited to, travel and entertainment expenses.
Employee will furnish Employer with all invoices and vouchers reflecting amounts
for which Employee seeks Employer's reimbursement.
(f) Employee will be entitled to participate in all insurance and
retirement plans, incentive compensation plans (at a level appropriate to his
position) and such other benefit plans or programs as may be in effect from time
to time for the key management employees of Employer including, without
limitation, those related to savings and thrift, retirement, welfare, medical,
dental, disability, salary continuance, accidental death, travel accident, life
insurance, incentive bonus, membership in business and professional
organizations, and reimbursement of business and entertainment expenses.
(g) All Base Salary, bonus and other payments made by Employer to
Employee pursuant to this Agreement will be subject to such payroll and
withholding deductions as may be required by law and other deductions applied
generally to employees of Employer for insurance and other employee benefit
plans in which Employee participates.
Section 3. Fiduciary Duty; Confidentiality.
(a) In keeping with Employee's fiduciary duties to Employer,
Employee agrees that he will not knowingly take any action that would create a
conflict of interest with Employer, or upon discovery thereof, allow such a
conflict to continue. In the event that Employee discovers that such a conflict
exists, Employee agrees that he will disclose to the Board any facts which might
involve a conflict of interest that has not been approved by the Board.
(b) As part of Employee's fiduciary duties to Employer, Employee
agrees to protect and safeguard Employer's information, ideas, concepts,
improvements, discoveries, and inventions and any proprietary, confidential and
other information relating to Employer or its business (collectively,
"Confidential Information") and, except as may be required by Employer, Employee
will not knowingly, either during his employment by Employer or thereafter,
directly or indirectly, use for his own benefit or for the benefit of another,
or disclose to another, any Confidential Information, except (i) with the prior
written consent of Employer; (ii) in the course of the proper performance of
Employee's duties under this Agreement; (iii) for information that becomes
generally available to the public other than as a result of the unauthorized
disclosure by Employee; (iv) for information that becomes available to Employee
on a nonconfidential basis
-3-
from a source other than Employer or its affiliated companies who is not bound
by a duty of confidentiality to Employer; or (v) as may be required by any
applicable law, rule, regulation or order.
(c) Upon termination of his employment with Employer, Employee will
immediately deliver to Employer all documents in Employee's possession or under
his control which embody any of Employer's Confidential Information.
(d) In addition to the foregoing provisions of this Section 3, and
effective as of the Effective Date, Employee agrees to enter into an Employee
Confidentiality and Intellectual Property Agreement with Employer, a copy of
which is attached hereto as Exhibit A.
Section 4. Term.
Employee's employment with Employer, having previously commenced, will
continue until terminated in accordance with Section 5.
Section 5. Termination.
(a) Employee's employment with Employer hereunder will terminate
upon the first to occur of the following:
(1) The death or "Disability" (as defined in Section 5 (b)
hereof) of Employee;
(2) Employer terminates such employment for "Cause" (as
defined in Section 5(c) hereof);
(3) Employee terminates such employment for "Good Reason" (as
defined in Section (d) hereof);
(4) Employer terminates such employment for any reason other
than Cause or for no reason at all;
(5) Employee terminates such employment for any reason other
than Good Reason or for no reason at all; or
(6) Employee's sixty-fifth (65th) birthday, at which time
Employee will continue to be employed by Employer as an employee at
will.
(b) As used in this Agreement, "Disability" means permanent and
total disability (within the meaning of Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor provision) which has
existed for at least 180 consecutive days.
(c) As used in this Agreement, "Cause" means:
-4-
(1) the willful and continued failure by Employee to
substantially perform his obligations under this Agreement (other
than any such failure resulting from his Disability) after a demand
for substantial performance has been delivered to him by the Board
which specifically identifies the manner in which the Board believes
Employee has not substantially performed such provisions and
Employee has failed to remedy the situation within ten (10) days
after such demand;
(2) Employee's willfully engaging in conduct materially and
demonstrably injurious to the property or business of Employer,
including without limitation, fraud, misappropriation of funds or
other property of Employer, other willful misconduct, gross
negligence or conviction of a felony or any crime of moral
turpitude; or
(3) Employee's material breach of this Agreement which breach
has not been remedied by Employee within ten (10) days after receipt
by Employee of written notice from Employer that he is in material
breach of the Agreement, specifying the particulars of such breach.
For purposes of this Agreement, no act, or failure to act, on the part of
Employee shall be deemed "willful" or engaged in "willfully" if it was due
primarily to an error in judgment or negligence, but shall be deemed "willful"
or engaged in "willfully" only if done, or omitted to be done, by Employee not
in good faith and without reasonable belief that his action or omission was in
the best interest of Employer. Notwithstanding the foregoing, Employee shall not
be deemed to have been terminated as a result of "Cause" hereunder unless and
until there shall have been delivered to Employee a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the Board
then in office at a meeting of the Board called and held for such purpose (after
reasonable notice to Employee and an opportunity for Employee, together with his
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board of Directors, Employee has committed an act set forth above in this
Section 5(c) and specifying the particulars thereof in detail. Nothing herein
shall limit the right of Employee or his legal representatives to contest the
validity or propriety of any such determination.
(d) As used in this Agreement, "Good Reason" means:
(1) Employer's failure to comply with any of the provisions of
Section 2 of this Agreement (including, but not limited to, such a
failure resulting from any reduction in the Base Salary) which
failure is not remedied within ten (10) days after receipt of
written notice from Employee specifying the particulars of such
breach;
(2) Employer's breach of any other material provision of this
Agreement which is not remedied within ten (10) days after receipt
by Employer of written notice from Employee specifying the
particulars of such breach;
(3) the assignment to Employee of any duties materially
inconsistent with Employee's position (including status, offices,
titles, and reporting
-5-
requirements), duties, functions, responsibilities, or authority as
contemplated by Section 1 of this Agreement or other action by
Employer that results in a diminution (other than an isolated,
inconsequential or insubstantial diminution which is remedied by
Employer promptly after receipt of written notice thereof given by
Employee) in such position, duties, functions, responsibilities or
authority; or
(4) the relocation of Employee's principal place of
performance of his duties and responsibilities under this Agreement
to a location more than one hundred miles (100) miles from the Place
of Employment;
(5) After a "Change in Control" (as defined in Section 6(g)
hereof), (i) Employer's failure to continue in effect any benefit or
compensation plan (including, but not limited to, any bonus,
incentive, retirement, supplemental executive retirement, savings,
profit sharing, pension, performance, stock option, stock purchase,
deferred compensation, life insurance, medical, dental, health,
hospital, accident or disability plans) in which Employee is
participating at the time of such Change in Control (or plans
providing to Employee, in the aggregate, substantially similar
benefits as the benefits enjoyed by Employee under the benefit and
compensation plans in which Employee is participating at the time of
such Change in Control), or (ii) the taking of any action by
Employer that would adversely affect Employee's participation in or
materially reduce Employee's benefits under any of such plans or
deprive Employee of any material fringe benefit enjoyed by Employee
at the time of such Change in Control;
(6) Any failure by Employer to comply with Section 11(c); or
(7) Any purported termination of Employee's employment by
Employer which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 5(e) hereof (and for purposes
of this Agreement, no such purported termination shall be
effective).
(e) Any termination by Employer or Employee of Employee's employment
with Employer (other than any such termination occurring on Employee's
sixty-fifth (65th) birthday) shall be communicated by written notice (a "Notice
of Termination") to the other party that shall:
(1) indicate the specific provision of this Agreement relied
upon for such termination;
(2) indicate the specific provision of this Agreement pursuant
to which Employee is to receive compensation and other benefits as a
result of such termination; and
(3) otherwise comply with the provisions of this Section 5(e)
and Section 13(a).
-6-
If a Notice of Termination states that Employee's employment with Employer has
been terminated as a result of Employee's Disability, the notice shall (i)
specifically describe the basis for the determination of Employee's Disability,
and (ii) state the date of the determination of Employee's Disability, which
date shall be not more than ten (10) days before the date such notice is given.
If the notice is from Employer and states that Employee's employment with
Employer is terminated by Employer as a result of the occurrence of Cause, the
Notice of Termination shall specifically describe the action or inaction of
Employee that Employer believes constitutes Cause and shall be accompanied by a
copy of the resolution satisfying Section 5(c). If the Notice of Termination is
from Employee and states that Employee's employment with Employer is terminated
by Employee as a result of the occurrence of Good Reason, the Notice of
Termination shall specifically describe the action or inaction of Employer that
Employee believes constitutes Good Reason. Any purported termination by Employer
of Employee's employment with Employer shall be ineffective unless such
termination shall have been communicated by Employer to Employee by a Notice of
Termination that meets the requirements of this Section 5(e) and the provisions
of Section 13(a).
(f) As used in this Agreement, "Date of Termination" means:
(1) if Employee's employment with Employer is terminated for
Disability, sixty (60) days after Notice of Termination is received
by Employee or any later date specified therein, provided that
within such sixty (60) day period Employee shall not have returned
to full-time performance of Employee's duties;
(2) if Employee's employment with Employer is terminated as a
result of Employee's death, the date of death of Employee;
(3) if Employee's employment with Employer is terminated for
Cause, the date Notice of Termination, accompanied by a copy of the
resolution satisfying Section 5(c), is received by Employee or any
later date specified therein, provided that Employer may, in its
discretion, condition Employee's continued employment upon such
considerations or requirements as may be reasonable under the
circumstances and place a reasonable limitation upon the time within
which Employee will comply with such considerations or requirements;
(4) if Employee's employment with Employer is terminated upon
the occurrence of Employee's sixty-fifth (65th) birthday, the date
of such birthday, at which time Employee will continue to be
employed by Employer as an employee at will; or
(5) if Employee's employment with Employer is terminated for
any reason other than Employee's Disability, Employee's death, Cause
or the occurrence of Employee's sixty-fifth (65th) birthday, or for
no reason, the date that is fourteen (14) days after the date of
receipt of the Notice of Termination.
-7-
Section 6. Effect of Termination.
(a) Upon termination of Employee's employment by Employer for Cause,
or by Employee for no reason or any reason other than Good Reason, all
compensation and benefits will cease upon the Date of Termination other than:
(i) those benefits that are provided by retirement and benefit plans and
programs specifically adopted and approved by Employer for Employee that are
earned and vested by the Date of Termination, (ii) as provided in Section 10,
(iii) Employee's Base Salary through the Date of Termination; (iv) any incentive
compensation due Employee if, under the terms of the relevant incentive
compensation arrangement, such incentive compensation was due and payable to
Employee on or before the Date of Termination; and (v) medical and similar
benefits the continuation of which is required by applicable law or provided by
the applicable benefit plan.
(b) Upon termination of Employee's employment due to the death of
Employee or upon termination by Employer due to the Disability of Employee, all
compensation and benefits will cease upon the Date of Termination other than:
(i) those benefits that are provided by retirement and benefit plans and
programs specifically adopted and approved by Employer for Employee that are
earned and vested by the Date of Termination, (ii) as provided in Section 10,
(iii) Employee's Base Salary through the Date of Termination; (iv) any incentive
compensation due Employee if, under the terms of the relevant incentive
compensation arrangement, such incentive compensation was due and payable to
Employee on or before the Date of Termination; and (v) medical and similar
benefits the continuation of which is required by applicable law or provided by
the applicable benefit plan.
(c) Upon termination of this Agreement due to Employee's reaching
his sixty-fifth (65th) birthday, Employee will continue to be employed by
Employer as an employee at will.
(d) Except as otherwise provided in Section 6(e), if Employee's
employment with Employer is terminated (i) by Employer for no reason or for any
reason other than Cause, the death or Disability of Employee, or Employee's
reaching his sixty-fifth (65th) birthday, or (ii) by Employee for Good Reason,
the obligations of Employer and Employee under Sections 1 and 2 will terminate
as of the Date of Termination, and Employer will pay or provide to Employee the
following:
(1) Employee's Base Salary through the Date of Termination;
(2) incentive compensation due Employee, if any, under the
terms of the relevant incentive compensation arrangement;
(3) during the two-year period ending on the second
anniversary of the Date of Termination, Employer shall pay to
Employee an aggregate amount (the "Severance Payment") equal to two
(2) times Employee's Base Salary at the highest annual rate in
effect on or before the Date of Termination (but prior to giving
effect to any reduction therein which precipitated such
termination), which Severance Payment will be paid to Employee in
equal installments every two weeks during such two-year period;
provided, however, that at any time during such two-year period
Employer may, in its discretion, elect to pay to Employee
-8-
the then remaining balance of the Severance Payment in the form of a
lump sum cash payment; and
(4) if immediately prior to the Date of Termination Employee
(and, if applicable, his spouse and/or dependents) was covered under
Employer's group medical, dental, health and hospital plan in effect
at such time, then Employer shall, at its election, pay or provide
to Employee one (but not both) of the following:
(1) for one (1) year after the Date of
Termination, and provided that Employee has
timely elected under the Consolidated
Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA"), to continue coverage
under such plan, Employer will, at no
greater cost or expense to Employee than was
the case immediately prior to the Date of
Termination, maintain such continued
coverage in full force and effect; or
(ii) pay to Employee a lump sum cash payment (the
"Section 6(d)(4)(ii) Payment") equal to the
sum of:
(A) an amount equal to (I) twelve (12),
multiplied by (II) the amount of
the applicable monthly COBRA
premium (determined based upon the
applicable COBRA premium rate in
effect immediately after the Date
of Termination) Employee would pay
if Employee elected under COBRA to
maintain coverage identical to the
coverage Employee (and, if
applicable, his spouse and/or
dependents) had under such plan
immediately prior to the Date of
Termination; plus
(B) an amount equal to the excess of
(I) an amount determined by
dividing (x) the amount determined
under Section 6(d)(4)(ii)(A) above,
by (y) one (1) minus the sum of the
following which shall be determined
for the calendar year that includes
the date of payment of the Section
6(d)(4)(ii) Payment and shall be
expressed as a decimal: (i) the
highest marginal U.S. federal
income tax rate applicable to
individuals for such calendar year,
plus (ii) the highest foreign,
state, provincial and/or local
individual income tax rate or
rates, if any, to which the Section
6(d)(4)(ii) Payment is subject for
such calendar year (which shall be
determined based on the assumption
that Employee pays income tax to
any such foreign, state, provincial
or local
-9-
jurisdiction at the highest
marginal rate of income tax imposed
by such jurisdiction on
individuals), plus, (iii) the
Hospital (Medicare) Insurance tax
rate under Section 3101(b) of the
Code (or any corresponding
successor statute) for such
calendar year, over (II) the amount
determined under Section
6(d)(4)(ii)(A) above.
Except as otherwise provided above and in Section 10, all other compensation and
benefits will cease upon the Date of Termination other than the following: (i)
those benefits that are provided by retirement and benefit plans and programs
specifically adopted and approved by Employer for Employee that are earned and
vested by the Date of Termination, (ii) any rights Employee or his survivors may
have under any grants of options to purchase Employer's Common Stock made in
accordance with Section 2(d) hereof; and (iii) medical and similar benefits the
continuation of which is required by applicable law or as provided by the
applicable benefit plan. As a condition to making the payments and providing the
benefits specified in this Section 6(d), Employer will require that Employee
execute a release of all claims Employee may have against Employer at the time
of Employee's termination. Such release will be in substantially the same form
as Exhibit B attached hereto.
(e) If (i) a "Change in Control" (as defined in Section 6(g) hereof)
shall have occurred, and (ii) within two (2) years after such Change in Control
Employee's employment with Employer is terminated (x) by Employer for no reason
or for any reason other than Cause, the death or Disability of Employee, or
Employee's reaching his sixty-fifth (65th) birthday, or (y) by Employee for Good
Reason, the obligations of Employer and Employee under Sections 1 and 2 will
terminate as of the Date of Termination, Section 6(d) above shall not apply, and
Employer will pay or provide to Employee:
(1) Employee's Base Salary through the Date of Termination;
(2) incentive compensation due Employee, if any, under the
terms of the relevant incentive compensation arrangement;
(3) within thirty (30) days after the Date of Termination, a
lump sum cash payment equal to three (3) times the sum of:
(i) Employee's Base Salary at the highest annual rate in
effect on or before the Date of Termination (but
prior to giving effect to any reduction therein which
precipitated such termination), plus
(ii) An amount equal to the greater of:
(A) the average of the incentive bonuses paid to
Employee for the last three (3) full fiscal
years of Employer ending before the Date of
Termination (or, if Employee was not
employed by Employer
-10-
hereunder for such last three (3) full
fiscal years, the average of the incentive
bonuses paid to Employee for the number of
full fiscal years of Employer ending before
the Date of Termination during which
Employee was employed by Employer
hereunder);
(B) the incentive bonus paid to Employee for the
last full fiscal year of Employer ending
before the Date of Termination; or
(C) an amount equal to Employee's Base Salary
described in Section 6(e)(3)(i) multiplied
by Employee's target percentage under the
Key Contributor Incentive Compensation Plan
or other replacement incentive or bonus plan
of Employer for the fiscal year which
includes the Date of Termination;
(4) if immediately prior to the Date of Termination Employee
(and, if applicable, his spouse and/or dependents) was covered under
Employer's group medical, dental, health and hospital plan in effect
at such time, then Employer shall, at its election, pay or provide
to Employee one (but not both) of the following:
(1) for eighteen (18) months after the Date of
Termination, and provided that Employee has timely
elected under COBRA to continue coverage under such
plan, Employer will, at no greater cost or expense to
Employee than was the case immediately prior to the
Date of Termination, maintain such continued coverage
in full force and effect; or
(ii) pay to Employee a lump sum cash payment (the "Section
6(e)(4)(ii) Payment") equal to the sum of:
(A) an amount equal to (I) eighteen (18),
multiplied by (II) the amount of the
applicable monthly COBRA premium (determined
based upon the applicable COBRA premium rate
in effect immediately after the Date of
Termination) Employee would pay if Employee
elected under COBRA to maintain coverage
identical to the coverage Employee (and, if
applicable, his spouse and/or dependents)
had under such plan immediately prior to the
Date of Termination; plus
(B) an amount equal to the excess of (I) an
amount determined by dividing (x) the amount
determined
-11-
under Section 6(e)(4)(ii)(A) above, by (y)
one (1) minus the sum of the following which
shall be determined for the calendar year
that includes the date of payment of the
Section 6(e)(4)(ii) Payment and shall be
expressed as a decimal: (i) the highest
marginal U.S. federal income tax rate
applicable to individuals for such calendar
year, plus (ii) the highest foreign, state,
provincial and/or local individual income
tax rate or rates, if any, to which the
Section 6(e)(4)(ii) Payment is subject for
such calendar year (which shall be
determined based on the assumption that
Employee pays income tax to any such
foreign, state, provincial or local
jurisdiction at the highest marginal rate of
income tax imposed by such jurisdiction on
individuals), plus, (iii) the Hospital
(Medicare) Insurance tax rate under Section
3101(b) of the Code (or any corresponding
successor statute) for such calendar year,
over (II) the amount determined under
Section 6(e)(4)(ii)(A) above; and
(5) the following shall occur immediately upon the occurrence
of such Change in Control:
(i) each option to acquire Common Stock or other equity
securities of Employer held by Employee immediately
prior to such Change in Control shall become fully
exercisable, regardless of whether or not the vesting
conditions set forth in the relevant stock option
agreement have been satisfied in full, and shall
remain fully exercisable for the remainder of the
ten-year term of such option; and
(ii) all restrictions on any restricted Common Stock or
other equity securities of Employer granted to
Employee prior to such Change in Control shall be
removed and such Common Stock or other equity
securities shall be freely transferable (subject to
applicable securities laws), regardless of whether
the conditions set forth in the relevant restricted
stock agreements have been satisfied in full.
As a condition to making the payments and providing the benefits specified in
this Section 6(e), Employer will require that Employee execute a release of all
claims Employee may have against Employer at the time of Employee's termination.
Such release will be in substantially the same form as Exhibit B attached
hereto.
-12-
(f) Notwithstanding anything contained in this Agreement to the
contrary, if following the commencement of any discussion with a third person
that ultimately results in a Change in Control, (i) Employee's employment with
Employer is terminated by Employer for no reason or for any reason other than
Cause, (ii) Employee is removed from any material duties or position with
Employer, or (iii) Employer fails to comply with any of the provisions of
Section 2 of this Agreement, then for all purposes of this Agreement, such
Change in Control shall be deemed to have occurred on the date immediately prior
to the date of such termination, removal, or failure.
(g) For purposes of this Agreement, a "Change in Control" shall mean
the occurrence of any of the following after the Effective Date:
(1) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended from time to time (the "Exchange
Act"), or any successor statute) (a "Covered Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of either (i) the then outstanding
shares of Common Stock (the "Outstanding Company Common Stock"), or
(ii) the combined voting power of the then outstanding voting
securities of Employer entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this Section 6(g)(1), the following
acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from Employer, (ii) any acquisition by
Employer, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Employer or any entity
controlled by Employer, or (iv) any acquisition by any corporation
pursuant to a transaction which complies with Section 6(g)(3)(i),
(ii) or (iii); or
(2) individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date
whose election, or nomination for election by Employer's
stockholders, was approved by a vote of at least two-thirds of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Covered Person other than the Board;
or
(3) consummation of (xx) a reorganization, merger,
amalgamation, consolidation, sale or other form of business
combination of Employer or any subsidiary of Employer, or (yy) a
sale, lease, exchange, disposition or other transfer of all or
substantially all of the assets of Employer (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding
-13-
Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 75%
of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of
such transaction owns Employer or all or substantially all of
Employer's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Covered Person (excluding
any employee benefit plan (or related trust) of Employer or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation, except to the
extent that such ownership existed prior to the Business
Combination, and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such Business
Combination, were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board of
Directors, providing for such Business Combination; or
(4) approval by the stockholders of Employer of a complete
liquidation or dissolution of Employer.
Section 7. Excise Tax.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by, or benefit
from, Employer or any of its affiliates to or for the benefit of Employee,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (any such payments, distributions or benefits being
individually referred to herein as a "Payment," and any two or more of such
payments, distributions or benefits being referred to herein as "Payments"),
would be subject to the excise tax imposed by Section 4999 of the 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 Employee shall be
entitled to receive 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 amount such that after
payment by Employee of all taxes (as defined in Section 7(k)) imposed upon the
Gross-Up Payment, Employee retains an amount of such Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 7(c) through (i), any
determination (individually, a "Determination") required to be made under this
Section 7(b), including whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, shall initially be made, at Employer's expense, by
nationally recognized tax counsel selected by Employer ("Tax
-14-
Counsel"). Tax Counsel shall provide detailed supporting legal authorities,
calculations, and documentation both to Employer and Employee within 15 business
days of the termination of Employee's employment, if applicable, or such other
time or times as is reasonably requested by Employer or Employee. If Tax Counsel
makes the initial Determination that no Excise Tax is payable by Employee with
respect to a Payment or Payments, it shall furnish Employee with an opinion
reasonably acceptable to Employee that no Excise Tax will be imposed with
respect to any such Payment or Payments. Employee 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
Employer's expense, be paid by Employer to or for the benefit of Employee within
five business days of Employee's receipt of such Determination. The existence of
a Dispute shall not in any way affect Employee'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 Employer and Employee,
subject in all respects, however, to the provisions of Section 7(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 Employer should have been made
("Underpayment"), and if upon any reasonable written request from Employee or
Employer to Tax Counsel, or upon Tax Counsel's own initiative, Tax Counsel, at
Employer's expense, thereafter determines that Employee is required to make a
payment of any Excise Tax or any additional Excise Tax, as the case may be, Tax
Counsel shall, at Employer's expense, determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by Employer
to or for the benefit of Employee.
(c) Employer shall defend, hold harmless, and indemnify Employee on
a fully grossed-up after tax basis from and against any and all claims, losses,
liabilities, obligations, damages, impositions, assessments, demands,
judgements, settlements, costs and expenses (including reasonable attorneys',
accountants', and experts' fees and expenses) with respect to any tax liability
of Employee resulting from any Final Determination (as defined in Section 7(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 to a claim by
Employee against Employer under this Section 7 ("Claim"), including, but not
limited to, a claim for indemnification of Employee by Employer under Section
7(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 Employee ("Employee Claim"),
Employee shall take or cause to be taken such action in connection with
contesting such Employee Claim as Employer shall reasonably request in writing
from time to time, including the retention of counsel and experts as are
reasonably designated by Employer (it being understood and agreed by the parties
hereto that the terms of any such retention shall expressly provide that
Employer 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:
-15-
(1) within 30 calendar days after Employer receives or
delivers, as the case may be, the Tax Claim Notice relating to such
Employee Claim (or such earlier date that any payment of the taxes
claimed is due from Employee, but in no event sooner than five
calendar days after Employer receives or delivers such Tax Claim
Notice), Employer shall have notified Employee in writing ("Election
Notice") that Employer does not dispute its obligations (including,
but not limited to, its indemnity obligations) under this Agreement
and that Employer elects to contest, and to control the defense or
prosecution of, such Employee Claim at Employer's sole risk and sole
cost and expense; and
(2) Employer shall have advanced to Employee on an
interest-free basis, the total amount of the tax claimed in order
for Employee, at Employer'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 Section 7(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 Employer shall only be entitled to xxx for a refund and
Employer shall not be entitled to initiate any proceeding in, for
example, United States Tax Court) and shall indemnify and hold
Employee 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
(3) Employer shall reimburse Employee for any and all costs
and expenses resulting from any such request by Employer and shall
indemnify and hold Employee harmless, on fully grossed-up after-tax
basis, from any tax imposed as a result of such reimbursement.
(f) Subject to the provisions of Section 7(e) hereof, Employer shall
have the right to defend or prosecute, at the sole cost, expense and risk of
Employer, such Employee Claim by all appropriate proceedings, which proceedings
shall be defended or prosecuted diligently by Employer to a Final Determination;
provided, however, that (i) Employer shall not, without Employee's prior written
consent, enter into any compromise or settlement of such Employee Claim that
would adversely affect Employee, (ii) any request from Employer to Employee
regarding any extension of the statute of limitations relating to assessment,
payment, or collection of taxes for the taxable year of Employee with respect to
which the contested issues involved in, and amount of, Employee Claim relate is
limited solely to such contested issues and amount, and (iii) Employer's control
of any contest or proceeding shall be limited to issues with respect to Employee
Claim and Employee 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 Employer is diligently defending or
prosecuting such Employee Claim, Employee shall provide or cause to be provided
to Employer any information reasonably requested by Employer that relates to
such Employee Claim, and shall otherwise cooperate with Employer and its
representatives in good faith in order to contest effectively such Employee
Claim. Employer shall keep Employee informed of all developments and events
relating to any such Employee Claim (including, without limitation, providing to
Employee copies of all written materials pertaining to any such Employee Claim),
and Employee or his authorized representatives shall be entitled, at Employee's
expense, to participate in all conferences, meetings and proceedings relating to
any such Employee Claim.
-16-
(g) If, after actual receipt by Employee of an amount of a tax
claimed (pursuant to an Employee Claim) that has been advanced by Employer
pursuant to Section 7(e)(2) hereof, the extent of the liability of Employer
hereunder with respect to such tax claimed has been established by a Final
Determination, Employee shall promptly pay or cause to be paid to Employer any
refund actually received by, or actually credited to, Employee 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
Employer to Employee, whether under the provisions of this Agreement or
otherwise. If, after the receipt by Employee of an amount advanced by Employer
pursuant to Section 7(e)(2), a determination is made by the Internal Revenue
Service or other appropriate taxing authority that Employee shall not be
entitled to any refund with respect to such tax claimed and Employer does not
notify Employee in writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of any Gross-Up Payments
and other payments required to be paid hereunder.
(h) With respect to any Employee Claim, if Employer fails to deliver
an Election Notice to Employee within the period provided in Section 7(e)(1)
hereof or, after delivery of such Election Notice, Employer fails to comply with
the provisions of Section 7(e)(2) and (3) and (f) hereof, then Employee 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 Employer, such Employee Claim. Employee shall have full
control of such defense or prosecution and such proceedings, including any
settlement or compromise thereof. If requested by Employee, Employer shall
cooperate, and shall cause its Affiliates to cooperate, in good faith with
Employee and his authorized representatives in order to contest effectively such
Employee Claim. Employer may attend, but not participate in or control, any
defense, prosecution, settlement or compromise of any Employee Claim controlled
by Employee pursuant to this Section 7(h) and shall bear its own costs and
expenses with respect thereto. In the case of any Employee Claim that is
defended or prosecuted by Employee, Employee shall, from time to time, be
entitled to current payment, on a fully grossed-up after tax basis, from
Employer with respect to costs and expenses incurred by Employee in connection
with such defense or prosecution.
(i) In the case of any Employee Claim that is defended or prosecuted
to a Final Determination pursuant to the terms of this Section 7(i), Employer
shall pay, on a fully grossed-up after tax basis, to Employee in immediately
available funds the full amount of any taxes arising or resulting from or
incurred in connection with such Employee Claim that have not theretofore been
paid by Employer to Employee, 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 Employer to Employee, within ten calendar days after
such Final Determination. In the case of any Employee Claim not covered by the
preceding sentence, Employer shall pay, on a fully grossed-up after tax basis,
to Employee in immediately available funds the full amount of any taxes arising
or resulting from or incurred in connection with such Employee Claim at least
ten calendar days before the date payment of such taxes is due from Employee,
except where
-17-
payment of such taxes is sooner required under the provisions of this Section
7(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
Section 7(i) shall be made within the time and in the manner otherwise provided
in this Section 7(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.
Section 8. Expenses of Enforcement.
Upon demand by Employee made to Employer, Employer shall reimburse
Employee for the reasonable expenses (including attorneys' fees and expenses)
incurred by Employee after a Change in Control in enforcing or seeking to
enforce the payment of any amount or other benefit to which Employee shall have
become entitled under this Agreement as a result of the termination of
Employee's employment with Employer within two (2) years after such Change in
Control, including, but not limited to, those incurred in connection with any
arbitration concerning same initiated pursuant to Section 14 (regardless of the
outcome of such arbitration). To the extent that any such reimbursement would be
subject to the Excise Tax, then Employee shall be entitled to receive Gross-Up
Payments in an amount such that after payment by Employee of all taxes imposed
on such Gross-Up Payments, Employee retains an amount equal to the Excise Tax
imposed upon the reimbursement, and the other provisions of Section 7 hereof
shall also apply to such circumstance unless the context thereof otherwise
indicates.
Section 9. No Obligation to Mitigate; No Rights of Offset.
(a) Employee shall not be required to mitigate the amount of any
payment or other benefit required to be paid to Employee pursuant to this
Agreement, whether by seeking other employment or otherwise, nor shall the
amount of any such payment or other benefit be reduced on account of any
compensation earned by Employee as a result of employment by another person.
(b) Employer'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 Employer may have against Employee or others.
-18-
Section 10. No Effect on Other Rights.
Nothing in this Agreement shall prevent or limit Employee's continuing
or future participation in any plan, program, policy or practice of or provided
by Employer or any of its affiliates and for which Employee may qualify, nor
shall anything herein limit or otherwise affect such rights as Employee may have
under any stock option or other agreements with Employer or any of its
affiliates. Amounts which are vested benefits or which Employee is otherwise
entitled to receive under any plan, program, policy or practice of or provided
by, or any other contract or agreement with, Employer or any of its affiliates
at or subsequent to the Date of Termination shall be payable or otherwise
provided in accordance with such plan, program, policy or practice or contract
or agreement except as explicitly modified by this Agreement.
Section 11. Successors; Binding Agreement.
(a) This Agreement is personal to Employee and without the prior
written consent of Employer shall not be assignable by Employee otherwise than
by will or the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
(b) This Agreement shall inure to the benefit of and be binding upon
Employer and its successors and assigns.
(c) Employer will require any successor (whether direct or indirect,
by purchase, merger, amalgamation, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer, by agreement in
form and substance reasonably satisfactory to Employee, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
Employer would be required to perform it if no such succession had taken place.
As used in this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by execution and delivery of the
agreement provided for in this Section 11(c) or which otherwise becomes bound by
the terms and provisions of this Agreement by operation of law or otherwise.
Section 12. Non-Competition; Non-Solicitation; No Hire.
(a) Employee agrees that, effective as of the Effective Date and for
a period that includes the term of this Agreement and (i) eighteen (18) months
thereafter in the event of a termination of Employee's employment with Employer
described in Section 6(e), and (ii) twelve (12) months thereafter in all other
events (such applicable period being referred to herein as the "Non-Compete
Period"), Employee shall not, without the prior written consent of Employer,
directly or indirectly, anywhere in the world, engage, invest, own any interest,
or participate in, consult with, render services to, or be employed by any
business, person, firm or entity that is in competition with the "Business" (as
defined in Section 12(d)) of Employer or any of its subsidiaries or affiliates,
except for the account of Employer and its subsidiaries and affiliates;
provided, however, that during the Non-Compete Period Employee may acquire,
solely as a
-19-
passive investment, not more than five percent (5%) of the outstanding shares or
other units of any security of any entity subject to the requirements of Section
13 or 15(d) of the Exchange Act. Employee acknowledges that a remedy at law for
any breach or attempted breach of this covenant not to compete will be
inadequate and further agrees that any breach of this covenant not to compete
will result in irreparable harm to Employer, and, accordingly, Employer shall,
in addition to any other remedy that may be available to it, be entitled to
specific performance and temporary and permanent injunctive and other equitable
relief (without proof of actual damage or inadequacy of legal remedy) in case of
any such breach or attempted breach. Employee acknowledges that this covenant
not to compete is being provided as an inducement to Employer to enter into this
Agreement and that this covenant not to compete contains reasonable limitations
as to time, geographical area and scope of activity to be restrained that do not
impose a greater restraint than is necessary to protect the goodwill or other
business interest of Employer. Whenever possible, each provision of this
covenant not to compete shall be interpreted in such a manner as to be effective
and valid under applicable law but if any provision of this covenant not to
compete shall be prohibited by or invalid under applicable law, such provision
of this covenant not to compete shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of this
covenant not to compete. If any provision of this covenant not to compete shall,
for any reason, be judged by any court of competent jurisdiction to be invalid
or unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this covenant not to compete but shall be confined in its operation
to the provision of this covenant not to compete directly involved in the
controversy in which such judgment shall have been rendered. In the event that
the provisions of this covenant not to compete should ever be deemed to exceed
the time or geographic limitations permitted by applicable laws, then such
provision shall be reformed to the maximum time or geographic limitations
permitted by applicable law.
(b) In addition to the restrictions set forth in Section 12(a),
Employee agrees that, effective as of the Effective Date and for a period that
includes the term of this Agreement and twelve (12) months thereafter, Employee
will not, either directly or indirectly, (i) make known to any person, firm or
entity that is in competition with the Business of Employer or any of its
subsidiaries or affiliates the names and addresses of any of the suppliers or
customers of Employer or any of its subsidiaries or affiliates, potential
customers of Employer or any of its subsidiaries or affiliates upon whom
Employer or any of its subsidiaries or affiliates has called upon in the last
twelve (12) months or contacts of Employer or any of its subsidiaries or
affiliates or any other information pertaining to such persons, or (ii) call on,
solicit, or take away, or attempt to call on, solicit or take away any of the
suppliers or customers of Employer or any of its subsidiaries or affiliates,
whether for Employee or for any other person, firm or entity.
(c) Effective as of the Effective Date and for a period that
includes the term of this Agreement and twelve (12) months thereafter, Employee
will not, either on his own account or for any other person, firm, partnership,
corporation, or other entity (i) solicit any employee of Employer or any of its
subsidiaries or affiliates to leave such employment; or (ii) induce or attempt
to induce any such employee to breach her or his employment agreement with
Employer or any of its subsidiaries or affiliates.
-20-
(d) As used in this Agreement, "Business" means the business of
acquiring, processing and/or interpreting geophysical data and/or producing
and/or conducting geophysical surveys, including, but not limited to, (x) the
business of surface seismic acquisition and/or surface seismic data processing
and/or interpretation for the purpose of providing and/or interpreting seismic
images of the subsurface of the earth, and (y) the following activities and
services: (i) all forms of surface land, marine, ocean bottom cable and
transition zone seismic data acquisition; (ii) all forms of surface seismic data
processing, including the processing of two, three and/or four dimensional
vertical seismic profiling; (iii) recording of data from wellbore seismic arrays
performed during simultaneous acquisition of surface two, three and/or four
dimensional data; (iv) trenched in, buried near surface or seabed permanent
array installation and acquisition; (v) surface seismic acquisition, processing,
interpretation and/or sales, in each case, of multiclient surveys; (vi)
maintenance of surface seismic data processing centers, including licensing and
support of surface seismic processing software; (vii) equipment design and
manufacture for surface seismic acquisition, processing and interpretation;
(viii) research and development programs for any of the items described in this
Section 12(d) and seismically-assisted reservoir solutions, including software
relating thereto; (ix) surface seismic data management services; (x)
interpretation activities related to or in support of acquisition and processing
activities described in this Section 12(d); (xi) borehole seismic acquisition
and installation and acquisition of data from wellbore seismic arrays; (xii)
reservoir management; (xiii) commercial seismically-assisted reservoir
solutions; and (xiv) non-seismic data management and non-seismic dynamic
reservoir characterization and performance prediction.
Section 13. Miscellaneous.
(a) All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith will be in writing
and will be delivered by hand or by registered or certified mail, return receipt
requested to the addresses set forth below in this Section 13(a):
If to Employer, to:
Veritas DGC Inc.
00000 Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
If to Employee, to:
Xx. Xxxxxxx X. Xxxxx
0000 Xxxxxx Xxx
Xxxxxxx, Xxxxx 00000
or to such other names or addresses as Employer or Employee, as the case may be,
designate by notice to the other party hereto in the manner specified in this
Section.
(b) With the exception of the Indemnity Agreement by and between
Employer and Employee dated as of March 7, 2000 which is specifically not
superceded or replaced by or merged into this Agreement, this Agreement
(including the Exhibits attached hereto) supersedes,
-21-
replaces and merges all previous agreements and discussions relating to the same
or similar subject matters between Employee and Employer (including any such
agreements or discussions between Employee and any past or present subsidiary or
affiliate of Employer) and constitutes the entire agreement between Employee and
Employer with respect to the subject matter of this Agreement. Specifically,
this Agreement supercedes and replaces the Original Employment Agreement. This
Agreement may not be modified in any respect by any verbal statement,
representation or agreement made by any employee, officer, or representative of
Employer or by any written agreement unless signed by an officer of Employer who
is expressly authorized by the Board to execute such document.
(c) If any provision of this Agreement or application thereof to
anyone or under any circumstances should be determined to be invalid or
unenforceable, such invalidity or unenforceability will not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application. In addition, if any
provision of this Agreement is held by an arbitration panel or a court of
competent jurisdiction to be invalid, unenforceable, unreasonable, unduly
restrictive or overly broad, the parties intend that such arbitration panel or
court modify said provision so as to render it valid, enforceable, reasonable
and not unduly restrictive or overly broad.
(d) The internal laws of the State of Texas will govern the
interpretation, validity, enforcement and effect of this Agreement without
regard to the place of execution or the place for performance thereof.
Section 14. Arbitration.
(a) Employer and Employee agree to submit to final and binding
arbitration any and all disputes or disagreements concerning the interpretation
or application of this Agreement. Any such dispute or disagreement will be
resolved by arbitration in accordance with the National Rules for the Resolution
of Employment Disputes of the American Arbitration Association (the "AAA
Rules"). Arbitration will take place in Houston, Texas, unless the parties
mutually agree to a different location. Within 30 calendar days of the
initiation of arbitration hereunder, each party will designate an arbitrator.
The appointed arbitrators will then appoint a third arbitrator. Employee and
Employer agree that the decision of the arbitrators will be final and binding on
both parties. Any court having jurisdiction may enter a judgment upon the award
rendered by the arbitrators. In the event the arbitration is decided in whole or
in part in favor of Employee, Employer will reimburse Employee for his
reasonable costs and expenses of the arbitration (including reasonable
attorneys' fees); provided, however, that Employer shall reimburse Employee in
accordance with Section 8 for the reasonable expenses (including attorneys' fees
and expenses) incurred by Employee in enforcing or seeking to enforce in any
arbitration the payment of any amount or other benefit described in Section 8
regardless of the outcome of such arbitration. Regardless of the outcome of any
arbitration, Employer will pay all fees and expenses of the arbitrators and all
of Employer's costs of such arbitration.
(b) Notwithstanding the provisions of Section 14(a), Employer may,
if it so chooses, bring an action in any court of competent jurisdiction for
injunctive relief to enforce Employee's obligations under Sections 3(b), 3(c),
3(d) or 12 hereof.
-22-
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as to be effective as of the Effective Date.
EMPLOYER:
VERITAS DGC INC.
By:
------------------------------------------
Xxxxx X. Xxxxxx
Chairman & Chief Executive Officer
EMPLOYEE:
---------------------------------------------
Xxxxxxx X. Xxxxx
-23-
[VERITAS LOGO]
EMPLOYEE CONFIDENTIALITY
AND
INTELLECTUAL PROPERTY AGREEMENT
As part of the consideration for my employment or continued employment with
Veritas DGC Inc. or any company affiliated with Veritas (collectively referred
to as "Veritas"), I agree to the following:
1. CONFIDENTIAL INFORMATION. I understand that during my employment with
Veritas, I will have access to Confidential Information that belongs to
Veritas. Some examples of the types of Confidential Information I may
receive include:
(a). Customer lists, customer requirements, customer contracts and
service agreements, customer profitability and other financial
information;
(b). Business plans, pricing and marketing techniques and
strategies, product information, business software and
computer programs, costing methodologies and allocation
modeling, and methods of business operation or procedure;
(c). Suppliers, business associates, business connections and
opportunities and information concerning the financial status
and private affairs of Veritas; and
(d). Trade secrets, inventions, improvements, developments,
technical data, test results, designs, and materials for which
Veritas may or may not have obtained patent, copyright or
trademark protection.
I may receive Confidential Information in writing, orally, or
electronically.
2. CONFIDENTIALITY AGREEMENT. I agree to hold all Confidential Information
in confidence during and following my employment. I will not divulge it
to anyone without the express written authorization of the Company. I
further agree that if my employment ceases, I will not take any
Confidential Information with me or disclose it to anyone not
authorized by the Company.
CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT PAGE 1
EXHIBIT A
3. ASSIGNMENT OF INTELLECTUAL PROPERTY. I assign to Veritas all
inventions, novel ideas (including ideas relating to new products, new
services, or new methods of doing business), improvements or
discoveries which I conceive or make, either alone or with others: (a)
with the use of Veritas' time, materials, or facilities; or (b)
resulting from or suggested by my work for Veritas; or (c) in any way
related to any business Veritas is engaged in or plans to engage in.
All such inventions, improvements, and developments will automatically
become the property of Veritas immediately as I make them or conceive
them. I agree to assign to Veritas the rights to such inventions,
improvements and developments at any time Veritas requests, even after
my employment terminates.
4. EXECUTION OF DOCUMENTS. At any time Veritas requests, either during my
employment or after termination, and without charge to Veritas, but at
its expense, I agree to execute, acknowledge, and deliver all
additional papers (including applications for patents and assignments
of patents) and to perform such other lawful acts as Veritas may deem
reasonably necessary to obtain or maintain patents for such inventions
in any country and to vest title to such inventions in Veritas.
5. This Agreement may not be modified, released, discharged, abandoned or
terminated, except as agreed in writing between Veritas and the
undersigned employee.
IN WITNESS WHEREOF this Agreement has been signed and delivered this ________
day of ____________________, 20___.
----------------------------------- -----------------------------------
WITNESS EMPLOYEE SIGNATURE
----------------------------------- -----------------------------------
PRINTED NAME PRINTED NAME
AGREEMENT AND RELEASE OF ALL CLAIMS
This Agreement, entered into as of the date written by Employee's
signature below, is by and between Veritas DGC Inc. ("Veritas"), a Delaware
corporation, and _______________ ("Employee"). (As used in this Agreement, the
term "Veritas" includes Veritas DGC Inc., and all of its subsidiary and
affiliated companies).
Veritas and Employee agree as follows:
Section 1. Within 5 business days after the Separation Date, as defined
in Section 3 below, and whether or not Employee executes and returns this
Agreement, Veritas will pay Employee the following amounts:
o Employee's regular base salary prorated through the Separation Date;
o Employee's vacation pay accrued as of the Separation Date; and
o any expense reimbursement owed to Employee under Veritas policy.
All of the above amounts will be REDUCED by applicable taxes and
withholding.
Section 2. [Insert Option A or Option B, whichever is applicable:]
[Option A: During the two-year period ending on the second anniversary
of the Separation Date, Employer shall pay to Employee an aggregate amount (the
"Severance Payment") equal to two (2) times Employee's Base Salary (as defined
in the Employment Agreement between Employer and Employee dated October 22,
2001, the "Employment Agreement") at the highest annual rate in effect on or
before the Separation Date (but prior to giving effect to any reduction therein
which precipitated such termination), which Severance Payment will be paid to
Employee in equal installments every two weeks during such two-year period;
provided, however, that at any time during such two-year period Employer may, in
its discretion, elect to pay to Employee the then remaining balance of the
Severance Payment in the
form of a lump sum cash payment. All amounts so paid will be REDUCED by
applicable taxes and withholding.
In addition, Employer will pay or provide for Employee's medical,
dental, health, and hospital coverage for one year or pay Employee a lump cash
payment in lieu of such coverage, in accordance with Section 6(d)(4) of the
Employment Agreement.]
[Option B: Within 30 calendar days after the Effective Date, as defined
in Section 15 below, Veritas will pay to Employee a lump sum equal to
__________. This amount will be REDUCED by applicable taxes and withholding.
In addition, Employer will pay or provide for Employee's medical,
dental, health, and hospital coverage for eighteen months or pay Employee a lump
cash payment in lieu of such coverage, in accordance with Section 6(e)(4) of the
Employment Agreement by and between Employer and Employee effective October 22,
2001 (the "Employment Agreement").]
Section 3. Employee's termination from employment will be effective at
the close of business on the Separation Date. The SEPARATION DATE as used in
this Agreement means _________.
Section 4. Employee agrees to release Veritas from any claims he has or
may have against Veritas as of the date he signs this Agreement. The claims he
is releasing include all of the following:
o any claims under any bonus or incentive plans;
o any claims for tortious action or inaction of any sort
("tortious action or inaction" means, among other things,
claims for such things as negligence, fraud, libel, or
slander);
o any claims arising under the Age Discrimination in Employment
Act of 1967 as amended (29 U.S.C. Section 621, et seq.) (the
Age Discrimination in Employment Act of 1967 prohibits, in
general, discrimination against employees on the basis of
age);
o any claims arising under Title VII of the Civil Rights Act of
1964 as amended (42 U.S.C. Section 2000e, et seq.), or the
Texas Commission on Human Rights Act (Texas Labor Code Section
21.001, et seq.) (both of these statutes, in general, prohibit
discrimination in employment on the basis of race, religion,
national origin or gender);
o any claims arising under the Americans with Disabilities Act
of 1990, as amended (42 U.S.C. Section 12101, et seq.) (the
Americans with Disabilities Act of 1990 prohibits, in general,
discrimination in employment on the basis of an employee's or
applicant's disability);
o any claims arising under Texas Labor Code Sections 451.001, et
seq. for retaliation or discrimination in connection with a
claim for workers' compensation benefits; and,
o any claims for breach of contract, wrongful discharge,
constructive discharge, retaliation, or conspiracy.
The release contained in this Section 4 WILL NOT affect any of the
following:
o Employee's rights or benefits under Veritas' 401(k) retirement
savings plan, Veritas' Employee Stock Purchase Plan, or any
pension or retirement plan in which Employee is a participant
on the Separation Date (Employee's rights and benefits will be
determined by the applicable plan documents);
o Employee's right to elect continued health and/or dental
benefits under the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA");
o Employee's right to exercise any options to purchase Veritas
DGC Inc. common stock in accordance with the terms of the
applicable stock option grant, including any terms of the
grant modified by Section 6(e)(5) of the Employment Agreement;
o Employee's rights under any restricted stock agreement between
Employee and Veritas DGC Inc. under the terms of which
Employee has been granted Veritas DGC Inc. restricted stock,
including any terms of the grant modified by Section 6(e)(5)
of the Employment Agreement;
o Employee's right to claim and receive reimbursement for or
indemnity from excise taxes in accordance with Section 7 of
the Employment Agreement;
o Employee's rights to indemnity under that one certain
Indemnity Agreement effective March 7, 2000, by and between
Employer and Employee;
o Any other benefit to which Employee may be entitled under any
other health or benefit plan in accordance with the applicable
plan documents; or
o Employee's rights under any workers' compensation statue; the
Xxxxx Act, 46 U.S.C. Appx. Section 688, as amended; general
maritime law or similar laws; and any other right Employee may
have with respect to bodily injury.
Section 5. Veritas and Employee agree that this Agreement is a binding
contract. The purpose of the Agreement is to compromise doubtful or disputed
claims, avoid litigation, and buy peace. Employee agrees that although Veritas
is making payment to Employee in exchange for a release of claims, Veritas does
not admit any wrongdoing of any kind.
Section 6. Employee agrees to assist Veritas in defending any legal
proceedings against Veritas arising out of matters which occurred on or prior to
the Separation Date. Veritas agrees to reimburse Employee for his time and
expense or costs he may incur in that regard.
Section 7. Employee confirms that after the Effective Date he remains
subject to and agrees to comply with:
o those obligations of confidentiality contained in Section 3(b)
and 3(c) of the Employment Agreement;
o the provisions relating to competition with Employer contained
in Section 12 of the Employment Agreement;
o the provisions relating to solicitation or hiring of
Employer's employees contained in Section 12 of the Employment
Agreement; and
o the terms of the Employee Confidentiality and Intellectual
Property Agreement with Employer which Employee signed
effective October 22, 2001.
Section 8. This Agreement has been delivered to Employee on __________.
o Employee will have 21 calendar days from ___________ or until
the close of business on ___________ to decide whether to sign
and return this Agreement and be bound by its terms. In the
event Employee has not signed and returned this Agreement to
Veritas on or before __________, this Agreement will become
null and void.
o Veritas and Employee agree that if they agree to change the
terms of this Agreement in any manner after it is delivered to
Employee, even if the changes are material, the 21-day period
specified in the previous paragraph will not restart or be
extended.
o After signing this Agreement, Employee will have the right to
revoke the Agreement for a period of 7 calendar days after
signing it by (a) notifying Veritas in writing that Employee
revokes the Agreement and (b) returning to Veritas any
consideration paid Employee under Section 2 above. In the
event Employee revokes the Agreement, it will become null and
void.
Section 9. Employee acknowledges that he has read this Agreement. He
understands that, except for the exceptions set out in Section 4 above, this
Agreement will have the effect of waiving any claim he may pursue against
Veritas.
Section 10. Employee acknowledges that he makes this Agreement
knowingly and voluntarily.
Section 11. This Agreement constitutes the entire understanding between
Veritas and Employee with respect to the subject matter hereof.
Section 12. This Agreement will benefit and be binding upon Veritas and
its successors and assigns and Employee and his successors and legal
representatives. Employee will not assign or attempt to assign any of his rights
under this Agreement.
Section 13. If a court determines that any provision of this Agreement
is invalid, the other provisions will remain in effect.
Section 14. This Agreement will be governed by, construed under, and
enforced in accordance with the laws of the State of Texas, not including,
however, its conflicts of law rules that might otherwise refer to the law of
another forum or jurisdiction.
Section 15. This Agreement will become effective and enforceable only
after a period of 7 days has expired following Employee's execution and delivery
of this Agreement to Veritas (this date is referred to in this Agreement as the
"EFFECTIVE DATE").
THIS AGREEMENT IS SUBJECT TO ARBITRATION IN
ACCORDANCE WITH THE FOLLOWING SECTION
Section 16. Employer and Employee agree to submit to final and binding
arbitration any and all disputes or disagreements concerning the interpretation
or application of this Agreement. Any such dispute or disagreement will be
resolved by arbitration in accordance with the National Rules for the Resolution
of Employment Disputes of the American Arbitration Association (the "AAA
Rules"). Arbitration will take place in Houston, Texas, unless the parties
mutually agree to a different location. Within 30 calendar days of the
initiation of arbitration hereunder, each party will designate an arbitrator.
The appointed arbitrators will then appoint a third arbitrator. Employee and
Employer agree that the decision of the arbitrators will be final and binding on
both parties. Any court having jurisdiction may enter a judgment upon the award
rendered by the arbitrators. In the event the arbitration is decided in whole or
in part in favor of Employee, Employer will reimburse Employee for his
reasonable costs and expenses of the arbitration (including reasonable
attorneys' fees). Regardless of the outcome of any arbitration, Employer will
pay all fees and expenses of the arbitrators and all of Employer's costs of such
arbitration.
Notwithstanding the provisions of the previous paragraph, Employer may,
if it so chooses, bring an action in any court of competent jurisdiction for
injunctive relief to enforce Employee's obligations under Section 7 of this
Agreement.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Effective Date.
VERITAS:
VERITAS DGC INC.
and subsidiary and affiliated companies
By:
-------------------------------------
NOTICE TO EMPLOYEE
BY SIGNING THIS DOCUMENT, YOU MAY BE GIVING UP IMPORTANT LEGAL RIGHTS. YOU ARE
ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING AND RETURNING THIS DOCUMENT
TO VERITAS.
EMPLOYEE:
------------------------------------
Date:
-------------------------------
