EMPLOYMENT AGREEMENT
This agreement ("Agreement") is made effective as of June 11, 1996, by and
between Ameron International Corporation, a Delaware corporation, (the
"Company") and Xxxxx X. Xxxxxx ("Employee").
In consideration of the mutual promises and agreements set forth herein,
the Company and Employee agree as follows:
1. TERM.
1.1 The term of this agreement shall be from June 11, 1996 through June 10,
1999, (the "Term") subject to earlier termination in accordance with the
provisions of section 10 hereinbelow. The Term is subject to extension
upon the mutual agreement of both parties hereto.
2. POSITION AND TITLE.
2.1 The Company hereby employs Employee as its Chairman of the Board, President
and Chief Executive Officer, and Employee hereby accepts such employment.
2.2 Employee shall devote substantially all of his efforts on a full time basis
to the business and affairs of the Company and to its subsidiaries and
affiliates. Employee shall not engage in any business or perform any
services in any capacity whatsoever adverse to the interests of the
Company.
2.3 Employee shall at all times faithfully, industriously, and to the best of
his ability, experience and talents, perform all of the duties of the
office of Chairman of the Board, President and Chief Executive Officer of
the Company.
2.4 As President and Chief Executive Officer, Employee shall be responsible to
the Board of Directors for all actions and activities of the Company.
3. (deleted)
4. BASE SALARY.
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4.1 As of June 11, 1996, Employee's base salary is $515,000 per year.
Employee's base salary and performance shall be reviewed annually during
the Term, by the Board of Directors of the Company and may be increased
from time to time at the discretion of, and by, such board based on merit
or such other considerations as such Board shall deem appropriate.
5. SHORT-TERM INCENTIVE BONUS.
5.1 The Company has adopted a management incentive bonus plan for its
executives, which plan is currently known as the "Management Incentive
Compensation Plan" (herein the "MIC Plan"), and a Key Executive Long-Term
Cash Incentive Plan (herein the "LTIP").
5.2 Employee shall be deemed to be a participant under the MIC Plan and the
LTIP, as well as any successor management incentive bonus plans adopted by
the Company for its executives. Individual goals and guidelines for bonus
payable to Employee under the MIC Plan and the LTIP, and any successor
plans, shall be subject to review and approval by the Board of Directors of
the Company.
5.3 Employee's participation in the MIC Plan and the LTIP shall be in
accordance with the terms and conditions of those plans and other
compensation arrangements as agreed to herein. In the event of Employee's
termination of employment other than for cause (as defined in paragraph
10.1 hereinbelow) Employee shall be entitled to a pro-rata portion of the
award he would have been entitled to receive under the MIC Plan in respect
of the fiscal year in which Employee's termination date occurs had he
continued in employment until the end of such fiscal year.
5.4 The Company shall consider in good faith any recommendations of Employee
with respect to any management incentive bonus plans subsequent to the MIC
Plan and the LTIP.
6. STOCK GRANTS & OPTIONS.
6.1 (deleted)
6.2 As promptly as possible, with due consideration to the limitations on
shares of the Company's stock available for award under the Company's 1992
Incentive Stock Compensation Plan, the Company shall cause Employee to be
granted stock options of 100,000 shares of the Company's common stock in
the form of non-qualified stock options with terms of 10 years from the
dates of actual grant, with vesting in four installments, each of which
shall equal twenty-five percent of the shares subject to the
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option during each of the succeeding four annual periods. The option price
for such 100,000 shares shall be $39.50, that being the New York Stock
Exchange closing market price of the Company's common stock (par value
$2.50) as of June 24, 1996, as agreed to by the Company's Board of
Directors at its meeting held on June 24, 1996.
6.3 Except as noted in paragraph 6.2 hereinabove, Employee hereby waives any
rights to claim any additional stock option grants during calendar years
1996, 1997 and 1998. Notwithstanding the foregoing additional stock grants
may be granted from time to time at the sole discretion of, and by, the
Board of Directors of the Company. The Board of Directors of the Company
shall consider in good faith any recommendations of Employee with respect
to any alternative formulas or plans for stock options.
7. (deleted)
8. PENSION.
8.1 During the Term, the Company shall provide pension benefits to Employee in
accordance with the terms and conditions of Company's Pension Plan for
Salaried Employees and its Supplemental Executive Retirement Plan as in
effect as of June 11, 1993.
8.2 In addition to the pension benefits described in paragraph 8.1 hereinabove,
the Company shall provide the following additional pension benefits to
Employee. Those additional benefits shall be calculated by crediting two
years of service for each actual year of service during the first 9-1/2
years of his employment by the Company under the Supplemental Executive
Retirement Plan described in paragraph 8.1 hereinabove, provided however
that in no event shall Employee's vested pension benefits from the Company
at age 65 be less than $114,302 in the event of Employee's voluntary or
involuntary termination before age 65.
8.3 Vesting of the pension benefits described in paragraphs 8.1 and 8.2
hereinabove began as of June 11, 1993.
8.4 In the event that Employee's employment is terminated by the Company
without cause (as defined in paragraph 10.2 hereinbelow) and/or a Change of
Control (as defined in paragraph 10.5 hereinbelow) during the Term,
Employee shall be entitled to the vested pension benefits described in
paragraph 8.1, and those described in paragraphs 8.2 and 8.3 hereinabove
plus three (3) additional years of credited service. However, in the event
that Employee should obtain new employment within three (3) years of the
date of such termination of employment with the Company, then Employee
shall be entitled only to the vested pension benefits described in
paragraphs 8.1, 8.2 and 8.3 hereinabove from the date of such termination
of employment with the Company and until the effective date of his new
employment.
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9. ADDITIONAL EMPLOYEE BENEFITS.
9.1 The Company shall provide Employee the right to participate in its
Executive Life Insurance plan, together with all other fringe benefit
programs in which executive officers of the Company generally participate
so long as such programs are continued by the Company, and all other fringe
benefit programs which may hereafter be adopted by the Company for its
executive officers.
9.2 The Company shall provide Employee the right to participate in its medical
and dental insurance plans.
9.3 In the event that Employee should voluntarily resign or is terminated
without cause (as defined in paragraph 10.2 hereinbelow) by the Company
during the Term, the Company shall provide Employee with substantially the
same level of health and medical benefits in effect for Employee as of the
date of such resignation or termination, with Employee remaining obligated
to continuing to pay employee contributions towards such coverage at the
same level as in effect as of such date, until the earlier of (1) the
second anniversary of such date of resignation or termination, or (2) the
date Employee becomes employed by another party.
9.4 The Company shall provide Employee the right to participate in its long-
term disability insurance plan, which as of this date generally provides
that in the event of total disability, the plan will provide a benefit
equal to 60% of base monthly salary less any income received by Employee
from other sources, such as by way of example and not limitation, Social
Security and worker's compensation.
9.5 The Company shall provide Employee the right to participate in its 401(k)
Savings Plan.
9.6 The Company shall reimburse Employee for dues and assessments for
membership at the Annandale Country Club and the California Club.
9.7 The Company shall provide Employee with the use of a company car
substantially equivalent to a Cadillac STS, together with normal
maintenance, insurance and operating expenses.
9.8 Employee shall be entitled to vacation in accordance with the customary
practice of the company with regard to its executives, which is currently
four (4) weeks annually.
9.9 Employee shall be reimbursed for financial/tax consulting services actually
incurred, not-to-exceed $5,000 annually.
9.10 The Company shall reimburse Employee for fees actually paid by Employee to
his
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legal counsel in connection with legal review of this employment agreement,
provided that such reimbursement shall not exceed $5000.00.
10. TERMINATION; EXTENSION.
10.1 During the Term of this Agreement, the Company's Board of Directors may
terminate Employee's employment herein at any time for cause as
contemplated by Section 2924 of the California Labor Code (copy of which in
effect as of the date hereof is attached hereto as Exhibit "E" and made a
part hereof), or as a result of a material breach by Employee of his
obligations under this Agreement, provided however that Company shall
provide Employee with not less than sixty (60) days prior written notice
describing the behavior or conduct which is alleged by the Company to
constitute cause for termination, and Employee shall be provided with
reasonable opportunity to correct such behavior or conduct within that
notice period.
10.2 In the event that the Company terminates Employee's employment for any
cause other than the causes set forth in paragraph 10.1 hereinabove, such
shall be considered to be termination "without cause." Removal from
Employee of the title of "President, Chief Executive Officer and Chairman
of the Board" during the Term, without Employee's consent, shall be deemed
to be termination without cause.
10.3 In the event that the Company terminates this Agreement or Employee's
employment hereunder without cause at any time between June 11, 1996 and
June 10, 1999, except for termination without cause under a Change of
Control (as that term is defined in paragraph 10.5 hereinabove), then:
(1) the Company shall pay Employee a lump-sum severance amount equal
to 3.5 times the sum of (i) Employee's annual base salary in
effect as of the date of termination, and (ii) the highest
management incentive bonus paid to Employee during that period of
time (but not less than sixty percent (60%) times Employee's
annual base salary determined as of the date of termination; and
(2) all unvested restricted stock grants and stock options granted to
Employee shall automatically vest in full.
10.4 On or before January 10, 1999 the Company shall review terms for the future
extension of the Term beyond June 10, 1999. In the event that following
their good faith efforts, the Company and Employee are unable to agree on
reasonable terms for such extension by March 10, 1999, which reasonable
terms shall be consistent with general competitive practices based on the
Company's peer group of companies, then, at Employee's option, Employee's
employment shall terminate on June 10, 1999 and Employee shall be entitled
to those termination benefits described in paragraphs 8.3,
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8.4, 9.3, 10.3 (1) and 10.3 (2) hereinabove. In the event however that the
Company and Employee continue their good faith negotiations for such an
extension of the Term through June 10, 1999, but have been unable to reach
agreement as of that date, this Agreement shall nevertheless be deemed to
remain in effect until the earlier of the following shall have occurred:
(1) mutual agreement for an extension is reached, (2) Employee's employment
is terminated by the Company, or (3) Employee exercises his option to
consider his employment terminated, in which case Employee shall be
entitled to those termination benefits described in paragraphs 8.3, 8.4,
9.3, 10.3(1) and 10.3(2) hereinabove.
10.5 In the event of Change of Control at any time between June 11, 1996 and
June 10, 1999:
(1) all unvested restricted stock grants and stock options granted to
Employee shall automatically vest in full; and
(2) in the event that the Company terminates Employee's employment
without cause at any time within the period of twelve (12) months
following the date of Change of Control, then Employee shall be
entitled to the following termination benefits:
(i) the Company shall pay Employee a lump-sum severance
amount equal to 2.99 times the sum of (a) Employee's
annual base salary in effect as of the date of
termination, and (b) the highest management incentive
bonus paid to Employee during that period of time (but
not less than sixty percent (60%) times Employee's
annual base salary determined as of the date of
termination;
(ii) all unvested restricted stock grants and stock options
granted to Employee shall automatically vest in full;
and
(iii) Employee shall be entitled to the benefits described in
paragraphs 8.3, 8.4 and 9.3 hereinabove.
The provisions of paragraph 10.5(2) above shall not be deemed to
be additional to those described in paragraph 10.3(1)
hereinabove.
Notwithstanding any other provisions in this Agreement or any other
agreement, plan or arrangement (except as provided in paragraph I of
Exhibit "T" herein, the provisions of which Exhibit are hereby fully
incorporated by reference), if any payment or benefit received or to be
received by Employee, whether under the terms of this Agreement, or any
other agreement, plan or arrangement with the Company, or any other plan,
arrangement or agreement with any person whose actions result in a Change
of
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Control or any person affiliated with the Company, (all such payments and
benefits being hereinafter referred to as "Total Payments") would be
subject, in whole or in part, to taxes imposed by Internal Revenue Code
("IRC") Section 4999, then the portion of the Total Payments payable under
this Agreement shall be reduced as provided in accordance with the
provisions of Exhibit "T".
As used herein, the term "Change of Control" means either: (1) the
dissolution or liquidation of the Company; (ii) a reorganization, merger
or consolidation of the Company with one or more corporations as a result
of which the Company is not the surviving corporation; (iii) approval by
the stockholders of the Company of any sale, lease, exchange or other
transfer (in one or a series of transactions) of all or substantially all
of the assets of the Company; (iv) approval by the stockholders of the
Company of any merger or consolidation of the Company in which the holders
of voting stock of the Company immediately before the merger or
consolidation will not own fifty percent (50%) or more of the outstanding
voting shares of the continuing or surviving corporation immediately after
such merger or consolidation; or (v) a change of 25% (rounded to the next
whole person) in the membership of the Board of Directors of the Company
within a 12-month period, unless the election or nomination for election by
stockholders of each new director within such period was approved by the
vote of 85% (rounded to the next whole person) of the directors then still
in office who were in office at the beginning of the 12-month period.
10.6 In the event that Employee should voluntarily resign or is terminated for
cause by the Company during the Term, Employee shall not be entitled to any
of the termination benefits described in this section 10, other than any
payment which may be due pursuant to section 10.5 hereinabove.
10.7 In the event that Employee should die or become disabled or incapacitated
for an uninterrupted period in excess of six (6) months during the Term,
then (1) all unvested restricted stock grants and stock options granted to
Employee shall automatically vest in full, and (2) Employee shall remain
eligible (or entitled as the case may be) for a pro-rated management
incentive or bonus award for the period prior to Employee's death or
disability.
11. COVENANTS.
11.1 Employee agrees that any and all confidential knowledge or information,
including but not limited to customer lists, books, records, data,
formulae, specifications, inventions, processes and methods, developments
and improvements, which has or have been or may be obtained or learned by
him in the course of his employment with the Company, will be held
confidential by him and that he will not disclose the same to any person
outside of the Company either during his employment or after his employment
by the Company has terminated.
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11.2 Employee agrees that upon termination of his employment with the Company he
will immediately surrender and turn over to the Company all books, records,
forms, specifications, formulae, data and all papers and writings relating
to the business of the Company and all other property belonging to the
Company, it being understood and agreed that the same are the sole property
of the Company and that Employee will not make or retain any copies
thereof.
11.3 Employee agrees that all inventions, developments or improvements which he
may make, conceive, invent, discover or otherwise acquire during his
employment by the Company in the scope of his responsibilities or otherwise
shall become the sole property of the Company.
12. MISCELLANEOUS.
12.1 All terms and conditions of this Agreement are set forth herein, and there
are no warranties, agreements or understandings, express or implied, except
those expressly set forth herein.
12.2 Any modification of this Agreement shall be binding only if evidenced in
writing signed by both parties hereto.
12.3 Any notice or other communication required or permitted to be given
hereunder shall be deemed properly given if personally delivered or
deposited in the United States mail, registered or certified and postage
prepaid, address to the Company at 000 X. Xxx Xxxxxx Xxx., Xxxxxxxx, XX
00000, or to Employee at 000 Xxxxx Xxxxxx Xxxxx Xxxxxxxxx #0, Xxxxxxxx, XX
00000, or at such other addresses as may from time to time be designated by
the respective parties in writing.
12.4 The laws of the State of California shall govern the validity of this
Agreement, the construction of its terms and the interpretation of the
rights an duties of the parties.
12.5 In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or
unenforceable, the same shall not affect any other provisions of this
Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provisions had never been contained herein.
12.6 This Agreement shall be binding upon, and inure to the benefit of, the
successors and assigns of the Company and the personal representatives,
heirs and legatees of Employee.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first
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above written.
AMERON INTERNATIONAL CORPORATION
By:
-------------------------------
A. Xxxxxxxxx Xxxxxxxx
Chairman, Compensation & Stock Option Committee
Board of Directors
EMPLOYEE
------------------------------------
Xxxxx X. Xxxxxx
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Exhibit "T"
(Page 1 of 2)
I. The Total Payments payable under this Agreement shall be reduced to the
extent necessary so that no portion of the Total Payments shall be subject
to the parachute excise tax (the "Excise Tax") imposed by IRC Section 4999
(after taking into account any reduction in the Total Payments provided by
reason of IRC Section 280G in any other plan, arrangement or agreement) but
only if the amount determined under the following subparagraph I.(1) is
greater than the amount determined under the following subparagraph I.(2):
(1) The amount determined hereunder shall be the net amount of such Total
Payments, as so reduced (and after deduction of the net amount of
Federal, state and local income taxes on such reduced Total Payments
computed at Employee's highest marginal tax rate).
(2) The amount determined hereunder shall be the excess of:
(i) the net amount of such Total Payments, without reduction (but
after deduction of the net amount of Federal, state and local
income taxes on such Total Payments computed at Employee's
highest marginal tax rate), over
(ii) the amount of Excise Tax to which Employee would be subject in
respect of such Total Payments.
Any reduction of the Total Payments shall be made under one of the two
alternative methods described in the following section II. For purposes of
this Exhibit "T" and the calculations hereunder, Total Payments shall not
include any amounts considered a "parachute payment" under IRC Section 280G
in the opinion of Xxxxxx Xxxxxxxx LLP (or suitable experts selected by the
Company's Board of Directors).
II. If the Total Payments all become payable at approximately the same time:
(1) the payments under section 10.5(2)(i)(b) of the Agreement shall first
be reduced (if necessary, to zero);
(2) the payments under section 10.5(2)(i)(a) of the Agreement shall next
be reduced (if necessary, to zero);
(3) the other portions of the Total Payments shall next be reduced (if
necessary, to zero); and
Exhibit "T"
(Page 2 of 2)
(4) the acceleration of vesting of awards under stock options shall be
reduced as necessary.
If the Total Payments do not become due and payable at approximately the
same time, the respective Total Payments shall be paid in full in the order
in which they become payable until any portion thereof would not be
deductible, and such portion (and any subsequent portions) of the Total
Payments shall be reduced to zero. In such case, the Company shall make
every reasonable effort to make such payments in the order that results in
the most favorable tax treatment and financial results for Employee.
III. For purposes of determining whether and the extent to which the Total
Payments would be subject to the Excise Tax:
(1) no portion of the Total Payments the receipt or enjoyment of which
Employee shall have effectively waived in writing prior to the date of
termination shall be taken into account;
(2) no portion of the Total Payments shall be taken into account which in
the opinion of Xxxxxx Xxxxxxxx LLP (or suitable experts selected by
the Company's Board of Directors) does not constitute a "parachute
payment" within the meaning of IRC Section 280G(b)(2), including by
reason of IRC Section 280G(b)(4)(A);
(3) in calculating the Excise Tax, the payments shall be reduced only to
the extent necessary so that the Total Payments in their entirety
constitute reasonable compensation for services actually rendered
within the meaning of IRC Section 280G(b)(4) or are otherwise not
subject to disallowance as deductions because of IRC Section 280G, in
the opinion of Xxxxxx Xxxxxxxx LLP (or suitable experts selected by
the Company's Board of Directors); and
(4) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by Xxxxxx Xxxxxxxx
LLP (or suitable experts selected by the Company's Board of Directors)
in accordance with the principles of IRC Section 280G(d)(3) and (4).
The Company shall provide Employee with the calculation of the foregoing
amounts and any supporting materials as are reasonably necessary for
Employee to evaluate the calculations. All calculations hereunder shall be
performed by Xxxxxx Xxxxxxxx LLP (or suitable experts selected by the
Company's Board of Directors).
