XXX. 00
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This amended and restated employment 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"). It
supersedes and replaces the Employment Agreement previously entered into between
the Company and Employee which was effective as of June 11, 1996.
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 commence on June 11, 1996, and
shall be automatically extended from day to day so that it always
has a remaining term of three years and six months or until
Employee attains age 67-1/2, if sooner (the "Term"), subject to
earlier termination in accordance with the provisions of section
10 hereinbelow. In no event shall the Term of this Agreement
extend beyond the date when Employee attains age 67-1/2, unless
the Company and Employee hereafter expressly agree in writing to
extend the Term of this Agreement beyond such date.
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.
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)
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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
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, an 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 pensions 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.
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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 due to or following a Change of Control (as defined in
paragraph 10.5 hereinbelow) during the Term, Employee shall be
entitled to continue to accrue the pension benefits described in
paragraphs 8.1, 8.2 and 8.3 hereinabove for the additional period
starting from the date of such termination of employment with the
Company and continuing until the effective date of his obtaining
of new employment, if any; provided however that such additional
period for the accrual of those pension benefits shall not exceed
three (3) years from the date of termination of employment with
the Company.
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.
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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 legal counsel in connection with legal review of
this employment agreement, provided that such reimbursement shall
not exceed $5,000.00.
9.11 The Company agrees that in the event of an audit of Employee's
tax returns by the Internal Revenue Service with respect to
issues arising under this Agreement (including, but not limited
to, Section 10.5 hereof), Employee will have the right to select
his own professional advisors to represent Employee in the audit
proceedings, and the reasonable expenses thereof shall be borne
by the Company.
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
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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 Employee's employment
without cause at any time during the Term of this Agreement,
except for termination without cause due to or following a Change
of Control (as that term is defined in paragraph 10.5
hereinbelow), then:
(1) the Company shall pay Employee a lump-sum severance amount
within thirty (30) days following termination equal to 3.5
(or the number of years and fractional years remaining in
the Term, if the remaining Term of this Agreement is less
than three years and six months as of the date of the
termination) 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
the three and one-half years preceding termination (but not
less than sixty percent (60%) times Employee's annual base
salary determined as of the date of termination);
(2) all unvested restricted stock grants and stock options
granted to Employee shall automatically vest in full; and
(3) Employee shall be entitled to the benefits described in
paragraphs 8.3, 8.4 and 9.3 hereinabove.
Employee shall not be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to
Employee under any of the provisions of this Agreement.
10.4 The Term of this Agreement shall be automatically extended from
day to day so that it always has a remaining term of three years
and six months (or until Employee attains age 67-1/2, if sooner)
until the Company or Employee shall give written notice to the
other that the Term shall not be further extended. In such event
the Term shall end three years and six months after delivery of
such written notice in the manner provided in paragraph 12.3
hereinbelow (or when Employee attains age 67-1/2, if sooner). If
the Company notifies Employee that the Term shall not be further
extended, then Employee may elect within 90 days after receipt of
such notice to terminate employment and consider his employment
to have been terminated by the Company without cause, in which
case Employee shall be entitled to those termination benefits
described in paragraph 10.3 hereinabove.
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10.5 In the event of a Change of Control at any time during the Term
of this Agreement:
(1) All unvested restricted stock grants and stock options
granted to Employee shall automatically vest in full upon a
Change of Control.
(2) In the event that the Company terminates Employee's
employment without cause at any time during the Term of this
Agreement within the period of twelve (12) months following
the date of a Change of Control, then Employee shall be
entitled to the termination benefits described in paragraph
10.3 hereinabove; provided that the lump-sum severance
amount paid to Employee under this paragraph 10.5(2) which
is calculated based on paragraph 10.3(1) hereinabove (i)
shall be reduced to equal the present value, determined in
accordance with IRC 280G(d)(4), of the lump-sum severance
amount which would otherwise be payable under paragraph
10.3(1), and (ii) shall be reduced to offset compensation
and other earned income earned by Employee in the manner
provided in paragraphs 10.5(3) and (4) below.
(3) The amount of the lump-sum severance amount payable to
Employee under paragraph 10.5(2) which is calculated based
on paragraph 10.3(1) shall be reduced by one hundred percent
(100%) of any compensation and other earned income (within
the meaning of Section 911(d)(2)(A) of the Internal Revenue
Code ("IRC")) which is earned by Employee for services
rendered to persons or entities other than the Company or
its affiliates during the remaining Term of this Agreement
as of the date of termination. Health and medical benefits
shall be offset as provided in paragraph 9.3.
(4) Not less frequently than annually (by December 31 of each
year), Employee shall account to the Company with respect to
all compensation and other earned income earned by Employee
which is required hereunder to be offset against the
lump-sum severance amount received by Employee from the
Company under paragraph 10.5(2) which is calculated based on
paragraph 10.3(1). If the Company has paid a lump-sum
severance amount in excess of the amount to which Employee
is entitled (after giving effect to the offsets provided
above), Employee shall reimburse the Company for such excess
by December 31 of such year. The requirements imposed under
this paragraph shall terminate on December 31 of the last
calendar
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year which begins during the remaining term of this
Agreement as of the date of termination.
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 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 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 paragraph 9.3 or 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
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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 prorated management incentive or bonus
award for the period prior to Employer'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.
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, development 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,
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 and 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 above written.
AMERON INTERNATIONAL CORPORATION
By:
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A. Xxxxxxxxx Xxxxxxxx
Chairman, Compensation & Stock Option Committee
Board of Directors
EMPLOYEE
---------------------------------
Xxxxx X. Xxxxxx
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XXXXXXX X
XXXXXXX'X XXXXXXXXXX CODES
LABOR CODE
ANNOTATED
OF THE STATE OF CALIFORNIA
ADOPTED APRIL 24, 1937
with amendments through the
First Extraordinary Session of the 1989-1990 Legislature
Section 2924. Employment for specified term; Grounds for
termination by employer
An employment for a specified term may be terminated at any
time by the employer in case of any willful breach of duty
by the employee in the course of his employment, or in case
of his habitual neglect of his duty or continued incapacity
to perform it.
Enacted 1937. Amended Stats 1969, ch 1529 Section 3; Stats
1971, ch 1580 Section 2, ch 1607 Section 3.
EXHIBIT T
Exhibit "T"
(Page 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 which are not 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 10.3(1)(ii) of the Agreement shall first be
reduced (if necessary, to zero);
(2) the payments under section 10.3(1)(i) 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
(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 noncash 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).
