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Exhibit 10.5 (a)
AGREEMENT
This Agreement dated as of September 1, 1999 is made between Chicago
Bridge & Iron Company, N.V. a Netherlands company (the "Company"), and Xxxxxx X.
Xxxxx, an Illinois resident ("Executive").
RECITALS
A. The Company has established for the benefit of certain key employees
of the Company and its majority-owned subsidiaries the Chicago Bridge & Iron
Management Defined Contribution Plan (the "Plan"), funded under the Chicago
Bridge & Iron Management Defined Contribution Plan Trust (the "Trust") made as
of June 19, 1997 by and between the Company and Xxxxx Xxxxxx Private Trust
Company, a New York trust company, as trustee (the "Trustee").
B. Executive is a participant in the Plan. Pursuant to the Plan,
Executive has a contingent unvested interest in certain shares (the "Shares") of
the common stock of the Company (the "Common Stock") held in the Trust for
Executive.
C. The Company and Executive desire to convert the form of Executive's
benefits under the Plan from a contingent interest in the Shares into deferred
stock units on the terms and conditions specified in this Agreement and in the
Plan as amended pursuant to this Agreement.
AGREEMENT
The Company and Executive agree as follows:
1. Executive for himself and his beneficiaries consents to each
of the following:
(a) an Amendment and Restatement of the Plan (the "Plan
Amendment") substantially in the form thereof attached to this
Agreement as Exhibit A,
(b) an Amendment and Division of the Trust (the "Trust
Amendment") substantially in the form thereof attached to this
Agreement as Exhibit B, and
(c) the application to Executive of Section 6.2 of the Plan as
amended and restated by the Plan Amendment to provide for the
conversion on a one-for-one basis of his contingent interest in the
Shares into restricted stock units representing a right to receive
Common Stock at future dates.
2. Concurrently with the execution of this Agreement, (a) the Company
shall adopt the Plan Amendment and (b) the Company and the Trustee shall adopt
the Trust Amendment.
3. Effective as of September 1, 1999, the Company shall grant or cause
to be granted to Executive under the Chicago Bridge & Iron Long-Term Incentive
Plan ("LTIP") 50,000 Restricted Stock Units (as defined in the LTIP) on the
following terms and conditions:
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(a) The Restricted Stock Units may not be sold, transferred,
pledged, assigned or otherwise alienated at any time before a date (the
"Vesting Date") which is the earlier of (i) a "Change of Control" as
such term is defined in the Chicago Bridge & Iron Company Management
Defined Contribution Plan, or (ii) April 1, 2002.
(b) If Executive's employment with the Company or any of its
Subsidiaries or affiliated companies terminates before the Vesting Date
for any reason (including retirement) other than death, Disability (as
defined in the LTIP) or dismissal for the convenience of the Company,
Executive shall forfeit all such Restricted Stock Units as of the date
of his termination of employment.
(c) The Restricted Stock Units will be settled by the
distribution to Executive of a number of shares of Common Stock equal
to the number of Restricted Stock Units that have not previously been
forfeited. The date of such settlement (the "Settlement Date") shall be
the later to occur of (i) the first business day after Executive's
termination of employment or (ii) the first business day after the
Vesting Date; provided, however, that if the general counsel of the
Company determines that Executive's right to sell Common Stock on the
open market on such date is restricted by the Company's xxxxxxx xxxxxxx
policy then applicable to Executive, the Settlement Date shall be
deferred until the first subsequent business day on which the Company's
general counsel determines that Executive can sell Common Stock on an
unrestricted basis. Notwithstanding the foregoing provisions of this
subsection (c), in the event of a Change of Control (as defined in
subsection (a)), the Settlement Date shall be the date of the Change of
Control.
(d) In the event that the Company shall at any time pay a
dividend in cash or Common Stock to the holders of Common Stock as of
any record date before the Settlement Date, the Company shall
concurrently (i) pay to Executive in respect of each nonforfeited
Restricted Stock Unit then held by Executive pursuant to this Agreement
a cash amount equal to the amount of the cash dividend payable in
respect of each share of Common Stock and (ii) grant to Executive
additional Restricted Stock Units equal to the number of shares of
Common Stock payable as a dividend in respect of each share of Common
Stock then outstanding. Any such additional Restricted Stock Units
shall be subject to the terms of this Agreement.
4. To the extent that any tax (a "FICA Medicare Tax") imposed by
Section 3101(b) of the Internal Revenue Code of 1986 is withheld from dividends
payable to the Executive under Section 4.4 of the Plan, the Company will pay
Executive, simultaneously with the payment of such dividends, an amount (the
"FICA Tax Gross-Up Amount") sufficient, after Executive's payment of all
federal, state and local income, excise and other taxes on the FICA Tax Gross-Up
Amount, to provide Executive with the amount equal to the FICA Medicare Tax.
5. The Company shall at the written request of the Executive purchase
from Executive all or any part of the Shares of Common Stock distributed to the
Executive under the Plan on the following terms and conditions:
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(a) The written request shall be signed by Executive, and
dated and delivered to the office of the Treasurer of the Company
during regular working hours on a date (the "Put Date") which is not
earlier than the first business day occurring more than six months
after the date of distribution of such Shares and not later than the
180th day occurring more than six months after the date of distribution
of such Shares, stating the number of Shares to be sold to the Company
and (if such Shares were distributed in certificated form) accompanied
by such Share certificates duly endorsed for transfer.
(b) The price for the Shares shall be the average of the high
and low trading prices of the Common Stock of the Company on the New
York Stock Exchange (or, if the Common Stock of the Company is not then
listed on the New York Stock Exchange, the closing prices of the Shares
on such other national exchange on which the Common Stock is
principally traded or as reported by the National Market system, or
similar organization, or if no such quotations are available, the
averages of the daily high bid and low asked quotations in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated or similar organization), for the Put Date. The closing of
the purchase and sale shall occur, and the Company shall pay Executive
the purchase price in full in cash, within five business days of the
Put Date.
(c) Notwithstanding subsections (a) and (b), if the General
Counsel of the Company determines in good faith and notifies Executive
in writing that as of the Put Date the Purchase of the Shares by the
Company (i) is forbidden by applicable law because of circumstances
reasonably unforseeable by, and beyond the reasonable control of, the
Company; (ii) is forbidden by or subject to a substantial restriction
under any contract made on or before the date hereof and binding on the
Company or any contract made after the date hereof if the Company shall
have exerted best efforts in negotiating such contract to limit any
such prohibition or restriction; or (iii) subjects the Company to a
material tax (other than a tax described in Section 6 below) or to a
charge in earnings by reason of a change in applicable revenue law or
change in applicable accounting standards from those existing on or
before the date hereof then in any such case the Company shall not be
required to purchase the Shares under this Section, but the Executive
may at his option require the Company to purchase the Shares on a
deferred Put Date which shall be the first day on which such purchase
is not so forbidden, restricted or taxed, at the purchase price
determined under subsection (b) as of that deferred Put Date.
6. In the event that a revenue authority asserts that a tax is due but
was unpaid by Executive by reason of a taxable event prior to the date Executive
is entitled to a distribution of his Stock Account (a "Tax Claim"), the Company
will indemnify Executive and hold him harmless as follows:
(a) The Company will pay Executive an amount equal to the sum
of the interest and penalties (if any) forming part of the Tax Claim.
(b) If (i) the amount of the Tax Claim, when paid, minus the
indemnity payment under subsection (a), exceeds (ii) the value of the
Executive's Stock Account when distributed (or when the Tax Claim is
paid if prior to distribution of the Stock Account), the Company will
pay Executive an amount equal to such difference.
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(c) Simultaneously with any payment required under subsection
(a) or (b) the Company will pay Executive an amount (the "Tax Gross-Up
Amount") sufficient, after Executive's payment of all federal, state
and local income, excise and other taxes on the Tax Gross-Up Amount, to
provide Executive after such taxes with the amounts of any federal,
state and local income, excise and other taxes (if any) payable with
respect to the amounts payable under subsections (a) and (b).
(d) Any payment required under subsection (a), (b) or (c)
shall be made promptly upon Executive's payment of the Tax Claim or as
soon as practicable thereafter.
(e) Executive shall notify the Company promptly of receipt of
any communication from a revenue authority respecting an actual or
potential Tax Claim. The Company shall have the right at its own
expense to control the negotiation, settlement, appeal or litigation of
the Tax Claim. Executive shall cooperate fully with the Company in any
such negotiation, settlement, appeal or litigation.
7. Executive may request in writing that the Company prepare and file
as soon as reasonably practicable a registration statement on Form S-2 or S-3 or
any similar short-form registration available to the Company under the
Securities Act of 1933 ("Securities Act") to register the offer and sale of all
or any portion of the Shares distributed under the Plan (the "Securities") on
the following terms and conditions:
(a) The aggregate public offering price of the Securities to
be sold in such offering by Executive (after aggregation with the
Securities to be sold in the same offering by any other executive
having similar contractual registration rights) may not be less than $5
million. The Company shall not be required to undertake more than one
registration pursuant to this Section.
(b) Subject to the next sentence of this paragraph, the
Company shall be entitled to postpone, for a reasonable period of time,
the filing or effectiveness of or suspend the rights of Executive to
make sales pursuant to a registration statement otherwise required to
be prepared, filed and made and caused to become effective by IT
pursuant to this Section. The duration of such postponement or
suspension may not exceed the earlier to occur of (i) 15 days after the
cessation of the circumstances described in the next sentence of this
subsection on which such postponement or suspension is based or (ii) 90
days after the date of the determination of the Board of Directors
referred to in the next sentence. Such postponement or suspension may
be effected only if the Board of Directors of the Company determines
that the filing or effectiveness of, or sales pursuant to, such
registration statement would (i) materially impede, delay or interfere
with any material financing, offer or sale of securities, acquisition,
corporate reorganization or other significant transaction involving the
Company or any of its subsidiaries (a "Significant Transaction") or
(ii) require the Company to make public disclosures or file
publicly-available documents with the U.S. Securities and Exchange
Commission ("SEC") sooner than otherwise required by applicable
securities laws, which disclosure or filings, as applicable, would
materially impede, delay or interfere with any Significant Transaction
or otherwise have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(c) In connection with any such registration, (i) the Company
will use its
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reasonable best efforts to cause such registration statement to be
declared effective on the date requested by Executive and (ii) the
Company and Executive shall enter into an underwriting agreement
containing customary terms, representations and covenants (including
customary indemnification provisions and customary contribution
provisions based on the relative fault of the parties) with one or more
managing underwriters selected by Executive (subject to the approval of
the Company, which approval shall not unreasonably be withheld). The
Company shall pay all of the legal, accounting, printing, filing and
other fees and expenses of such registration, except that Executive
shall pay all underwriters' discounts and commissions relating to the
sale of his shares of common stock of the Company and the fees and
disbursements of Executive's legal counsel, if any. No securities of
the Company other than Shares distributed under the Plan shall be
included in such Demand Registration.
8. In the event that any amount or benefit paid or distributed to
Executive pursuant to this Agreement, taken together with any amounts or
benefits otherwise paid or distributed to Executive (the "Covered Payments"),
are or become subject to the tax (the "Excise Tax") imposed under Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), or any similar
tax that may hereafter be imposed, the Company shall pay Executive, at the same
time as it pays such amount or benefit, an additional amount (the "Tax
Reimbursement Payment") such that the net amount retained by Executive with
respect to such Covered Payments, after deduction of any Excise Tax on the
Covered Payments and any Federal, state and local income or employment tax and
Excise Tax on the Tax Reimbursement Payment provided for by this Section 1(b),
but before deduction for any Federal, state or local income or employment tax
withholding on such Covered Payments, shall be equal to the amount of the
Covered Payments, further calculated as follows:
(a) For purposes of determining whether any of the Covered
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) all "parachute payments" in excess of the "base amount"
(as defined under Section 280G(b)(3)) of the Code) shall be treated as
subject to the Excise Tax, unless, and except to the extent that, in
the good faith judgment of the Company's independent certified public
accountants appointed prior to the Change of Control (the
"Accountants"), or tax counsel selected by such Accountants, the
Company has a reasonable basis to conclude that such Covered Payments
(in whole or in part) represent reasonable compensation for personal
services actually rendered (within the meaning of Section 280G(b)(4)(B)
of the Code) in excess of the "base amount," or such "parachute
payments" are otherwise not subject to such Excise Tax; and (ii) 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.
(b) For purposes of determining the amount of the Tax
Reimbursement Payment, Executive shall be deemed to pay (i) Federal
income taxes at the highest applicable marginal rate of Federal income
taxation for the calendar year in which the Tax Reimbursement Payment
is to be made; and (ii) any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the calendar year
in which the Tax Reimbursement Payment is to be made, net of the
maximum reduction in Federal income taxes which could be obtained from
the deduction of such state or local taxes if paid in such year.
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(c) In the event that the Excise Tax is subsequently
determined by the Accountants or pursuant to any proceeding or
negotiations with the Internal Revenue Service to be less than the
amount taken into account hereunder in calculating the Tax
Reimbursement Payment made, Executive shall repay to the Company, at
the time that the amount of such reduction in the Excise Tax is finally
determined, the portion of such prior Tax Reimbursement Payment that
would not have been paid if such Excise Tax had been applied in
initially calculating such Tax Reimbursement Payment, plus interest on
the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event
any portion of the Tax Reimbursement Payment to be refunded to the
Company has been paid to any Federal, state or local tax authority,
repayment thereof shall not be required until actual refund or credit
of such portion has been made to Executive. Executive and the Company
shall mutually agree upon the course of action to be pursued if
Executive's good faith claim for refund or credit is denied, provided
that the Company shall bear the cost of any expenses incurred which are
related to pursuing any recovery of any amount paid in respect of the
Excise Tax.
(d) In the event that the Excise Tax is later determined by
the Accountants or pursuant to any proceeding or negotiations with the
Internal Revenue Service to exceed the amount taken into account
hereunder at the time the Tax Reimbursement Payment is made (including,
but not limited to, by reason of any payment the existence or amount of
which cannot be determined at the time of the Tax Reimbursement
Payment), the Company shall make an additional Tax Reimbursement
Payment in respect of such excess (plus any interest or penalty payable
with respect to such excess) at the time that the amount of such excess
is finally determined.
9. Executive shall from time to time execute and deliver such further
documents and consents and do all other acts and things as the Company may
reasonably request to implement the Plan Amendment and Trust Amendment in
accordance with their respective terms.
10. Any dispute or controversy arising under or in connection with this
Agreement shall be settled by arbitration held in accordance with the rules of
the American Arbitration Association pertaining to the resolution of employment
disputes. Any such arbitration shall be held in Chicago, Illinois unless the
parties otherwise agree in writing. Judgment may be entered on the arbitrator's
award in any court having jurisdiction.
11. The Company shall pay on a current basis all legal expenses
(including attorneys' fees) incurred by Executive in enforcing his rights under
the Plan or the Trust or in connection with any advice or arbitration pursuant
to Section 10 respecting this Agreement (including judicial enforcement or
defense of any arbitrator's award). Executive shall repay such amounts, plus
interest compounded semiannually at the short-term annual Applicable Federal
Rate (as determined under Section 1274(b) of the Code as in effect on the date
Executive first incurs such expenses) if the arbitrator (or a court) determines
that Executive's position was frivolous or not taken in good faith.
12. The Company shall have the right to withhold any amounts otherwise
payable under this Agreement to the extent required to satisfy its withholding
obligations under applicable federal, state and local tax laws.
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13. This Agreement may be amended or modified one by a written
instrument executed by the Company and Executive. A waiver of any portion of
this Agreement shall not be deemed a waiver of any other portion of this
Agreement.
14. This Agreement contains the entire understanding of the Company and
the Executive with respect to its subject matter and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained.
15. This Agreement shall be subject to and construed in accordance with
the laws of the State of Illinois, without regard to its rules or provisions of
law regarding conflict of laws.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement as of the date first above written.
CHICAGO BRIDGE & IRON COMPANY N.V.
By: CHICAGO BRIDGE & IRON COMPANY B.V.
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Chicago Bridge & Iron Company B.V.,
its sole Managing Director
By: /s/ Xxxxxx X. Xxxxxx
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Its authorized officer
EXECUTIVE
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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