CHANGE IN CONTROL AGREEMENT
CHANGE
IN CONTROL
AGREEMENT
THIS
AGREEMENT is made as of the 1st day of April, 2009 by and between XxXxxxxxx
International, Inc., a corporation duly organized under the laws of the Republic
of Panama (the “Company”) and Xxxxxxx X. Xxxxxxx (“Executive”.)
In
consideration of the mutual covenants and agreements contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the parties hereto agree as follows:
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I.
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Obligations
of the Company Upon Termination of Executive After Change In
Control.
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Following
the Effective Date of a Change In Control, in the event Executive’s employment
by the Company is terminated before the one-year anniversary of the Effective
Date of a Change In Control either (i) by the Company for any reason other than
Cause, or (ii) by the Executive for Good Reason, then subject to the provisions
of paragraph (b) below, the Company shall:
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(a)
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Pay
to the Executive within thirty days after the date of termination of
Executive’s employment (or such earlier time as may be required by law)
the Accrued Benefits;
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(b)
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In
the event that a bonus is paid after the date of Executive’s termination
of employment under the Company’s Executive Incentive Compensation Plan
(“EICP”) for the year prior to the year in which the termination takes
place (the “Measurement Period”), pay to the Executive in a lump sum, at
the same time such bonus is paid to other EICP participants, a cash bonus
equal to the product of the multiplier used for Executive’s position
during the Measurement Period and Executive’s annual base salary for
the Measurement Period.
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(c)
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Pay
to Executive in a lump sum in cash within thirty days after the date of
termination of Executive’s employment a payment equal to the product of
Executive’s target bonus under EICP as in effect immediately prior to the
date of termination and a fraction, the numerator of which is the number
of days that have elapsed in the year in which the termination takes place
through the date of termination of Executive’s employment and the
denominator of which is 365.
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(d)
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Pay
to Executive in a lump sum in cash as soon as administratively practicable
after the date of termination of Executive’s employment 200% of the sum of
(1) Executive’s annual base salary as in effect immediately prior to the
date of termination of Executive’s employment, and (2) Executive’s target
bonus under EICP as in effect immediately prior to the date of
termination.
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(e)
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Pay
to Executive in a lump sum in cash within thirty days after the date of
termination of Executive’s employment a payment equal to two times the
full annual cost of coverage for medical, dental and vision benefits
provided to Executive and Executive’s covered dependents by Company for
the year in which Executive’s termination takes
place.
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II.
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Participation
In Other Company Programs.
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Nothing
in this Agreement shall prevent or limit Executive’s continuing or future
participation in any plan, program, policy or practice provided by the Company
for which Executive may qualify, nor, subject to paragraph (d) of Section X,
shall anything herein limit or otherwise affect such rights as Executive may
have under any contract or agreement with the Company. Amounts which
are vested benefits or which Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company at or subsequent to the date of termination of Executive’s employment
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this
Agreement. Notwithstanding the foregoing, it is expressly understood
and acknowledged by Executive that any payment by the Company under Section I
hereof shall be in lieu of any obligation on the part of the Company for payment
of severance benefits under the Severance Plan for Employees of XxXxxxxxx
Incorporated and Participating Subsidiary and Affiliated Companies or any
successor thereto or any other plan, policy or agreement of the Company in the
event of termination of Executive’s employment as provided in Section I hereof
with the Company during the one-year period following the Effective Date of a
Change In Control.
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III.
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Confidential
and Proprietary Information.
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Executive
acknowledges and agrees that any and all non-public information regarding the
Company, any of its Subsidiaries and its or their customers (including but not
limited to any and all information relating to its or their business practices,
products, services, finances, management, strategy, profits and overhead) is
confidential and the unauthorized disclosure of such confidential information
will result in irreparable harm to the Company. Executive shall not,
during his employment by the Company or any of its Subsidiaries and for a period
of five years after termination of such employment (or such shorter period as
may be required by law), disclose or permit the disclosure of any such
confidential information to any person other than an employee or director of the
Company or its Subsidiaries or any successor thereto or an individual engaged by
the Company or its Subsidiaries or any successor thereto to render professional
services to the Company or its Subsidiaries under circumstances that require
such person to maintain the confidentiality of such information, except as such
disclosure may be required by law. The provisions of this Section III
shall survive any termination of this Agreement. For purposes of this
Section III, the term “confidential information” shall not include information
that was or becomes generally available to the public other than as a result of
disclosure by Executive. Executive acknowledges that the execution of
this Agreement and the payments described in Section I herein constitute
consideration for the limitations on activities set forth in this Section III,
the adequacy of which is hereby expressly acknowledged by
Executive. Executive understands and agrees that the Company shall
suffer irreparable harm if Executive breaches Section III hereof, and that
monetary damages shall be inadequate to address any such
breach. Accordingly, Executive agrees that the Company shall have the
right, to the extent permitted by applicable law, and in addition to any other
rights or remedies it may have, to obtain from any court of competent
jurisdiction, injunctive relief to restrain any breach or threatened breach
hereof or otherwise to specifically enforce the provisions hereof.
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IV.
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Notices.
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All
notices and other communications provided for by this Agreement shall be in
writing and shall be deemed to have been duly given when (a) delivered by hand,
(b) sent by facsimile or email to the facsimile number or email address given
below, provided that a copy is also sent by a nationally recognized overnight
delivery service, (c) the day after being sent by a nationally recognized
overnight delivery service, or (d) three days after being mailed by United
States Certified Mail, return receipt requested, postage prepaid, addressed as
follows:
If to
Executive: Xxxxxxx
X. Xxxxxxx
Village on Memorial
00000 Xxxxxxxx, Xxxxxxxxx
0000
Xxxxxxx,
XX 00000
Email: xxxxxxxxx@xxxxxxxxx.xxx
Facsimile: 000-000-0000
If to the
Company: XxXxxxxxx
International, Inc.
c/o
Xxxxxxx Xxxxxxx
Senior
Vice President, Human Resources
000 X. Xxxxxxxx Xxxxxxx
Xxxxxxx,
XX 00000
Email: xxxxxxxxxx@xxxxxxxxx.xxx
Facsimile: 000-000-0000
or to
such other address as any party may have furnished to the other in writing in
accordance with this Agreement.
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V.
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Governing
Law.
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The
provisions of this Agreement shall be interpreted and construed in accordance
with, and enforcement may be made under, the law of the State of Texas without
reference to principles of conflict of laws.
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VI.
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Successors
and Assigns.
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(a)
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This
Agreement is personal to Executive and, without the prior written consent
of the Company, shall not be assignable by Executive otherwise than by
will or the laws of descent and
distribution.
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(b)
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This
Agreement shall be binding upon and shall inure to the benefit of the
Company and its successors and
assigns.
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(c)
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The
Company will require that any successor to all or substantially all of its
business and/or assets (whether such successor acquires such business
and/or assets directly or indirectly, and whether by purchase, merger,
consolidation or otherwise) expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken
place. As used in this Agreement, “Company” shall mean the
Company as herein defined and any successor to its business and/or
assets.
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VII.
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Employment
by Subsidiaries.
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If
Executive is not employed by XxXxxxxxx International, Inc., but is only employed
by one or more Subsidiaries of XxXxxxxxx International, Inc., then (a) the
“Company” as defined herein shall be deemed to include such Subsidiary or
Subsidiaries, and (b) termination of employment shall be determined with
reference to Executive’s employment by all such
Subsidiaries. Further, the Company agrees that it will perform its
obligations hereunder without regard to whether Executive is employed by the
Company or by a Subsidiary or Subsidiaries of the Company.
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VIII.
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Severability.
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If any
provision or portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this Agreement shall
be unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by applicable law.
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IX.
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Entire
Agreement; Amendment.
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This
Agreement sets forth the entire Agreement of the parties hereto and supersedes
all prior agreements, understandings and covenants between the parties with
respect to the subject matter hereof. Except as provided in Section
X, paragraphs (d) and (f) or Section XI, this Agreement may be amended or
terminated only by mutual agreement of the parties in writing.
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X.
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Miscellaneous.
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(a)
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The
captions and headings of this Agreement are not part of the provisions
hereof and shall have no force or
effect.
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(b)
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The
Company shall be entitled to withhold from any amounts payable under this
Agreement such Federal, state, local, foreign or excise taxes as shall be
required or permitted to be withheld pursuant to any applicable law or
regulation.
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(c)
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Executive’s
or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right Executive
or the Company may have hereunder, including, without limitation, the
right of Executive to terminate employment for Good Reason pursuant to
paragraph (g) of Section XII of this Agreement, shall not be deemed to be
a waiver of such provision or right or any other provision or right of
this Agreement.
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(d)
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Executive
and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between Executive and the Company, the
employment of Executive by the Company is “at will” and, subject to the
last sentence of paragraph (f) of Section XII hereof, Executive’s
employment may be terminated by either Executive or the Company at any
time prior to the Effective Date of a Change In Control, in which case
this Agreement shall terminate as provided in Section XI below and
Executive shall have no further rights under this
Agreement.
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(e)
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For
purposes of this Agreement, the date of termination of Executive’s
employment shall be: (i) if Executive’s employment is terminated by the
Company for Cause, the date on which the Company delivers to Executive the
resolution referred to in the last sentence of Section XII, paragraph (c),
or, with respect to a termination under Section XII, paragraph (c)(iii),
the date on which the Company notifies Executive of such termination, (ii)
if Executive’s employment is terminated by the Company because of
Executive’s Disability or for a reason other than Cause or Executive’s
death or Disability, the date on which the Company notifies Executive of
such termination, (iii) if executive’s employment is terminated by
Executive for Good Reason, the date on which Executive notifies the
Company of such termination (after having given the Company notice and a
thirty-day cure period), or (iv) if Executive’s employment is terminated
by reason of death, the date of death of
executive.
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(f)
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The
Company may terminate this Agreement at any time prior to a Change In
Control upon giving Executive written notice of such termination at least
thirty days prior to the date of termination if either of the following
circumstances take place: (i) Executive’s position with the Company is
changed so that he ceases to be an officer of the Company, or (ii)
Executive ceases to be a fulltime employee; provided that if a Change In
Control is announced or occurs during such thirty-day period, the
termination shall not be effective.
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(g)
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This
Agreement may be executed in two counterparts, each of which shall be
deemed an original and together shall constitute one and the same
agreement, with one counterpart being delivered to each party
hereto.
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(h)
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In
the event the Executive’s employment is terminated following the Effective
Date of a Change In Control and before the one-year anniversary of the
Effective Date of a Change In Control (i) by the Company for Cause or an a
result of Executive’s death or disability, or (ii) by Executive without
Good Reason, Executive shall not be entitled to the payments described in
Section 1 hereof.
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XI.
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Term.
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This
Agreement shall terminate on the earliest to occur of (i) termination by the
Company in accordance with Section X, paragraph (f) above, (ii) the date one
year after the Effective Date of a Change or Control, or (iii) the date on which
Executive’s employment with the Company is terminated (subject to the last
sentence of Section XII, paragraph (g)); provided, however, that if Executive’s
employment with the Company is terminated under any of the circumstances
described in Section I hereof, Executive’s rights hereunder shall continue
following the termination of his/her employment with the Company until all
benefits to which Executive is entitled hereunder has been paid and the
Company’s rights hereunder shall continue until all obligations owed to it
hereunder have been satisfied.
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XII.
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Definitions.
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For
purposes of this Agreement, the following terms shall have the meanings given
them in this Section XII.
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(a)
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“Accrued
Benefits” shall mean:
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(i)
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Any
portion of Executive’s Annual Base Salary earned through the date of
termination of Executive’s employment and not yet
paid;
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(ii)
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Reimbursement
for any and all amounts advanced in connection with Executive’s employment
for reasonable and necessary expenses incurred by Executive through the
date of termination of Executive’s employment in accordance with the
Company’s policies and procedures on reimbursement of
expenses;
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(iii)
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Any
earned vacation pay not theretofore used or paid in accordance with the
Company’s policy for payment of earned and unused vacation time;
and
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(iv)
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All
other payments and benefits to which Executive may be entitled under the
terms of any applicable compensation arrangement or benefit plan or
program of the Company that do not specify the time of distribution;
provided that Accrued Benefits shall not include any entitlement to
severance under any severance policy of the Company generally applicable
to the salaried employees of the
Company.
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(b)
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“Annual
Base Salary” shall mean Executive’s annual rate of pay excluding all other
elements of compensation such as, without limitation, bonuses,
perquisites, expatriate or hardship premiums, restricted stock awards,
stock options and retirement and welfare
benefits.
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(c)
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“Cause”
shall mean:
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(i)
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the
willful and continued failure of Executive to perform substantially
his/her duties with the Company (occasioned by reason other than physical
or mental illness or disability of Executive) after a written demand for
substantial performance is delivered to Executive by the Compensation
Committee of the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Compensation Committee of
the Board or the Chief Executive Officer believes that Executive has not
substantially performed his/her duties, after which Executive shall have
thirty days to defend or remedy such failure to substantially perform
his/her duties:
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(ii)
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the
willful engaging by Executive in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company;
or
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(iii)
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the
conviction of Executive with no further possibility of appeal or, or plea
of nolo contendere by Executive to, any
felony.
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The
cessation of employment of Executive under subparagraph (i) and (ii) above shall
not be deemed to be for “Cause” unless and until there shall have been delivered
a Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters (3/4) of the entire membership of the Compensation
Committee of the Board at a meeting of such Committee called and held for such
purpose (after reasonable notice is provided to Executive and Executive is given
an opportunity, together with counsel, to be heard before the Compensation
Committee of the Board), finding that, in the good faith opinion of the
Compensation Committee of the Board, Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
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(d)
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“Change
In Control” shall be deemed to occur
if:
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(i)
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When
any “person” or “group” of persons (as such terms are used in §13 and 14
of the Securities Exchange Act of 1934, as amended from time to time (the
“Exchange Act”)), other than the Company or any employee benefit plan
sponsored by the Company, becomes the “beneficial owner” (as such term is
used in §13 of the Exchange Act) of 30 percent or more of the total number
of the Company’s common shares at the time outstanding;
or
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(ii)
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The
shareholders of the Company approve: a) a merger or consolidation of the
Company, with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto, continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or b) the
shareholders of the Company approve a plan of complete liquidation of the
Company, or c) an agreement for the sale or disposition by the Company of
all or substantially all of the Company’s assets
or;
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(iii)
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During
any period of two (2) consecutive years (not including any period prior to
the execution of this Plan), individuals who at the beginning of such
period constitute the Board of the Company, and any new
Director of the Company (other than a Director designated by a Person who
has entered into an agreement with the Company to effect a transaction
described in Clauses (a) or (c) of this Section 2.5) whose election by the
Company’s Board or nomination for election by the stockholders of the
Company, was approved by a vote of at least two-thirds (2/3) of the
Directors of the Company’s Board, then still in office who either were
Directors thereof at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason
to constitute a majority thereof;
or
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(iv)
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Such
other circumstances as may be deemed by the Board in its sole discretion
to constitute a change in control of the
Company.
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However,
in no event shall a “Change in Control” be deemed to have occurred with respect
to the Executive if the Executive is part of the purchasing group which
consummates the Change-in-Control transaction. An Executive shall be
deemed “part of a purchasing group” for purposes of the preceding sentence if
the Executive is an equity participant in the purchasing company or group
(except for: (i) passive ownership of less than three percent (3%) of the stock
of the purchasing company; or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not significant, as determined
prior to the Change in Control by a majority of the non-employee continuing
Directors). A Change In Control shall not result from any transaction
precipitated by the Company’s insolvency, appointment of a conservator or
determination by a regulatory agency that the Company is insolvent.
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(e)
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“Disability”
shall mean circumstances that qualify Executive for long-term disability
benefits under the Company’s Long-Term Disability Plan as in effect
immediately prior to the Change In
Control.
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(f)
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“Effective
Date” with respect to a Change In Control for purposes of this Agreement
shall be the earliest to occur of (i) the date on which the Company
receives a copy of a Schedule 13D disclosing beneficial ownership of
shares in accordance with Section XII, paragraph (d)(i) above; (ii) the
effective date of the consummation of a merger, consolidation, share
exchange or similar form of corporate transaction or liquidation or
reorganization in accordance with Section XII, paragraph (d)(ii); or (iii)
the date of the annual or special meeting of shareholders at which the
last director necessary to meet the requirements of Section XII, paragraph
(d)(iii) is elected. Upon the occurrence of the Effective Date
of a Change In Control, the Board of Directors or its designee shall,
within thirty days thereof, provide written notice to Executive of the
Effective Date of the Change In Control. Notwithstanding
anything to the contrary in this Agreement, if a Change In Control occurs
and if Executive’s employment with the Company is terminated within the
ninety days prior to the Effective Date of the Change In Control as
determined in accordance with the first sentence of this paragraph (f),
and if it is reasonably demonstrated by Executive that such termination of
employment was at the request of a third party who has taken steps
reasonably calculated to effect a Change In Control, or otherwise arose in
connection with or in anticipation of a Change In Control, then for all
purposes of this Agreement, the “Effective Date” of the Change In Control
shall mean the date immediately prior to the date of such termination of
employment.
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(g)
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“Good
Reason” shall mean:
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(i)
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the
assignment to Executive of duties that are materially inconsistent with
Executive’s position, authority, duties or responsibilities immediately
prior to the Change In Control, or any other action by the Company which
results in a material diminution in such position, authority, duties or
responsibilities;
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(ii)
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requiring
Executive, without his consent, to be based at any office or location
other than the office or location a which Executive was employed
immediately prior to the Change In Control; provided, however, that any
such relocation requests shall not be grounds for resignation with Good
Reason if such relocation is within a twenty-mile radius of the location
at which Executive was based prior to the Effective Date of a Change In
Control;
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(iii)
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a
reduction in Executive’s Annual Base Salary in effect immediately prior to
the Change In Control or a reduction in the target multiplier used to
calculate the annual bonus awarded to Executive below the target
multiplier used to calculate the bonus paid to Executive under the EICP
immediately prior to the Change In Control, provided, however that in
either case a reduction in the Annual Base Salary or the target bonus
multiplier shall not be considered “Good Reason” with respect to any year
for which such reduction is part of a reduction uniformly applicable to
all similarly situated employees;
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(iv)
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a
change in Executive’s eligibility to participate in incentive compensation
plans as in effect immediately prior to the Change In Control;
or
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(v)
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any
material breach of this Agreement by the Company, excluding for this
purpose an isolated, insubstantial or inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of
notice thereof given by Executive.
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Upon the
occurrence of any of the events described above, Executive shall give the
Company written notice that such event constitutes Good Reason and the Company
shall thereafter have thirty days in which to cure. If the Company
has not cured in that time, the event shall constitute Good Reason.
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(h)
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“Subsidiaries”
shall mean every, limited liability company, partnership or other entity
of which 50% or more of the total combined voting power of all classes of
voting securities or other equity interests is owned, directly or
indirectly, by XxXxxxxxx International,
Inc.
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XIII.
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Arbitration
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Any
controversy or claim arising out of or relating to this Agreement (or the breach
thereof) shall be settled by final and binding arbitration in Houston, Texas by
one arbitrator selected in accordance with the Commercial Arbitration Rules (the
“Rules”) of the American Arbitration Association (the “Association”) then in
effect. Subject to the following provisions, the arbitration shall be
conducted in accordance with the Rules then in effect. Any award
entered by the arbitrator shall be final and binding, and judgment may be
entered thereon by any party hereto in any court of law having competent
jurisdiction. This arbitration provision shall be specifically
enforceable. The Company and the Executive shall each pay half of the
administrative fees of the Association and the compensation of the arbitrator
and shall each be responsible for its or his/her own attorney’s fees and
expenses relating to the conduct of the arbitration.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
XxXXXXXXX INTERNATIONAL,
INC.
By: /s/ Xxxx X.
Fees
Printed
Name:
Xxxx X. Fees
Title: Chief
Executive Officer
Date:
April 1,
2009
Executive: /s/ Xxxxxxx X.
Xxxxxxx
Date:
April 1,
2009
