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EXHIBIT 00.XX
EMPLOYMENT CONTINUATION AGREEMENT
THIS AGREEMENT between BW/IP Inc., a Delaware corporation (the
"Company"), and XXXXXXX X. XXXXXXX (the "Executive"), dated as of this 14th day
of December, 1995.
W I T N E S E S T H :
WHEREAS, the Company has employed the Executive in an officer position
and has determined that the Executive holds an important position with the
Company;
WHEREAS, the Company believes that, in the event it is
confronted with a situation that could result in a change in ownership or
control of the Company, continuity of management will be essential to its
ability to evaluate and respond to such situation in the best interests of
shareholders;
WHEREAS, the Company understands that any such situation will
present significant concerns for the Executive with respect to his financial and
job security;
WHEREAS, the Company desires to assure itself of the
Executive's services during the period in which it is confronting such a
situation, and to provide the Executive certain financial assurances to enable
the Executive to perform the responsibilities of his position without undue
distraction and to exercise his judgment without bias due to his personal
circumstances;
WHEREAS, to achieve these objectives, the Company and the
Executive desire to enter into an agreement providing the Company and the
Executive with certain rights and obligations upon the occurrence of a Change of
Control or Potential Change of Control (as defined in Section 2);
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company and the
Executive as follows:
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1. Operation of Agreement. (a) Effective Date. The effective date of
this Agreement shall be the date on which a Change of Control occurs (the
"Effective Date"), provided that, except as provided in Section 1(b), if the
Executive is not employed by the Company on the Effective Date, this Agreement
shall be void and without effect.
(b) Termination of Employment Following a Potential Change of
Control. Notwithstanding Section 1(a), if (i) the Executive's employment is
terminated by the Company Without Cause (as defined in Section 6(c)) after the
occurrence of a Potential Change of Control and prior to the occurrence of a
Change of Control and (ii) a Change of Control occurs within one year of such
termination, the Executive shall be deemed, solely for purposes of determining
his rights under this Agreement, to have remained employed until the date such
Change of Control occurs and to have been terminated by the Company Without
Cause immediately after this Agreement becomes effective.
2. Definitions. (a) Change of Control. For the purposes of
this Agreement, a "Change of Control" shall be deemed to have occurred if:
(i) any Person (as defined below) has acquired, "beneficial
ownership" (within the meaning of Rule 13d-3, as promulgated under
Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of securities of the Company representing 30% or more
of the combined Voting Power (as defined below) of the Company's
securities;
(ii) within any 24 month period, the persons who were
directors of the Company immediately before the beginning of such
period (the "Incumbent Directors") shall cease (for any reason other
than death) to constitute at least a majority of the Board or the board
of directors of any successor to the Company, provided that any
director who was not a director at the beginning of such period shall
be deemed to be an Incumbent Director if such director (A) was elected
to the Board by, or on the recommendation of or with the approval of,
at least two-thirds of the directors who then qualified as Incumbent
Directors either actually or by prior operation of this Section
2(a)(ii) and (B) was not designated by a person who has entered into an
agreement with the Company to effect a Corporate Event, as described in
Section 2(a)(iii); or
(iii) the stockholders of the Company approve a merger,
consolidation, share exchange, division, sale or other disposition of
all or
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substantially all of the assets of the Company (a "Corporate Event"),
as a result of which the shareholders of the Company immediately prior
to such Corporate Event shall not hold, directly or indirectly,
immediately following such Corporate Event a majority of the Voting
Power of (x) in the case of a merger or consolidation, the surviving or
resulting corporation, (y) in the case of a share exchange, the
acquiring corporation or (z) in the case of a division or a sale or
other disposition of assets, each surviving, resulting or acquiring
corporation which, immediately following the relevant Corporate Event,
holds more than 10% of the consolidated assets of the Company
immediately prior to such Event.
(b) Potential Change of Control. For the purposes of this
Agreement, a Potential Change of Control shall be deemed to have occurred if:
(i) a Person commences a tender offer (with reasonably
adequate financing) for securities representing at least 20% of the
Voting Power of the Company's securities;
(ii) the Company enters into an agreement the consummation of
which would constitute a Change of Control;
(iii) proxies for the election of directors of the Company are
solicited by anyone other than the Company; or
(iv) any other event occurs which is deemed to be a Potential
Change of Control by the Board.
(c) Person Defined. For purposes of this Section 2, "Person"
shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act, as supplemented by Section 13(d)(3) of the Exchange Act; provided, however,
that Person shall not include (i) the Company or any subsidiary of the Company
or (ii) any employee benefit plan sponsored by the Company or any subsidiary of
the Company.
(d) Voting Power Defined. A specified percentage of "Voting
Power" of a company shall mean such number of the Voting Securities as shall
enable the holders thereof to cast such percentage of all the votes which could
be cast in an annual election of directors (without consideration of the rights
of any class of stock other than the common stock of the company to elect
directors by a separate class vote); and "Voting Securities" shall mean all
securities of a company entitling the holders thereof to vote in an annual
election of directors
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(without consideration of the rights of any class of stock other than the common
stock of the company to elect directors by a separate class vote).
3. Employment Period. Subject to Section 6 of this Agreement,
the Company agrees to continue the Executive in its employ, and the Executive
agrees to remain in the employ of the Company, for the period (the "Employment
Period") commencing on the Effective Date and ending on the second anniversary
of the Effective Date.
4. Position and Duties. (a) No Reduction in Position. During
the Employment Period, the Executive's position (including titles), authority
and responsibilities shall be at least commensurate with those held, exercised
and assigned immediately prior to the Effective Date. It is understood that, for
purposes of this Agreement, such position, authority and responsibilities shall
not be regarded as not commensurate merely by virtue of the fact that a
successor shall have acquired all or substantially all of the business and/or
assets of the Company as contemplated by Section 13(b) of this Agreement. The
Executive's services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date.
(b) Business Time. From and after the Effective Date, the
Executive agrees to devote substantially all of his attention during normal
business hours to the business and affairs of the Company, to the extent
necessary to discharge his responsibilities hereunder, except for (i) time spent
in managing his personal, financial and legal affairs, serving on corporate,
civic or charitable boards or committees or working for any charitable or civic
organization, in each case only if and to the extent not materially interfering
with the performance of such responsibilities, and (ii) periods of vacation and
sick leave to which he is entitled. It is expressly understood and agreed that
the Executive's continuing to serve on any boards and committees on which he is
serving or with which he is otherwise associated immediately preceding the
Effective Date shall be deemed not to interfere with the performance of the
Executive's services to the Company.
5. Compensation. (a) Base Salary. During the Employment
Period, the Executive shall receive a base salary at a monthly rate at least
equal to the monthly salary paid to the Executive by the Company and any of its
affiliated companies immediately prior to the Effective Date. The base salary
shall be reviewed at least once each year after the Effective Date, and may be
increased (but not decreased) at any time and from time to time by action of the
Board or any committee thereof or by any individual having authority to take
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such action in accordance with the Company's regular practices. The Executive's
base salary, as it may be increased from time to time, shall hereafter be
referred to as "Base Salary". Neither the Base Salary nor any increase in Base
Salary after the Effective Date shall serve to limit or reduce any other
obligation of the Company hereunder.
(b) Annual Bonus. During the Employment Period, in addition to
the Base Salary, for each fiscal year of the Company ending during the
Employment Period, the Executive shall be afforded the opportunity to receive an
annual bonus on terms and conditions no less favorable to the Executive (taking
into account reasonable changes in the Company's goals and objectives) than the
annual bonus opportunity that had been made available to the Executive for the
fiscal year ended immediately prior to the Effective Date (the "Annual Bonus
Opportunity"). Any amount payable in respect of the Annual Bonus Opportunity
shall be paid as soon as practicable following the year for which the amount (or
prorated portion) is earned or awarded, but not later than 90 days after the
close of the calendar year for which the bonus is payable, unless electively
deferred by the Executive pursuant to any deferral programs or arrangements that
the Company may make available to the Executive.
(c) Long-term Incentive Compensation Programs. During the
Employment Period, the Executive shall participate in all long-term incentive
compensation programs for key executives at a level that is commensurate with
the Executive's participation in such plans immediately prior to the Effective
Date, or, if more favorable to the Executive, at the level made available to the
Executive or other similarly situated officers at any time thereafter.
(d) Benefit Plans. During the Employment Period, the Executive
(and, to the extent applicable, his dependents) shall be entitled to participate
in or be covered under all pension, retirement, deferred compensation, savings,
medical, dental, health, disability, group life, accidental death and travel
accident insurance plans and programs of the Company and its affiliated
companies at a level that is commensurate with the Executive's participation in
such plans immediately prior to the Effective Date, or, if more favorable to the
Executive, at the level made available to the Executive or other similarly
situated officers at any time thereafter.
(e) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the policies and procedures of the
Company as in effect immediately prior to the Effective Date. Notwithstanding
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the foregoing, the Company may apply the policies and procedures in effect after
the Effective Date to the Executive, if such policies and procedures are more
favorable to the Executive than those in effect immediately prior to the
Effective Date.
(f) Vacation, Perquisites and Fringe Benefits. During the
Employment Period, the Executive shall be entitled to paid vacation, perquisites
and fringe benefits at a level that is commensurate with the paid vacation,
perquisites and fringe benefits available to the Executive immediately prior to
the Effective Date, or, if more favorable to the Executive, at the level made
available from time to time to the Executive or other similarly situated
officers at any time thereafter.
(g) Indemnification. The Company agrees that if the Executive
is made a party, or is threatened to be made a party, to any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he is or was a director, officer or
employee of the Company, the Executive shall be indemnified and held harmless by
the Company to the fullest extent legally permitted or authorized by the
Company's certificate of incorporation or bylaws or resolutions of the Board or,
if greater, by the laws of the State of Delaware, against all cost, expense,
liability and loss (including, without limitation, attorney's fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by the Executive in connection
therewith. The Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering the Executive to the extent the
Company provides such coverage for its other executive officers.
(h) Office and Support Staff. The Executive shall be entitled
to an office with furnishings and other appointments, and to secretarial and
other assistance, at a level that is at least commensurate with that provided to
the Executive immediately prior to the Effective Date.
6. Termination. (a) Death, Disability or Retirement. Subject
to the provisions of Section 1 hereof, this Agreement shall terminate
automatically upon the Executive's death, termination due to "Disability" (as
defined below) or voluntary retirement under any of the Company's retirement
plans as in effect from time to time. For purposes of this Agreement, Disability
shall mean the Executive has been incapable of substantially fulfilling the
positions, duties, responsibilities and obligations set forth in this Agreement
because of physical, mental or emotional incapacity resulting from injury,
sickness or disease for a period of (i) at least five consecutive months or (ii)
more than seven months in
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any twelve month period. The Company and the Executive shall agree on the
identity of a physician to resolve any question as to the Executive's
disability. If the Company and the Executive cannot agree on the physician to
make such determination, then the Company and the Executive shall each select a
physician and those physicians shall jointly select a third physician, who shall
make the determination. The determination of any such physician shall be final
and conclusive for all purposes of this Agreement. The Executive or his legal
representative or any adult member of his immediate family shall have the right
to present to such physician such information and arguments as to the
Executive's disability as he, she or they deem appropriate, including the
opinion of the Executive's personal physician.
(b) Voluntary Termination. Notwithstanding anything in this
Agreement to the contrary, following a Change of Control the Executive may, upon
not less than 30 days' written notice to the Company, voluntarily terminate
employment for any reason (including early retirement under the terms of any of
the Company's retirement plans as in effect from time to time), provided that
any termination by the Executive pursuant to Section 6(d) on account of Good
Reason (as defined therein) shall not be treated as a voluntary termination
under this Section 6(b).
(c) Cause. The Company may terminate the Executive's
employment for Cause. For purposes of this Agreement, "Cause" means (i) the
Executive's conviction of a felony or the entering by the Executive of a plea of
nolo contendere to a felony charge, (ii) the Executive's gross neglect, willful
malfeasance or willful gross misconduct in connection with his employment
hereunder which has had a material adverse effect on the business of the Company
and its subsidiaries, unless the Executive reasonably believed in good faith
that such act or nonact was in or not opposed to the best interests of the
Company, or (iii) repeated material violations by the Executive of his
obligations under Section 4 of this Agreement, which violations are demonstrably
willful and deliberate on the Executive's part and which result in material
damage to the Company's business or reputation.
(d) Good Reason. Following the occurrence of a Change of
Control, the Executive may terminate his employment for Good Reason. For
purposes of this Agreement, "Good Reason" means the occurrence of any of the
following, without the express written consent of the Executive, after the
occurrence of a Change of Control:
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(i) (A) the assignment to the Executive of any duties
inconsistent with the Executive's position, authority or
responsibilities as contemplated by Section 4 of this Agreement, or (B)
failure to continue the Executive as the Company's President and Chief
Executive Officer or as a member of the Board, other than in connection
with a Termination for Cause or a Termination due to Disability or any
other material adverse change in such position, including titles,
authority or responsibilities;
(ii) any failure by the Company to comply with any of the
provisions of Section 5 of this Agreement, other than an insubstantial
or inadvertent failure remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location more than 40 miles (or such other distance as shall
be set forth in the Company's relocation policy as in effect at the
Effective Time) from that location at which he performed his services
specified under the provisions of Section 4 immediately prior to the
Change of Control, except for travel reasonably required in the
performance of the Executive's responsibilities;
(iv) any other material breach of this Agreement by the
Company; or
(v) any failure by the Company to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated by
Section 13(b).
In no event shall the mere occurrence of a Change of Control, absent any further
impact on the Executive, be deemed to constitute Good Reason.
(e) Notice of Termination. Any termination by the Company for
Cause or by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 13(e).
For purposes of this Agreement, a "Notice of Termination" means a written notice
given, in the case of a termination for Cause, within 10 business days of the
Company's having actual knowledge of the events giving rise to such termination,
and in the case of a termination for Good Reason, within 180 days of the
Executive's having actual knowledge of the events giving rise to such
termination, and which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
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circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the termination date
is other than the date of receipt of such notice, specifies the termination date
of the Executive's employment (which date shall be not more than 15 days after
the giving of such notice). The failure by the Executive to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing his rights
hereunder.
(f) Date of Termination. For the purpose of this Agreement,
the term "Date of Termination" means (i) in the case of a termination for which
a Notice of Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein, as the case may be, and
(ii) in all other cases, the actual date on which the Executive's employment
terminates during the Employment Period.
7. Obligations of the Company upon Termination. (a) Death or
Disability. If the Executive's employment is terminated during the Employment
Period by reason of the Executive's death or Disability, this Agreement shall
terminate without further obligations to the Executive or the Executive's legal
representatives under this Agreement other than those obligations accrued
hereunder at the Date of Termination, and the Company shall pay to the Executive
(or his beneficiary or estate) (i) the Executive's full Base Salary through the
Date of Termination (the "Earned Salary"), (ii) a pro-rata bonus for the year of
termination equal to the product of (x) the annual incentive compensation the
Executive would have been entitled to receive for the calendar year in which his
active service for the Company terminates had he remained employed for the
entire year and assuming that the performance requirements to receive a bonus at
(but not above) target for such year had been met, multiplied by (y) a fraction,
the numerator of which is equal to the number of days in such calendar year
occurring on or prior to the termination of the Executive's active service for
the Company and the denominator of which is 365 (the "Pro Rata Bonus"); (iii)
any vested amounts or vested benefits owing to the Executive under the Company's
otherwise applicable employee benefit plans and programs, including any
compensation previously deferred by the Executive (together with any accrued
earnings thereon) and not yet paid by the Company and any accrued vacation pay
not yet paid by the Company (the "Accrued Obligations"), and (iv) any other
benefits payable due to the Executive's death or Disability under the Company's
plans, policies or programs (the "Additional Benefits").
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Any Earned Salary shall be paid in cash in a single lump sum
as soon as practicable, but in no event more than 30 days (or at such earlier
date required by law), following the Date of Termination. Accrued Obligations
and Additional Benefits shall be paid in accordance with the terms of the
applicable plan, program or arrangement.
(b) Cause and Voluntary Termination. If the Executive's
employment shall be terminated for Cause or voluntarily terminated by the
Executive (other than on account of Good Reason following a Change of Control),
the Company shall pay the Executive (i) the Earned Salary in cash in a single
lump sum as soon as practicable, but in no event more than 10 days, following
the Date of Termination, and (ii) the Accrued Obligations in accordance with the
terms of the applicable plan, program or arrangement.
(c) Termination by the Company other than for Cause and
Termination by the Executive for Good Reason.
(i) Lump Sum Payments. If, during the Employment Period, the
Company terminates the Executive's employment other than for Cause, or
following a Change of Control the Executive terminates his employment
for Good Reason, the Company shall pay to the Executive the following
amounts:
(A) the Executive's Earned Salary;
(B) the Pro Rata Bonus;
(C) a cash amount (the "Severance Amount") equal to three
times the sum of (x) the Executive's - annual Base Salary
and (y) an amount equal to the greater of (1) the last
annual bonus paid - - to the Executive (or if, at the Date
of Termination, the Executive has not been eligible to
receive an annual bonus for an entire calendar year, the
annual bonus that would have been payable to the Executive
at target performance for the year in which termination
occurs) and (2) the product of (i) the Executive's annual
Base Salary and (ii) the average of the percentages of the
Executive's then current Base Salary paid as an annual
bonus with respect to each of the last three calendar
years ended prior to the Change of Control (or, if at the
Date of Termination,
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the Executive has been employed for less than three full
calendar years, for the number of full calendar years
during which the Executive was employed);
(D) the Accrued Obligations.
The Earned Salary and Severance Amount shall be paid in cash in a
single lump sum as soon as practicable, but in no event more than 30
days (or at such earlier date required by law), following the Date of
Termination. Accrued Obligations shall be paid in accordance with the
terms of the applicable plan, program or arrangement.
(ii) Premium Shares. If, during the Employment Period, the
Company terminates the Executive's employment other than for Cause, or
the Executive terminates his employment for Good Reason, any Premium
Shares (as defined in Section 5(c) of the employment agreement dated as
of October 19, 1995 between the Executive and the Company (the
"Employment Agreement")) that have not previously vested in accordance
with the terms of such Section 5(c) shall vest and become
nonforfeitable upon the Executive's termination of employment.
(iii) Continuation of Benefits. If, during the Employment
Period, the Company terminates the Executive's employment other than
for Cause, or following a Change of Control the Executive terminates
his employment for Good Reason, the Executive (and, to the extent
applicable, his dependents) shall be entitled, after the Date of
Termination until the earlier of (1) the third anniversary of the Date
of Termination (the "End Date") and (2) the date the Executive becomes
eligible for comparable benefits under a similar plan, policy or
program of a subsequent employer, to continue participation in all of
the Company's employee and executive welfare and fringe benefit plans
(the "Benefit Plans"). To the extent any such benefits cannot be
provided under the terms of the applicable plan, policy or program, the
Company shall provide a comparable benefit under another plan or from
the Company's general assets. The Executive's participation in the
Benefit Plans will be on the same terms and conditions that would have
applied had the Executive continued to be employed by the Company
through the End Date.
(iv) Car Allowance and Outplacement Services. In addition to
the benefits continuation described in Section 7(c)(iii), the Company
shall also continue to provide the Executive with the same car
allowance that
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was made available to the Executive immediately prior to the Change of
Control (or the use of the same automobile, if the Company provided the
Executive with such an automobile in lieu of a car allowance) until the
earlier of (x) the time that the Executive obtains other employment or
(y) the third anniversary of the Date of Termination. The Company shall
also make available to the Executive at its expense the full services
of a qualified independent outplacement firm to assist the Executive in
obtaining other employment.
(d) Discharge of the Company's Obligations. Except as
expressly provided in the last sentence of this Section 7(d), the amounts
payable to the Executive pursuant to this Section 7 (whether or not reduced
pursuant to Section 7(f)) following termination of his employment shall be in
full and complete satisfaction of the Executive's rights under this Agreement
and any other claims he may have in respect of his employment by the Company or
any of its subsidiaries other than claims (i) for common law torts that arise
other than in connection with his termination of employment or (ii) under other
contracts between the Executive and the Company or its subsidiaries; provided
that, in no event shall the exception set forth in subclause (ii) above be
construed to permit the Executive to receive both the benefits payable under
this Section 7 and the benefits payable under Paragraph 7 of the Employment
Agreement. Such amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt of such
amounts, the Company shall be released and discharged from any and all liability
to the Executive in connection with this Agreement or otherwise in connection
with the Executive's employment with the Company and its subsidiaries, except as
otherwise provided in the preceding sentence. Nothing in this Section 7(d) shall
be construed to release the Company from its commitment to indemnify the
Executive and hold the Executive harmless from and against any claim, loss or
cause of action arising from or out of the Executive's performance as an
officer, director or employee of the Company or any of its subsidiaries or in
any other capacity, including any fiduciary capacity, in which the Executive
served at the request of the Company to the maximum extent permitted by
applicable law.
(e) Employment Agreement. Notwithstanding the occurrence of
the Effective Date, the Employment Agreement shall remain in effect, provided
that any provision of this Agreement which is more favorable to the Executive
than a similar provision in the Employment Agreement shall control and supersede
any provisions of the Employment Agreement which conflict with the provisions
hereof or are otherwise inconsistent with the provisions hereof and provided
further that the provisions of Section 7(f) shall be applicable in any event.
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(f) Limit on Payments by the Company.
(i) Application of Section 7(f). In the event that any amount
or benefit paid or distributed to the Executive pursuant to this
Agreement, taken together with any amounts or benefits otherwise paid
or distributed to the Executive by the Company or any affiliated
company (collectively, the "Covered Payments"), would be an "excess
parachute payment" as defined in Section 280G of the Code and would
thereby subject the Executive to the tax (the "Excise Tax") imposed
under Section 4999 of the Code (or any similar tax that may hereafter
be imposed), the provisions of this Section 7(f) shall apply to
determine the amounts payable to the Executive pursuant to this
Agreement.
(ii) Calculation of Benefits. Immediately following delivery
of any Notice of Termination, the Company shall notify the Executive of
the aggregate present value of all termination benefits to which he
would be entitled under this Agreement and any other plan, program or
arrangement as of the projected Date of Termination, together with the
projected maximum payments, determined as of such projected Date of
Termination that could be paid without the Executive being subject to
the Excise Tax.
(iii) Imposition of Payment Cap. If the aggregate value of all
compensation payments or benefits to be paid or provided to the
Executive under this Agreement and any other plan, agreement or
arrangement with the Company exceeds the amount which can be paid to
the Executive without the Executive incurring an Excise Tax, then the
amounts payable to the Executive under this Section 7 shall be reduced
(but not below zero) to the maximum amount which may be paid hereunder
without the Executive becoming subject to such an Excise Tax (such
reduced payments to be referred to as the "Payment Cap"). In the event
that the Executive receives reduced payments and benefits hereunder,
the Executive shall have the right to designate which of the payments
and benefits otherwise provided for in this Agreement that he will
receive in connection with the application of the Payment Cap.
(iv) Application of Section 280G. For purposes of determining
whether any of the Covered Payments will be subject to the Excise Tax
and the amount of such Excise Tax,
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(A) (x) whether Covered Payments are "parachute payments"
within the meaning of Section 280G of the Code, and (y)
whether there are "parachute payments" in excess of the
"base amount" (as defined under Section 280G(b)(3) of the
Code) shall be determined in good faith by the Company's
independent certified public accountants appointed prior
to the Effective Date (the "Accountants") or tax counsel
selected by such Accountants, and
(B) the value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Accountants in
accordance with the principles of Section 280G of the
Code.
(v) Adjustments in Respect of the Payment Cap. If the
Executive receives reduced payments and benefits under this Section
7(f)(or this Section 7(f) is determined not to be applicable to the
Executive because the Accountants conclude that Executive is not
subject to any Excise Tax) and it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding (a
"Final Determination") that, notwithstanding the good faith of the
Executive and the Company in applying the terms of this Agreement, the
aggregate "parachute payments" within the meaning of Section 280G of
the Code paid to the Executive or for his benefit are in an amount that
would result in the Executive's being subject to an Excise Tax, then
any amounts actually paid to or on behalf of the Executive which are
treated as excess parachute payments shall be deemed for all purposes
to be a loan to the Executive made on the date of receipt of such
excess payments, which the Executive shall have an obligation to repay
to the Company on demand, together with interest on such amount at the
applicable Federal rate (as defined in Section 1274(d) of the Code)
from the date of the payment hereunder to the date of repayment by the
Executive. If the Executive receives reduced payments and benefits by
reason of this Section 7(f) and it is established pursuant to a Final
Determination that the Executive could have received a greater amount
without exceeding the Payment Cap, then the Company shall promptly
thereafter pay the Executive the aggregate additional amount which
could have been paid without exceeding the Payment Cap, together with
interest on such amount at the applicable Federal rate (as defined in
Section 1274(d) of the Code) from the original payment due date to the
date of actual payment by the Company.
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8. Non-exclusivity of Rights. Except as expressly provided
herein, nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise prejudice such rights as the Executive may have under any other
agreements with the Company or any of its affiliated companies, including
employment agreements or stock option agreements. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan or
program.
9. No Mitigation or Offset. The Executive shall have no
obligation to seek other employment and, except as expressly provided in
Sections 7(c)(iii) and 7(c)(iv), there shall be no offset against amounts due to
the Executive under this Agreement on account of any remuneration attributable
to subsequent employment that he may obtain. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against the Executive or others. In the event
that the Executive shall in good faith give a Notice of Termination for Good
Reason and it shall thereafter be determined that Good Reason did not exist, the
employment of the Executive shall, unless the Company and the Executive shall
otherwise mutually agree, be deemed to have terminated, at the date of giving
such purported Notice of Termination, by mutual consent of the Company and the
Executive and the Executive shall be entitled to receive only his Earned Salary
and the Accrued Obligations which he would have been entitled to receive upon a
voluntary termination.
10. Legal Fees and Expenses. If the Executive asserts any
claim in any contest (whether initiated by the Executive or by the Company) as
to the validity, enforceability or interpretation of any provision of this
Agreement, the Company shall pay the Executive's legal expenses (or cause such
expenses to be paid) including, without limitation, his reasonable attorney's
fees, on a quarterly basis, upon presentation of proof of such expenses in a
form acceptable to the Company, provided that the Executive shall reimburse the
Company for such amounts, plus simple interest thereon at the 90-day United
States Treasury Xxxx rate as in effect from time to time, compounded annually,
if the Executive shall not prevail, in whole or in part, as to any material
issue as to the validity, enforceability or interpretation of any provision of
this Agreement.
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11. Confidential Information; Company Property. By and in
consideration of the salary and benefits to be provided by the Company
hereunder, including the severance arrangements set forth herein, the Executive
agrees that:
(a) Confidential Information. 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, (i) obtained by the Executive during
his employment by the Company or any of its affiliated companies and (ii) not
otherwise public knowledge (other than by reason of an unauthorized act by the
Executive). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company,
unless compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it.
(b) Company Property. Except as expressly provided herein,
promptly following the Executive's termination of employment, the Executive
shall return to the Company all property of the Company and all copies thereof
in the Executive's possession or under his control, except that the Executive
may retain his personal notes, diaries, Rolodexes, calendars and correspondence.
(c) Injunctive Relief and Other Remedies with Respect to
Covenants. The Executive acknowledges and agrees that the covenants and
obligations of the Executive with respect to confidentiality and Company
property relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the
Company irreparable injury for which adequate remedies are not available at law.
Therefore, the Executive agrees that the Company shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) restraining the Executive from committing any
violation of the covenants and obligations contained in this Section 11. These
remedies are cumulative and are in addition to any other rights and remedies the
Company may have at law or in equity. In no event shall an asserted violation of
the provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.
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12. Elimination of Stock Ownership Requirement. Upon the
occurrence of a Change of Control, the share ownership guidelines set forth in
Section 5(a) of the Employment Agreement shall cease to be applicable.
13. Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. The Company shall require any
successor to all or substantially all of the business and/or assets of the
Company, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.
14. Miscellaneous. (a) Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
applied without reference to principles of conflict of laws.
(b) Arbitration. Except to the extent provided in Section
11(c), any dispute or controversy arising under or in connection with this
Agreement shall be resolved by binding arbitration. The arbitration shall be
held in the city of Los Angeles, California and except to the extent
inconsistent with this Agreement, shall be conducted in accordance with the
Expedited Employment Arbitration Rules of the American Arbitration Association
(or such other voluntary arbitration rules applicable to employment contract
disputes) in effect at the time of the arbitration, supplemented, as necessary,
by those principles which would be applied by a court of law or equity. The
arbitrator shall be acceptable to both the Company and the Executive. If the
parties cannot agree on an acceptable arbitrator, the dispute shall be heard by
a panel of three arbitrators, one appointed by each of the parties and the third
appointed by the other two arbitrators.
(c) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
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(d) Entire Agreement. This Agreement, together with the
Employment Agreement, constitutes the entire agreement between the parties
hereto with respect to the matters referred to herein. No other agreement
relating to the terms of the Executive's employment by the Company, oral or
otherwise, shall be binding between the parties unless it is in writing and
signed by the party against whom enforcement is sought. There are no promises,
representations, inducements or statements between the parties other than those
that are expressly contained herein. The Executive acknowledges that he is
entering into this Agreement of his own free will and accord, and with no
duress, that he has read this Agreement and that he understands it and its legal
consequences.
(e) 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: at the home address of the Executive noted on the
records of the Company
If to the Company: BW/IP INC.
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000
Attn.: Secretary
with a copy to: Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxxxxxx X. Xxxxxx, Esq.
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.
(f) Tax Withholding. The Company shall withhold from any
amounts payable under this Agreement such Federal, state or local taxes as shall
be required to be withheld pursuant to any applicable law or regulation.
(g) Severability; Reformation. In the event that one or more
of the provisions of this Agreement shall become invalid, illegal or
unenforceable in
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any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event that any
of the provisions of any of Section 11(a) are not enforceable in accordance with
its terms, the Executive and the Company agree that such Section shall be
reformed to make such Section enforceable in a manner which provides the Company
the maximum rights permitted at law.
(h) Waiver. Waiver by any party hereto of any breach or
default by the other party of any of the terms of this Agreement shall not
operate as a waiver of any other breach or default, whether similar to or
different from the breach or default waived. No waiver of any provision of this
Agreement shall be implied from any course of dealing between the parties hereto
or from any failure by either party hereto to assert its or his rights hereunder
on any occasion or series of occasions.
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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(j) Captions. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and the Company has caused this Agreement to be executed in its name on its
behalf, and its corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.
BW/IP INC.
/s/ P.C. Valli
-----------------------
By: P. C. Valli
Title: Chairman
WITNESSED:
/s/ Xxxx X. Xxxxxxxxx
---------------------
Xxxx X. Xxxxxxxxx
XXXXXXX X. XXXXXXX:
/s/ Xxxxxxx X. Xxxxxxx
-------------------------
WITNESSED:
/s/ Xxxx X. Xxxxxxxxx
---------------------
Xxxx X. Xxxxxxxxx
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