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Exhibit 10.54
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into this 1st day of
August, 1997, between DURCO INTERNATIONAL INC. ("Company") and Xxxxxxx X. Xxxxxx
("Executive").
BACKGROUND
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A. Executive is currently employed by Durco International Inc. as its
Chief Executive Officer.
B. A subsidiary of Company and BW/IP, Inc. are to merge pursuant to an
Agreement and Plan of Merger, dated as of May 7, 1997 ("Merger Agreement").
C. The Company wishes to assure that it will have the Executive's
services and dedication after the Merger.
D. The Executive wishes to serve Company after the Merger as provided
in this Agreement.
AGREEMENT
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In consideration of the premises, and for other valuable consideration,
it is agreed as follows:
1. GENERAL AGREEMENT. The Company agrees to employ the Executive, and
the Executive agrees to accept employment with the Company, as provided in this
Agreement for the period beginning on the Effective Date and ending on the fifth
anniversary of the Effective Date.
2. DEFINITIONS. For purposes of this Agreement, the following terms,
when capitalized, shall have the meanings specified below:
(a) "Accrued Compensation" means the sum of (i) the
Executive's annual base salary through the date his employment
terminates to the extent not previously paid and (ii) the Executive's
Historical Bonus multiplied by a fraction, the numerator of which is
the number of complete months in the fiscal year of termination that
precede the Executive's termination and the denominator of which is
twelve.
(b) "Board" means the Company's Board of Directors.
(c) "Board Chairman" means Chairman of the Company's Board of
Directors.
(d) "Cause" means (i) the Executive's continuing substantial
failure to perform his duties for the Company (other than as a result
of incapacity due to mental or physical
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illness) after a written demand is delivered to the Executive by the
Board; (ii) the Executive's wilful engaging in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the
Company; (iii) the Executive's conviction of a felony or his plea of
guilty or nolo contendere to a felony, or (iv) the Executive's wilful
and material breach of the confidentiality portion of this Agreement.
"Cause" shall be determined as provided in Paragraph 6(e).
(e) "Disability" and "Disabled" refer to the Executive's
failure to perform his duties with the Company on a full-time basis for
180 consecutive days, if an independent physician selected by the
Company or its insurers and acceptable to the Executive finds that such
failure has resulted from the Executive's inability to perform such
duties because of his physical or mental incapacity.
(f) "Effective Date" means the Effective Time of the Merger
(as defined in the Merger Agreement).
(g) "Employment Period" means the First Employment Period
and/or Second Employment Period.
(h) "Employment Term" means the period beginning on the
Effective Date and ending on the fifth anniversary of the Effective
Date; provided, however, the Employment Term shall automatically be
extended for one-year periods, unless either party gives the other
notice of its intention not to extend the term at least three months
before the end of the initial Employment Term or any extension thereof.
(i) "First Employment Period" means the period beginning on
the Effective Date and ending on the third anniversary of the Effective
Date.
(j) "Good Reason" means, during the First Employment Period or
Second Employment Period, (i) the Company's removal of the Executive
from his position for the applicable Employment Period (as provided in
Paragraph 3 or 4, whichever is applicable), (ii) the Company's (A)
assignment of duties to the Executive that are materially inconsistent
with his position for the applicable Employment Period, or (B) actions
resulting in a material diminution of the Executive's position or
duties for the applicable Employment Period, (iii) the Company's
material failure to comply with any provision of this Agreement,
including its failure to designate the Executive as its Board Chairman
and Chief Executive officer, effective as of the beginning of the
Second Employment Period, and (iv) the Company's termination of the
Executive's employment, other than as permitted by this Agreement.
"Good Reason" shall be determined as provided in Paragraph 6(c).
(k) "Historical Bonus" means, for the fiscal year in which the
Executive's employment terminates, the Executive's highest annual bonus
for the two fiscal years
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preceding termination, reduced by any annual bonus previously paid to
him for the fiscal year of termination.
(l) "Other Benefit" means any accrued compensation or benefit
of the Executive other than Accrued Compensation that is payable on or
after termination of employment under a plan, policy, or program of the
Company.
(m) "Second Employment Period" means the period beginning with
the end of the First Employment Period and ending on the fifth
anniversary of the Effective Date; provided, however, the Second
Employment Period shall automatically be extended for one-year periods,
unless either party gives the other notice of its intention not to
extend the term at least three months before the end of the initial
Employment Term or extension thereof.
(n) "Wilful" means that the Executive has acted in bad faith
or without reasonable belief that his act or omission was in the
Company's best interest.
(o) "Welfare Benefit Plan" has the meaning given to such term
by 29 U.S.C. section 1002(1).
3. EXECUTIVE'S DUTIES DURING FIRST EMPLOYMENT PERIOD. During the First
Employment Period, the Executive shall serve as the Company's President and
Chief Operating Officer in accordance with the provisions of this Paragraph. The
Executive shall have such authority, duties, and responsibilities as are
commensurate with his position and as may be assigned to him from time to time
by the Board. The Executive shall serve the Company diligently and faithfully,
devoting substantially all of his time and attention during normal business
hours to the business and affairs of the Company and to the faithful performance
of his duties. The Executive may continue to serve as a director of Xxxxxx
Industries and NIBCO. Except as provided in the preceding sentence, the
Executive shall not perform any other services for remuneration, unless the
performance such services is approved by the Board as being in the best
interests of the Company. The Executive shall not engage in any activity that
substantially interferes with the performance of his responsibilities to the
Company.
4. EXECUTIVE'S DUTIES DURING SECOND EMPLOYMENT PERIOD. During the
Second Employment Period, the Executive shall serve as the Company's Chief
Executive Officer and Board Chairman with general responsibility for and control
of the Company's business and affairs, all in accordance with the provisions of
this Paragraph. The Executive shall have such authority, duties, and
responsibilities as are commensurate with his position and as may be assigned to
him from time to time by the Board. The Executive shall serve the Company
diligently and faithfully, devoting substantially all of his time and attention
during normal business hours to the business and affairs of the Company and to
the faithful performance of his duties. The Executive may continue to serve as a
director of Xxxxxx Industries and NIBCO. Except as provided in the preceding
sentence, the Executive shall not perform any other services for
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remuneration, unless the performance of such services is approved by the Board
as being in the best interests of the Company. The Executive shall not engage in
any activity that substantially interferes with the performance of his
responsibilities to the Company.
5. EXECUTIVE'S COMPENSATION. During the Employment Term, the Executive
shall be entitled to the following compensation:
(a) BASE SALARY. The Executive's ihitial base salary shall be
an amount agreed to by the Executive and the Company and set out in
Appendix A. The Executive's base salary may be increased, but not
decreased, throughout the Employment Term and shall be reviewed at
least once every 12 months.
(b) BONUS. The Executive shall have an annual bonus
opportunity, with a minimum target bonus of no less than 50% of his
base salary.
(c) LONG-TERM INCENTIVE COMPENSATION PLAN. The Executive shall
participate in the Company's long-term incentive compensation plan.
(d) INCENTIVE, SAVINGS, RETIREMENT, AND WELFARE BENEFIT PLANS.
The Executive shall be entitled to participate in all incentive
compensation, savings, retirement, and Welfare Benefit Plans available
to other senior executives of the Company on a basis at least as
favorable as provided to such other executives.
(e) VACATION. The Executive shall be entitled to paid vacation
on terms at least as favorable as available to other senior executives.
(f) FRINGE BENEFITS. The Executive shall be entitled to an
office, reimbursement of country club initiation fees and dues and
automobile expenses, and other fringe benefits on a basis no less
favorable than provided to other senior executives of the Company.
(g) REIMBURSEMENT OF EXPENSES. The Executive shall be entitled
to reimbursement of reasonable business expenses on terms and
conditions at least as favorable as provided to other senior executives
of the Company. The Executive shall be entitled to reimbursement of his
reasonable expenses of relocation from Dayton, Ohio, to Dallas, Texas,
in accordance with the Company's reimbursement policy for senior
executives.
6. TERMINATION OF EMPLOYMENT.
(a) DEATH. The Executive's employment shall terminate
automatically upon his death during the Employment Term.
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(b) DISABILITY. If the Executive becomes Disabled during the
Employment Term, the Company may notify the Executive of its intention
to terminate his employment pursuant to this Subparagraph (b). In such
event, the Executive's employment shall terminate on the 30th day after
the Executive receives such notice, unless he returns to substantially
full-time performance of his duties within such 30-day period.
(c) EXECUTIVE'S TERMINATION FOR GOOD REASON. To terminate his
employment for Good Reason, the Executive must notify the Board of his
intent to terminate employment for Good Reason and describe all
circumstances that he believes in good faith to constitute Good Reason.
If the Company corrects all situations identified by the Executive
within 30 days after receiving his notice, the Executive shall not be
entitled to terminate for Good Reason. If the Company agrees to the
Executive's termination for Good Reason or fails to correct the
conditions identified by the Executive within 30 days after receipt of
the Executive's notice, the Executive's employment shall terminate on
the 30th day after the Company received his notice or such earlier date
agreed to by the Company.
(d) EXECUTIVE'S TERMINATION WITHOUT GOOD REASON. If the
Executive terminates his employment without Good Reason, he shall
provide the Company at least 30 days' notice (which 30 day requirement
may be waived by the Company) of his intent to terminate, state that
the termination is without Good Reason, and identify his termination
date. The Executive's termination date shall be the date specified in
the notice provided pursuant to the preceding sentence.
(e) COMPANY'S TERMINATION FOR CAUSE. Before the Board
terminates the Executive's employment for Cause, it shall provide the
Executive an opportunity, after reasonable notice, to appear before the
Board with counsel. To terminate the Executive for Cause, the Board
must adopt a resolution terminating the Executive by affirmative vote
of at least 75% of its members, after having given the Executive the
opportunity to present his case to the Board. The Board's resolution
must state that the Board finds in good faith that (i) the Executive is
guilty of conduct constituting Cause, specifying the details of such
conduct, and (ii) the Executive failed to cure such conduct within 30
days after receiving written notice from the Company detailing such
conduct. The effective date of the Executive's termination for Cause
shall be the date on which the Executive receives a copy of the
resolution adopted by the Board or such later date specified in the
resolution.
(f) COMPANY'S TERMINATION WITHOUT CAUSE. If the Company
terminates the Executive's employment without Cause, it shall notify
the Executive of its decision and state that the termination is without
Cause. The effective date of the Executive's termination shall be the
date on which he receives the Company's notice or such later date as
specified in the notice.
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7. COMPANY'S OBLIGATIONS ON TERMINATION OF EMPLOYMENT.
(a) DEATH. If the Executive's employment is terminated by
reason of his death during the Employment Term, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Compensation and the timely payment or provision of Other Benefits.
Accrued Compensation shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days after
the Executive's death, and Other Benefits shall be paid pursuant to the
applicable plan, program, or policy of the Company.
(b) DISABILITY. If the Executive's employment is terminated by
reason of his Disability during the Employment Term, this Agreement
shall terminate without further obligations to the Executive, other
than for payment of Accrued Compensation and the timely payment or
provision of Other Benefits. Accrued Compensation shall be paid to the
Executive in a lump sum in cash within 30 days after his employment
terminates, and Other Benefits shall be paid pursuant to the applicable
plan, program, or policy of the Company.
(c) COMPANY'S TERMINATION FOR CAUSE. If the Executive's
employment is terminated for Cause, or the Executive terminates his
employment without Good Reason, during the Employment Term, this
Agreement shall terminate without further obligations to the Executive
other than for payment of Accrued Compensation and the timely payment
of Other Benefits. Accrued Compensation shall be paid to the Executive
in a lump sum in cash within 30 days after his employment terminates,
and Other Benefits shall be paid pursuant to the applicable plan,
program, or policy of the Company.
(d) COMPANY'S TERMINATION FOR REASON OTHER THAN CAUSE, DEATH
OR DISABILITY ON EXECUTIVE'S TERMINATION FOR GOOD REASON. If the
Company terminates the Executive's employment for a reason other than
Cause or Disability, or if the Employee terminates his employment for
Good Reason, the Company shall continue to compensate the Executive
hereunder throughout the Employment Term as if he had not terminated
employment. If the Executive is no longer eligible to participate in a
benefit plan of the Company because he is no longer an employee, the
Company shall provide a benefit equivalent to the benefit to which
Executive would have been entitled under such plan if he had remained
an employee; provided however, the Executive shall not be reimbursed
for the loss of his ability to make elective deferrals under any
qualified defined contribution plan of the Company.
8. ADDITIONAL PAYMENTS BY THE COMPANY. If it is determined that any
payment hereunder other than a payment pursuant to this Paragraph or Paragraph 9
is subject to Code Section 4999, or any interest or penalties are incurred by
the Executive with respect to such excise tax on account of such payments, then
the Executive shall be entitled to receive an additional payment sufficient to
compensate him for any such tax, interest, or penalties and any taxes with
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respect to payments made pursuant to this Paragraph. The Executive shall
promptly notify the Company of any notice from the Internal Revenue Service with
respect to excise taxes described in this Paragraph.
9. TERMINATION FOLLOWING CHANGE OF CONTROL. If the Executive's
employment terminates during the Employment Term but following a change of
control (as defined in a signed change of control agreement between the Company
and the Executive) during the Employment Term, the Executive shall receive
compensation upon such termination pursuant to the change of control agreement
and not pursuant to this Agreement.
10. CONFIDENTIALITY.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information,
knowledge, or data relating to the Company or any of its affiliated
companies, and their respective businesses, that has been acquired by
the Executive during his employment and that has not become public
knowledge (other than by acts by the Executive or his representatives
in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior
written consent of the Company's Board or as may otherwise be required
by law, communicate or divulge any such information, knowledge, or data
that is not otherwise publicly available to anyone other than the
Company and those designated by it. An asserted violation of this
Paragraph shall not be a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
(b) In the event of a breach or threatened breach of this
Paragraph, the Executive agrees that the Company shall be entitled to
injunctive relief in a court of appropriate jurisdiction to remedy such
breach or threatened breach, and the Executive acknowledges that
damages would be inadequate and insufficient.
(c) The Executive's obligations under this Paragraph shall
continue forever.
11. NOTICES. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xxxxxxx X. Xxxxxx
Miami Valley Research Park
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
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If to the Company or Board:
Miami Valley Research Park
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Attention: Vice President, Secretary and General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
12. SEVERABILITY. Each provision of this Agreement shall be considered
severable. If a court finds any provision to be invalid or unenforceable, the
validity, enforceability, operation, and effect of the remaining provisions
shall not be affected, and this Agreement shall be construed in all respects as
if the invalid or unenforceable provision had been omitted or limited in
accordance with the court's ruling.
13. ASSIGNABILITY. This Agreement may not be assigned by the Executive,
because it is personal in nature. The Company may assign, delegate, or transfer
this Agreement and all of its rights and obligations hereunder to any successor
in interest, any purchaser of substantially all of the Company's assets, or any
entity to which the Company transfers all or substantially all of its assets
before or after the term of this Agreement. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly 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.
14. GOVERNING LAW AND WAIVER. The laws of the State of New York shall
govern the construction, enforceability, and interpretation of this Agreement.
The parties intend this Agreement to supplement, but not displace, their
respective rights and responsibilities under the laws of the State of New York,
as amended from time to time. The failure of either party to insist upon
performance of any provision of this Agreement or to pursue his or its rights
hereunder shall not be construed as a waiver of any such provision or the
relinquishment of any such right.
15. PRIOR AGREEMENTS. This Agreement supersedes all prior or
contemporaneous negotiations, commitments, agreements, and writings with respect
to the subject matter hereof, all such other negotiations, commitments,
agreements, and writings will have no further force or effect, and the parties
to any such other negotiation, commitment, agreement or writing will have no
further rights or obligations thereunder.
16. NO PARTY DEEMED DRAFTER. Neither the Company nor the Executive
shall be deemed to be the drafter of this Agreement, and, if this Agreement or
any provision thereof is
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construed in any court or other proceeding, said court or other adjudicator
shall not construe this Agreement or any provision thereof against either party
as the drafter thereof.
17. NO ORAL MODIFICATIONS. This Agreement may not be modified orally.
Any change of this Agreement must be made in writing and signed by Executive and
an officer of Company.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
ATTEST: DURCO INTERNATIONAL, INC.
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxx
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Signature Title: Chairman - Compensation Committee
Xxxxxx X. Xxxxxx
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Printed Name
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
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APPENDIX A
The Executive's initial base salary shall be $500,000 per year.
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