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EXHIBIT 10.23
CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
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TABLE OF CONTENTS
PAGE
ARTICLE I. PURPOSES...............................................................................................1
ARTICLE II. CERTAIN DEFINITIONS...................................................................................1
2.1 "Accrued Obligations"....................................................................................1
2.2 "Agreement Term".........................................................................................1
2.3 "Affiliate"..............................................................................................2
2.4 "Article"................................................................................................2
2.5 "Beneficial Owner".......................................................................................2
2.6 "Board"..................................................................................................2
2.7 "Cause"..................................................................................................2
2.8 "Change of Control"......................................................................................2
2.9 "Code"...................................................................................................3
2.10 "Deferral Plan".........................................................................................3
2.11 "Disability"............................................................................................4
2.12 "Effective Date"........................................................................................4
2.13 "Good Reason" has the meaning defined for that term in Section 4.4(b)...................................4
2.14 "Gross-up Payment"......................................................................................4
2.15 "Growth Transaction"....................................................................................4
2.16 "Imminent Control Change Date"..........................................................................4
2.17 "IRS"...................................................................................................4
2.18 "1934 Act"..............................................................................................4
2.19 "Notice of Termination".................................................................................4
2.20 "Plans".................................................................................................5
2.21 "Policies"..............................................................................................5
2.22 "Post-Change Period" ..................................................................................5
2.23 "Present Value".........................................................................................5
2.24 "SEC" means the Securities and Exchange Commission......................................................5
2.25 "Section" ..............................................................................................5
2.26 "SERP"..................................................................................................5
2.27 "Shareholder Agreement".................................................................................5
2.28 "Subsidiary"............................................................................................5
2.29 "Termination Date"......................................................................................5
2.30 "Transaction Owner".....................................................................................6
2.31 "Voting Securities".....................................................................................6
ARTICLE III. POST-CHANGE PERIOD PROTECTIONS.......................................................................6
3.1 General..................................................................................................6
3.2 Position and Duties......................................................................................6
3.3 Compensation.............................................................................................7
3.4 Pro-Rata Bonus Payment..................................................................................10
3.5 Equity Awards Vesting...................................................................................10
3.6 Nonqualified Deferred Compensation......................................................................10
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE IV. TERMINATION OF EMPLOYMENT............................................................................11
4.1 Disability..............................................................................................11
4.2 Death...................................................................................................11
4.3 Cause...................................................................................................11
4.4 Good Reason.............................................................................................13
ARTICLE V. OBLIGATIONS OF THE COMPANY UPON TERMINATION...........................................................15
5.1 If by the Executive for Good Reason or by the Company Other Than for Cause or Disability...............15
5.2 If by the Company for Cause.............................................................................17
5.3 If by the Executive Other Than for Good Reason..........................................................17
5.4 If by the Company for Disability........................................................................17
5.5 If upon Death. ........................................................................................17
ARTICLE VI. NON-EXCLUSIVITY OF RIGHTS............................................................................18
6.1 Waiver of Other Severance Rights........................................................................18
6.2 Other Rights............................................................................................18
ARTICLE VII. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY..........................................................18
7.1 Gross-up for Certain Taxes..............................................................................18
7.2 Determination by the Executive..........................................................................18
7.3 Additional Gross-up Amounts.............................................................................19
7.4 Gross-up Multiple.......................................................................................19
7.5 Opinion of Counsel......................................................................................20
7.6 Amount Increased or Contested...........................................................................20
7.7 Refunds.................................................................................................21
ARTICLE VIII. EXPENSES AND INTEREST..............................................................................21
8.1 Legal Fees and Other Expenses...........................................................................21
8.2 Interest................................................................................................22
ARTICLE IX. NO SET-OFF OR MITIGATION.............................................................................22
9.1 No Set-off or Defenses by Company.......................................................................22
9.2 No Mitigation...........................................................................................23
ARTICLE X. CONFIDENTIALITY AND NONCOMPETITION....................................................................23
10.1 Confidentiality. .....................................................................................23
10.2 Noncompetition/Nonsolicitation.........................................................................23
10.3 Remedy. ..............................................................................................24
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE XI. MISCELLANEOUS........................................................................................24
11.1 No Assignability.......................................................................................24
11.2 Successors.............................................................................................25
11.3 Payments to Beneficiary................................................................................25
11.4 Non-alienation of Benefits.............................................................................25
11.5 Severability...........................................................................................25
11.6 Amendments.............................................................................................25
11.7 Notices................................................................................................25
11.8 Counterparts. ........................................................................................26
11.9 Governing Law..........................................................................................26
11.10 Captions...............................................................................................26
11.11 Tax Withholding........................................................................................26
11.12 Joint and Several Obligations..........................................................................26
11.13 No Waiver..............................................................................................26
11.14 Entire Agreement.......................................................................................26
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of October 13, 2000 is made among CHICAGO BRIDGE &
IRON COMPANY N.V. ("CBICNV"), a Netherlands corporation, CHICAGO BRIDGE & IRON
COMPANY, a Delaware corporation ("CBIC"), CHICAGO BRIDGE & IRON COMPANY
(DELAWARE), a Delaware corporation ("CBICD" and, together with CBICNV and CBIC,
the "Company"), each having its principal place of business in Plainfield,
Illinois, and Gerald M. Glenn (the "Executive"), a resident of Illinois.
ARTICLE I.
PURPOSES
The Supervisory Board of CBICNV has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued service of the Executive, despite the possibility or
occurrence of a change of control of the Company. The Board believes it is
imperative to reduce the distraction of the Executive that would result from the
personal uncertainties caused by a pending or threatened change of control, to
encourage the Executive's full attention and dedication to the Company, and to
provide the Executive with compensation and benefits arrangements upon a change
of control which ensure that the expectations of the Executive will be satisfied
and are competitive with those of similarly-situated corporations. This
Agreement is intended to accomplish these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" has the meaning defined for that term in Section
5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is thirty-six (36) months following the
date of this Agreement ("Expiration Date"); provided, however, that the
Agreement Term shall be extended as follows: (a) if neither the Company nor the
Executive gives written notice to the other pursuant to Section 11.7 that this
Agreement shall not be renewed ("Notice of Nonrenewal") within two years from
the date of this Agreement, the Agreement Term shall be extended to an
Expiration Date which shall be the first annual anniversary of the date a Notice
of Nonrenewal is given; (b) if an Imminent Control Change Date occurs before the
Expiration Date (as it may be extended under clause (a) above), then no Notice
of Nonrenewal shall thereafter be effective and the Agreement Term shall
automatically extend to an Expiration Date which is twelve (12) months after the
Imminent Change of Control Date, as further extended under the terms of this
clause should another Imminent Change of Control Date occur prior to the
Expiration Date as from time to time so extended, and (c) if a Change of Control
occurs before the Expiration Date (as extended
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under clause (a) or (b) above or this clause (c)), the Expiration Date shall
automatically be extended to the last day of the Post-Change Period as the
Post-Change Period may be extended as provided in Section 2.22.
2.3 "Affiliate" means an "affiliate" or "associate" as those terms are
defined in Rule 12b-2 under the 1934 Act.
2.4 "Article" means an article of this Agreement.
2.5 "Beneficial Owner" means such term as defined in Rule 13d-3 of the SEC
under the 1934 Act.
2.6 "Board" means the Supervisory Board of Chicago Bridge & Iron Company
N.V.
2.7 "Cause" has the meaning defined for that term in Section 4.3(b).
2.8 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
(a) any person (as such term is used in Rule 13d-5 of the SEC under the
1934 Act) or group (as such term is defined in Section 13(d) of the 1934
Act), other than a Subsidiary or any employee benefit plan (or any related
trust) of the Company or a Subsidiary, becomes the Beneficial Owner of 25%
or more of the common shares of any of CBICNV, CBIC or CBICD or of other
Voting Securities representing 25% or more of the combined voting power of
all Voting Securities of any of CBICNV, CBIC or CBICD; provided, however,
that (i) no Change of Control shall be deemed to have occurred solely by
reason of any such acquisition by a corporation with respect to which,
after such acquisition, more than 75% of both the common shares or common
stock of such corporation and the combined voting power of the Voting
Securities of such corporation are then beneficially owned, directly or
indirectly, by the persons who were the Beneficial Owners of the common
shares and other Voting Securities of CBICNV, CBIC or CBICD immediately
before such acquisition, in substantially the same proportion as their
ownership of the common shares and other Voting Securities of CBICNV, CBIC
or CBICD, as the case may be, immediately before such acquisition; and (ii)
once a Change of Control occurs under this subsection (a), the occurrence
of the next Change of Control (if any) under this subsection (a) shall be
determined by reference to a person or group other than the person or group
whose acquisition of Beneficial Ownership created such prior Change of
Control unless the original person or group has in the meantime ceased to
own 25% or more of the common shares of all of CBICNV, CBIC or CBICD or
other Voting Securities representing 25% or more of the combined voting
power of all Voting Securities of all of CBICNV, CBIC or CBICD; or
(b) individuals who, as of the date of this Agreement or as of any
Effective Date thereafter, are Supervisory Directors of CBICNV (the
"Incumbent Directors") cease for any reason to constitute at least 50% of
the members of the Board; provided, however, that (i) any individual who
becomes a Supervisory Director after the Effective Date whose binding
nomination for election to the Board by the general meeting of shareholders
was approved by a vote or written consent of at least 75% of the
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Supervisory Directors who are then Incumbent Directors shall be considered
an Incumbent Director, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of
the Company (as such terms are used in Rule 14a-11 of the SEC under the
1934 Act); and (ii) once a Change of Control occurs under this subsection
(b), the occurrence of the next Change of Control (if any) under this
subsection (b) shall be determined by reference to the individuals who were
Incumbent Directors immediately after the Effective Date of such prior
Change of Control; or
(c) approval by the Board, or by the shareholders of CBICNV, CBIC or
CBICD, of any of the following:
(i) a merger, reorganization or consolidation of CBICNV, CBIC or
CBICD ("Merger"), other than a Merger after which the individuals and
entities who were the respective beneficial owners of the common shares
and other Voting Securities of CBICNV, CBIC or CBICD (as the case may
be) immediately before such Merger beneficially own, directly or
indirectly, more than 75% of, respectively, the common shares or common
stock and the combined voting power of the Voting Securities of the
corporation resulting from such Merger, in substantially the same
proportion as their ownership of the common shares or common stock and
other Voting Securities of CBICNV, CBIC or CBICD (as the case may be)
immediately before such Merger, or
(ii) a sale or other disposition by any of CBICNV, CBIC or CBICD
of all or substantially all of the assets owned by it, or
(iii) any transaction as a result of which CBICNV would not
thereafter directly or indirectly own beneficially at least 75% of the
common stock of CBIC or as a result of which CBIC would not thereafter
directly or indirectly own beneficially at least 75% of the common
stock of CBICD, unless after either such transaction CBICNV continues
to own directly or indirectly substantially all of the pre-transaction
assets of both CBIC and CBICD.
(d) if a Growth Transaction previously occurred, any Transaction Owner
individually, or Transaction Owners collectively:
(i) materially breach(es) any provision of any shareholder
agreement to which CBICNV and such Transaction Owner(s) are parties
that addresses the governance of CBICNV following the Growth
Transaction; or
(ii) become(s) the Beneficial Owner of more than 66.5% of the
common shares of any of CBICNV, CBIC or CBICD or of other Voting
Securities representing more than 66.5% of the combined voting power of
all Voting Securities of any of CBICNV, CBIC or CBICD.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Deferral Plan" has the meaning defined for that term in Section 3.6.
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2.11 "Disability" has the meaning defined for that term in Section 4.1(b).
2.12 "Effective Date" means each date on which a Change of Control occurs
during the Agreement Term; provided, however, that if the Company terminates the
Executive's employment before the date of a Change of Control, and if the
Executive reasonably demonstrates that such termination of employment (a) was at
the request of a third party who had taken steps reasonably calculated to effect
the Change of Control or (b) otherwise arose in connection with or anticipation
of the Change of Control, then "Effective Date" shall mean the date immediately
before the date of such termination of employment.
2.13 "Good Reason" has the meaning defined for that term in Section 4.4(b).
2.14 "Gross-up Payment" has the meaning defined for that term in Section
7.1.
2.15 "Growth Transaction" means (i) the acquisition by Wedge Group
Incorporated ("WGI"), a Delaware corporation, First Reserve Fund VIII, L.P.
("FRF"), a Delaware limited partnership, or Pitt-Des Moines, Inc. ("PDM"), a
Pennsylvania corporation, or their Affiliates, of common shares or other Voting
Securities of CBICNV as contemplated by an agreement with CBICNV for the
acquisition by CBICNV or an Affiliate of Howe-Baker International, Inc. from WGI
(the "HBI Transaction") or for the acquisition of the PDM Engineered
Construction Division and Water Division from PDM (the "PDM Transaction"); (ii)
the acquisition by a person (other than by public offering) of common shares or
other Voting Securities of CBICNV from CBICNV as part of an arrangement for
financing the HBI Transaction or the PDM Transaction; (iii) the acquisition by a
person of common shares or other Voting Securities of CBICNV from a previous
Transaction Owner if the person acquiring such common shares or other Voting
Securities is or becomes a party to a Shareholder Agreement with CBICNV that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner; or (iv) a transfer of common shares or other
Voting Securities of CBICNV from one Transaction Owner to another Transaction
Owner if the acquiring Transaction Owner is subject with respect to such shares
or other Voting Securities to either a preexisting Shareholder Agreement between
CBICNV and the acquiring Transaction Owner or a Shareholder Agreement that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner. However, a "Growth Transaction" will not include
any event described in Section 2.8(d).
2.16 "Imminent Control Change Date" means any date on which occurs (a) a
presentation to the Company's shareholders generally or any of the Company's
directors or executive officers of a proposal or offer for a Change of Control,
or (b) the public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal or offer for
a Change of Control, or (c) such proposal or offer remains effective and
unrevoked.
2.17 "IRS" means the Internal Revenue Service.
2.18 "1934 Act" means the Securities Exchange Act of 1934, as amended.
2.19 "Notice of Termination" means a written notice given in accordance
with Section 11.7 which sets forth (a) the specific termination provision in
this Agreement relied upon
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by the party giving such notice, (b) in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under such termination provision and (c) if the Termination Date is
other than the date of receipt of such Notice of Termination, the Termination
Date.
2.20 "Plans" means plans, programs, policies or practices of the Company or
any of its Subsidiaries.
2.21 "Policies" means policies, practices or procedures of the Company or
any of its Subsidiaries.
2.22 "Post-Change Period" means the period commencing on each Effective
Date and ending on the third annual anniversary of such Effective Date. If a new
Change of Control creates a new Effective Date during any current Post-Change
Period, the Post-Change Period shall be extended to the third annual anniversary
of such new Effective Date; and shall be further extended upon each new
Effective Date during the Post-Change Period as extended.
2.23 "Present Value" means the present value, determined using (a) the
actuarial assumptions published by the Pension Benefit Guaranty Corporation
("PBGC") for determining immediate annuity values, as in effect on the first day
of the calendar year in which any payment of present value is required, or (b)
if no such actuarial assumptions are published by the PBGC, using the mortality
assumptions of the UP-84 group mortality table and an interest rate assumption
which is the lesser of (i) 75% of the current 30-year Treasury bond rate or (ii)
the current 30-year Treasury bond rate minus 150 basis points.
2.24 "SEC" means the Securities and Exchange Commission.
2.25 "Section" means, unless the context otherwise requires, a section of
this Agreement.
2.26 "SERP" has the meaning defined for that term in Section 3.6.
2.27 "Shareholder Agreement" means an agreement between CBICNV and a person
that limits the ability of such person and its Affiliates to obtain and exercise
control over the management and policies of the CBICNV.
2.28 "Subsidiary" means a corporation as defined in Section 424(f) of the
Code (with the Company being treated as the employer corporation for purposes of
this definition) and any partnership or limited liability company in which the
Company or any Subsidiary has a direct or indirect interest (whether in the form
of voting power or participation in profits or capital contribution) of 50% or
more.
2.29 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company terminates the Executive's employment
other than for Cause or Disability, then the Termination Date shall be the date
of receipt of such Notice of Termination and (b) if the Executive's employment
is terminated by reason of death or Disability, then the Termination Date shall
be the date of death
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of the Executive or the Disability Effective Date (as defined in Section
4.1(a)), as the case may be.
2.30 "Transaction Owner" means a person who acquires common shares or other
Voting Securities of CBICNV in a Growth Transaction, or any Affiliate of such
person.
2.31 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 General. On the Effective Date and during the Post-Change Period
thereafter the Company shall make the payments, provide the benefits and fulfill
the other obligations required by this Article III. However, if, such Effective
Date and Post-Change Period result solely from a Growth Transaction:
(a) Section 3.3(b) shall not apply except for purposes of determining
the obligations of the Company on termination pursuant to Section 5.1, and
to the extent provided in Section 4.4(b)(iii) and as modified thereby, in
determining the existence of Good Reason;
(b) clause (ii) of each of Sections 3.3(c) through 3.3(h) shall not
apply except for purposes of determining the obligations of the Company on
termination pursuant to Section 5.1; but the aggregate value to the
Executive of all Plans, fringe benefits and arrangements described in
Sections 3.3(c) through 3.3(h) shall not be less favorable, in the
aggregate, than the aggregate value to the Executive of such Plans, fringe
benefits and arrangements provided by the Company to the Executive or peer
executives at any time during the 90-day period immediately before such
Effective Date; and
(c) Except as otherwise agreed to by separate agreement between the
Company and the Executive that is more favorable to the Executive, Sections
3.4, 3.5, and 3.6 shall not apply on such Effective Date; but to the extent
such vesting or payment is not otherwise required by Section 5.1, Sections
3.4, 3.5 and 3.6, shall apply to the Executive on the Termination Date (as
if such Sections referred to the "Termination Date" instead of the
"Effective Date") if during the Post-Change Period the Company shall
terminate Executive's employment other than for Cause, or if the Executive
shall terminate employment for Good Reason, or if employment terminates as
a result of Disability or death.
3.2 Position and Duties.
(a) During the Post-Change Period, (1) the Executive's position
(including offices, titles, reporting requirements and responsibilities),
authority and duties shall be at least commensurate in all material
respects with the most significant of those held by, exercised by, or
assigned to the Executive at any time during the 90-day period immediately
before the Effective Date and (2) the Executive's services shall be
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performed at the location where the Executive was employed immediately
before the Effective Date or any other location less than 40 miles from
such former location.
(b) During the Post-Change Period (other than any periods of vacation,
sick leave, disability leave or other family or medical leave to which the
Executive is entitled), the Executive shall devote his or her full
attention and time to the business and affairs of the Company and, to the
extent necessary to discharge the duties assigned to the Executive in
accordance with this Agreement, shall use his or her best efforts to
perform such duties faithfully and efficiently. During the Post-Change
Period, the Executive may (1) serve on corporate, civic or charitable
boards or committees, (2) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (3) manage personal investments, so
long as such activities are consistent with the Policies of the Company or
its Subsidiaries at the Effective Date and do not significantly interfere
with the performance of the Executive's duties under this Agreement. To the
extent that any such activities have been conducted by the Executive before
the Effective Date and were consistent with the Policies of the Company or
its Subsidiaries at the Effective Date, the continued conduct of such
activities (or activities similar in nature and scope) after the Effective
Date shall not be deemed to interfere with the performance of the
Executive's duties under this Agreement.
3.3 Compensation.
(a) Base Salary. During the Post-Change Period, the Company shall pay
or cause to be paid to the Executive an annual base salary in cash
("Guaranteed Base Salary"), which shall be paid in a manner consistent with
the Company's payroll practices in effect immediately before the Effective
Date for such Post-Change Period, at a rate at least equal to the highest
rate of annual salary paid or payable to the Executive by the Company at
any time during the 12-month period immediately before such Effective Date.
During the Post-Change Period, the Guaranteed Base Salary shall be reviewed
at least annually and shall be increased at any time and from time to time
as shall be substantially consistent with increases in base salary awarded
to other peer executives of the Company. Any increase in Guaranteed Base
Salary shall not limit or reduce any other obligation of the Company to the
Executive under this Agreement. After any such increase, the Guaranteed
Base Salary shall not be reduced and the term "Guaranteed Base Salary"
shall thereafter refer to the increased amount.
(b) Guaranteed Bonus.
(i) During the Post-Change Period, the Company shall pay or cause
to be paid to the Executive a bonus (the "Guaranteed Bonus") for each
Performance Period which ends during the Post-Change Period.
"Performance Period" means each period of time designated in accordance
with any bonus arrangement ("Bonus Plan") which is based upon
performance and approved by the Board or by any committee of the Board.
For purposes of this Section 3.3, a Bonus Plan includes, without
limitation, the Company's Incentive Compensation Plan as in effect on
the date hereof or any similar plan, but does not include the Company's
1997 or 1999 Long-Term Incentive Plan (an "LTIP") or any similar plan
under
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which equity awards described Section 3.5 are granted, unless
failure to consider the LTIP a Bonus Plan would leave the Company
without any Bonus Plan covering Executive. The Guaranteed Bonus shall
be at least equal to the product of (A) the greater of (i) the On Plan
Percentage (as defined below), or (ii) the Actual Bonus Percentage (as
defined below), multiplied by (B) the Guaranteed Base Salary.
(ii) For purposes of this Section 3.3(b):
(A) "On Plan Percentage" means the percentage of Guaranteed
Base Salary to which the Executive would be entitled under the
Bonus Plan(s) for the Performance Period for which the Guaranteed
Bonus is awarded ("Current Performance Period") if performance
achieved 100% of the target performance goals established pursuant
to such Bonus Plan(s); or, if greater, the percentage of
Guaranteed Base Salary to which Executive would have been entitled
under the Bonus Plan(s) for the Performance Period ending
immediately prior to the Post-Change Period if performance
achieved 100% of the performance goals established pursuant to
such Bonus Plan(s) for such prior Performance Period.
(B) "Actual Bonus Percentage" means the percentage of
Guaranteed Base Salary for the Current Performance Period to which
the Executive would be entitled under any Bonus Plan if the
performance were measured by the actual performance during the
Current Performance Period; provided, however, that for purposes
of determining the Guaranteed Bonus for purposes of Sections 3.4
and 5.1(b), "Actual Bonus Percentage" means the percentage of
Guaranteed Base Salary for the Performance Period during which the
Effective Date (for purposes of Section 3.4) or Termination Date
(for purposes of Section 5.1(b)) occurs to which the Executive
would be entitled if the performance during such Performance
Period were measured by the actual performance during the portion
of such Performance Period before the Effective Date or the
Termination Date (whichever is applicable), projected to the last
day of such Performance Period.
(c) Incentive, Savings and Retirement Plans. During the Post-Change
Period and notwithstanding the payment required by Section 3.6, (i) the
Executive shall be entitled to continue to participate in all incentive
(including long-term incentives and management stock plans), savings,
deferred compensation, retirement and benefit restoration Plans provided by
the Company and applicable to other peer executives of the Company, but (ii)
in no event shall such Plans provide the Executive with incentive (including
long-term incentives and management stock benefits), savings, deferred
compensation, retirement and benefit restoration benefits which, in any
case, are less favorable, in the aggregate, than the most favorable of those
provided by the Company to
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the Executive or to peer executives under such Plans as in effect at any
time during the 90-day period immediately before any Effective Date.
(d) Welfare Benefit Plans. During the Post-Change Period, (i) the
Executive and the Executive's family shall be eligible to participate in,
and receive all benefits under, welfare benefit Plans (including, without
limitation, medical, prescription, dental, disability, salary continuance,
individual life, group life, dependent life, accidental death and travel
accident insurance Plans) provided by the Company and applicable to other
peer executives of the Company and their families, but (ii) in no event
shall such Plans provide benefits which in any case are less favorable, in
the aggregate, than the most favorable of those provided by the Company to
the Executive or to peer executives under such Plans as in effect at any
time during the 90-day period immediately before any Effective Date.
(e) Fringe Benefits. During the Post-Change Period, (i) the Executive
shall be entitled to fringe benefits (including, without limitation, any
foreign service travel and housing allowances for Executive and the
Executive's family under Plans or Policies of the Company for foreign
service) in accordance with the most favorable Plans provided by the Company
and applicable to other peer executives of the Company, but (ii) in no event
shall such Plans provide fringe benefits which in any case are less
favorable, in the aggregate, than the most favorable of those provided by
the Company to the Executive or peer executives under such Plans in effect
at any time during the 90-day period immediately before any Effective Date.
(f) Expenses. During the Post-Change Period, (i) the Executive shall be
entitled to prompt reimbursement of all reasonable employment-related
expenses incurred by the Executive upon the Company's receipt of accountings
in accordance with the most favorable Policies applicable to peer executives
of the Company, but (ii) in no event shall such Policies be less favorable,
in the aggregate, than the most favorable of those provided by the Company
to the Executive or to peer executives under such Policies in effect at any
time during the 90-day period immediately before any Effective Date.
(g) Office and Support Staff. During the Post-Change Period, (i) the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance
in accordance with the most favorable Policies applicable to peer executives
of the Company, but (ii) in no event shall such Policies be less favorable,
in the aggregate, than the most favorable of those provided by the Company
to the Executive or to peer executives under such Policies in effect at any
time during the 90-day period immediately before any Effective Date.
(h) Vacation. During the Post-Change Period, (i) the Executive shall be
entitled to paid vacation in accordance with the most favorable Policies
applicable to peer executives of the Company, but (ii) in no event shall
such Policies be less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive or to peer executives
under such Policies in effect at any time during the 90-day period
immediately before any Effective Date.
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3.4 Pro-Rata Bonus Payment.
On each Effective Date the Company shall pay to Executive in a single lump
sum in cash the product of (A) the Guaranteed Bonus for the Performance Period
in which falls the Effective Date, multiplied by (B) a fraction, the numerator
of which is the number of days in such Performance Period before the Effective
Date, and the denominator of which is the total number of days in such
Performance Period. The amount of Guaranteed Bonus for such Performance Period
otherwise payable pursuant to Section 3.3(b), or otherwise payable pursuant to
this Section 3.4 by reason of a later Change of Control in the same Performance
Period, shall be reduced by any earlier payment made under this Section 3.4 for
the same Performance Period.
3.5 Equity Awards Vesting.
On the Effective Date, the Executive shall become fully vested in:
(a) any and all outstanding options ("Options") to purchase common
shares of the Company granted to Executive prior to the Effective Date under
any Plan, contract or arrangement for Options, which Options shall become
fully exercisable;
(b) any outstanding shares of restricted common shares of the Company
regardless whether such restrictions are scheduled to lapse based on service
or on performance or both ("Restricted Stock") awarded to Executive under
any Plan, contract or arrangement for Restricted Stock; which shall become
unrestricted and freely transferable; and
(c) any outstanding awards providing for the payment of a variable
number of common shares of the Company dependent on the achievement of
performance goals, or of an amount based on the fair market value of such
shares or the appreciation thereof ("Performance Shares") awarded to
Executive under any Plan, contract or arrangement for Performance Shares;
and there shall be paid out in cash to Executive within 30 days following
the Effective Date of the Change of Control the value of the Performance
Shares to which Executive would have been entitled if performance achieved
100% of the target performance goals established for such Performance
Shares.
To the extent that for any reason such Options, Restricted Stock and
Performance Shares do not become vested on the Effective Date, the Company shall
pay Executive a cash amount equal to (i) the positive difference, if any,
between the value of the shares of common stock subject to the Options that did
not become vested (or, if greater, the value paid or to be paid in connection
with the Change of Control to a holder of an equal number of shares of common
stock ("Change of Control Value")) and the Option exercise price with respect to
such shares, as of and on the date such Options are forfeited; plus (ii) the
fair market value (determined without regard to any restriction other than a
restriction which by its terms may never lapse) (or, if greater, the Change of
Control Value) of all non-vested forfeited Restricted Stock and Performance
Shares as of and on the date such Restricted Stock or Performance Shares are
forfeited. Nothing in this Section 3.5 shall require the vesting, or payment, of
equity awards granted after such Effective Date unless a new Effective Date has
intervened
3.6 Nonqualified Deferred Compensation.
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On the Effective Date Executive shall become fully vested in and the
Company shall pay to Executive in a single lump sum in cash (1) the value of
Executive's then-accrued benefits, if any, which remain unpaid under any
nonqualified deferred compensation, benefit restoration, excess benefit or other
individual account plan, contract or arrangement for deferred compensation
maintained by the Company under which benefits are calculated by reference to an
individual account (a "Deferral Plan"), and (2) the Present Value of Executive's
then-accrued benefits, if any, which remain unpaid under any nonqualified
supplemental executive retirement plan or other plan, contract or arrangement
for retirement benefits maintained by the Company under which benefits are
calculated by reference to a defined amount payable in connection with or after
retirement or other termination of employment an (a "SERP").
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
(a) During the Post-Change Period, the Company may terminate the
Executive's employment upon the Executive's Disability (as defined in
Section 4.1(b)) by giving the Executive or his legal representative, as
applicable, Notice of Termination accompanied by a certification of the
Executive's Disability by a physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the Executive's legal
representative. The Executive's employment shall terminate effective on the
30th day (the "Disability Effective Date") after the Executive's receipt of
such Notice of Termination unless, before the Disability Effective Date, the
Executive shall have resumed the full-time performance of the Executive's
duties.
(b) "Disability" means any medically determinable physical or mental
impairment that has lasted for a continuous period of not less than six
months and can be expected to be permanent or of indefinite duration, and
that renders the Executive unable to perform the essential functions
required under this Agreement with or without reasonable accommodation.
(c) Unless the Company establishes, by clear and convincing evidence,
that Executive has a Disability, any purported termination of employment for
Disability shall be deemed a termination other than for Disability for all
purposes of this Agreement.
4.2 Death. The Executive's employment shall terminate automatically upon
the Executive's death during the Post-Change Period.
4.3 Cause.
(a) During the Post-Change Period, the Company may terminate the
Executive's employment for Cause.
(b) "Cause" means any of the following: Executive's conviction of a
felony or of a crime involving fraud, dishonesty or moral turpitude;
Executive's willful or intentional material breach of this Agreement that
results in financial detriment that is
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material to the Company as a whole; or willful or intentional misconduct by
Executive in the performance of his duties under this Agreement that
results in financial detriment that is material to the Company as a whole;
except that Cause shall not mean:
(i) bad judgment or negligence;
(ii) any act or omission believed by the Executive in good faith
to have been in or not opposed to the interest of the Company (without
intent of the Executive to gain, directly or indirectly, a profit to
which the Executive was not legally entitled);
(iii) any act or omission with respect to which a determination
could properly have been made by the Board that the Executive met the
applicable standard of conduct for indemnification or reimbursement
under the Company's by-laws, any applicable indemnification agreement,
or applicable law, in each case in effect at the time of such act or
omission; or
(iv) any act or omission with respect to which Notice of
Termination is not given within 12 months after the earliest date on
which any member of the Board, not a party to the act or omission, knew
or should have known of such act or omission.
(c) The Company may not during the Post-Change Period terminate
Executive's employment for Cause unless the following procedures are fully
complied with:
(i) no fewer than 45 days prior to the Termination Date, the
Company provides Executive with written notice (the "Notice of
Consideration") of its intent to consider termination of Executive's
employment for Cause, including a detailed description of the specific
reasons which form the basis for such consideration;
(ii) if after providing Notice of Consideration, the Board may, by
the affirmative vote of at least 80% of its members (excluding for this
purpose Executive if he is a member of the Board, and any other member
of the Board reasonably believed by the Board to be involved in the
events issuing the Notice of Consideration), suspend Executive with pay
until a final determination pursuant to this Section has been made;
(iii) for a period of not less than 30 days after the date Notice
of Consideration is provided, Executive shall have the opportunity to
appear before the Board, with or without legal representation, at
Executive's election, to present arguments and evidence on his own
behalf; and
(iv) following the presentation to the Board as provided in (3)
above or Executive's failure to appear before the Board at a date and
time specified in the Notice of Consideration (which date shall not be
less than 30 days after the date the Notice of Consideration is
provided), Executive may be terminated for Cause
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only if (i) the Board, by the affirmative vote of at least 80% of its
members (excluding Executive if he is a member of the Board, and any
other member of the Board reasonably believed by the Board to be
involved in the events leading the Board to terminate Executive for
Cause), determines that the actions or inactions of Executive specified
in the Notice of Consideration occurred, that such actions or inactions
constitute Cause, and that Executive's employment should accordingly be
terminated for Cause; and (ii) the Board provides Executive with a
written determination (a "Notice of Termination for Cause") setting
forth in specific detail the basis of such Termination of Employment,
which Notice of Termination for Cause shall be consistent with the
reasons set forth in the Notice of Consideration.
Unless the Company establishes, by clear and convincing evidence, both (x)
its full compliance with the substantive and procedural requirements of this
Section prior to a termination of employment for Cause, and (y) that Executive's
action or inaction specified in the Notice of Termination for Cause did occur
and constituted Cause, any purported termination of employment for Cause shall
be deemed a termination without Cause for all purposes of this Agreement.
4.4 Good Reason.
(a) During the Post-Change Period, the Executive may terminate
employment for Good Reason within 12 months (or, if applicable, within the
shorter period provided by subsection (b)(ix) below) following the
Executive's actual knowledge of an act or omission which constitutes Good
Reason; provided, however, that the Executive's failure to terminate within
12 months (or, if applicable, within the shorter period provided by
subsection (b)(ix) below) following Executive's actual knowledge of a
particular act or omission which constitutes Good Reason shall not prevent
Executive's termination for any other act or omission which constitutes
Good Reason.
(b) "Good Reason" means any of the following:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including offices, titles,
reporting requirements or responsibilities), authority or duties as
prescribed by Section 3.2(a)(1), or the Company's requiring the
Executive to be based at any office or location other than the location
described in Section 3.2(a)(2);or any other action by the Company which
results in a diminution or other material adverse change in such
position, authority or duties;
(ii) the failure to pay Guaranteed Base Salary in at least the
amount prescribed by Section 3.2(a);
(iii) the failure to pay Guaranteed Bonus in at least the amount
prescribed by Section 3.3(b); provided, however, that if the
Post-Change Period results solely from a Growth Transaction; Good
Reason under this clause (iii) shall only be the failure to provide
Executive with a bonus opportunity (including
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designation of target performance goals and percentage of Guaranteed
Base Salary payable on achievement of target performance goals) no less
favorable to Executive than that provided by the Company to Executive
for either of the two most recent Performance Periods beginning before
such Growth Transaction;
(iv) the failure to provide any plan or fringe benefits or
perquisites prescribed by Sections 3.3(c) through 3.3(h), as modified,
if the Post-Change Period results solely from a Growth Transaction, by
Section 3.1(b);
(v) any other failure by the Company to comply with any of the
provisions of Article III;
(vi) any other material adverse change to the terms and conditions
of the Executive's employment (whether or not also described in clauses
(i) through (v) above);
(vii) the Board's giving Notice of Consideration pursuant to
Section 4.3(c) (of the intent to consider terminating Executive for
Cause) but failing to terminate Executive for Cause within a period of
90 days thereafter in compliance with all substantive and procedural
requirements of Section 4.3,
(viii) any purported termination by the Company of the Executive's
employment other than as expressly permitted by this Agreement (any
such purported termination shall not be effective for any other purpose
under this Agreement);
(ix) a termination of employment by the Executive for any reason
or no reason during the 60-day period commencing 30 days after a Major
Change of Control, for which purpose "Major Change of Control" means an
event that is not a Growth Transaction and that would be a Change of
Control under Section 2.8 if Section 2.8 were applied (A) by
substituting "50%" for each occurrence of "25%" in subsection 2.8(a),
(B) by substituting the "the closing of any of the following:" for the
words "approval by the Board, or by the shareholders of CBICNV, CBIC,
or CBICD, of any of the following:" in the introductory clause of
subsection 2.8(c), and (C) by substituting "50%" for each occurrence of
"75%" in subsection 2.8(c);
(x) a failure by the Company to cause a successor, prior to or as
of the date it becomes a successor, to assume and agree to perform this
Agreement in accordance with the provisions of Section 11.2 hereof.
Any determination by Executive that any of the foregoing events has
occurred and constitutes "Good Reason" shall be conclusive and binding for
all purposes unless the Company establishes by clear and convincing
evidence that Executive did not have a reasonable basis for such a
determination.
(c) Any termination of employment by the Executive for Good Reason
shall be communicated to the Company by Notice of Termination. The passage
of time not in
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excess of 12 months after the Executive has actual knowledge of an act
or omission which constitutes Good Reason prior to delivery of Notice
of Termination or a failure by the Executive to include 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 under this
Agreement or preclude the Executive from asserting such fact or
circumstance in enforcing rights under this Agreement.
ARTICLE V.
OBLIGATIONS OF THE COMPANY UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Company Other Than for
Cause or Disability. If, during the Post-Change Period, the Company shall
terminate Executive's employment other than for Cause, Disability, or death or
if the Executive shall terminate employment for Good Reason, the Company shall
pay the Executive within five (5) days of the Termination Date (or if earlier
within five (5) days of the last day Executive performed services for the
Company as an Employee), in addition to all vested rights arising from the
Executive's employment as specified in Article III, a cash amount equal to the
sum of the amounts described in (a) through (g) below and the additional
benefits described in (h) through (i) below:
(a) The Guaranteed Base Salary, any accrued vacation pay and business
expenses incurred through the Termination Date, to the extent not
previously paid to the Executive by the Company.
(b) The difference between (1) the product of (A) the Guaranteed Bonus,
multiplied by (B) a fraction, the numerator of which is the number of days
in the Termination Performance Period which elapsed before the Termination
Date, and the denominator of which is the total number of days in the
Termination Performance Period, and (2) the amount of any Guaranteed Bonus
previously paid to the Executive by the Company with respect to the
Termination Performance Period.
(c) The value of Executive's then-accrued benefits under any Deferral
Plan plus the present value of Executive's then-accrued benefits under any
SERP, determined without disregarding service and compensation before any
Effective Date but then reduced by the amount, if any, previously paid to
the Executive by the Company pursuant to Section 3.6.
(d) An amount equal to the product of (1) three (3.0), multiplied by
(2) the sum of (A) the Guaranteed Base Salary and (B) the Guaranteed Bonus.
(e) An amount equal to the sum of the value of the unvested portion of
the Executive's accounts or accrued benefits under any qualified plan
maintained by the Company as of the Termination Date.
(f) The difference between (1) the amount that would be determined
under Section 5.1(c) above if such amount were calculated (to the extent
applicable in determining such amount) (A) as though the Executive
continued to accrue benefits and be credited with service under the SERP
for a period of three years after the Termination
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Date, (B) as though the Executive received compensation during each year of
such three-year period equal to the sum of the Guaranteed Base Salary and
the highest Guaranteed Bonus paid (or payable) to the Executive in the
three calendar years preceding the Termination Date, (C) as though the
Executive were three (3) years older than his age at the Termination Date,
and (D) without disregarding service and compensation before the
Termination Date; reduced by (2) the amount (if any) previously or
simultaneously paid by the Company to the Executive pursuant to Sections
3.6 and 5.1(c).
(g) In addition to the foregoing amounts, the Company shall pay on
behalf of Executive all fees and costs charged by the outplacement firm
selected by the Executive to provide outplacement services or at the
election of the Executive, an immediate cash payment equal to the fees and
expenses such outplacement firm would charge but not in excess of 20% of
the Guaranteed Base Salary.
(h) In addition to the foregoing payments, until the third annual
anniversary of the Termination Date or such later date as any Plan of the
Company may specify, the Company shall continue to provide to the Executive
and the Executive's family welfare benefits (including, without limitation,
medical, prescription, dental, disability, salary continuance, individual
life, group life, accidental death and travel accident insurance plans and
programs) which are at least as favorable as the most favorable Plans of
the Company applicable to other peer executives and their families as of
the Termination Date, but which are in no event less favorable than the
most favorable Plans of the Company applicable to other peer executives and
their families during the 90-day period immediately before the Effective
Date; and the cost of such welfare benefits to Executive shall not exceed
the cost of such benefits to the Executive immediately before the
Termination Date or, if less, the Effective Date.
(i) Beginning on the later of the third annual anniversary of the
Termination Date or the date Executive attains age 50, and continuing until
the death of the last to die of Executive and his or her spouse, the
Company shall provide to the Executive and to Executive's family medical
benefits which (1) until Executive attains age sixty-five (65) are at least
as favorable as the most favorable medical Plans of the Company applicable
to actively employed peer executives and that covered any active employee
of the Company as of the Effective Date, and (2) from and after the date
Executive attains age 65, are at least as favorable as the most favorable
medical Plans of the Company applicable to eligible retired peer executives
and that covered any retired employee as of the Effective Date; and the
cost to Executive of such medical benefits for the period described in
clause (1) shall not exceed the cost of such benefits to Executive
immediately before the Termination Date or, if less, the Effective Date,
and the cost to Executive of such medical benefits for the period described
in clause (2) shall not exceed the cost of such benefits to any similarly
situated eligible retiree of the Company immediately before the Termination
Date or, if less, the Effective Date.
The Executive's rights under this Section 5.1 shall be in addition to, and not
in lieu of, any post-termination continuation coverage or conversion rights the
Executive may have pursuant to applicable law, including without limitation
continuation coverage required by Section 4980 of the Code or Part 6 of Title I
of the Employee Retirement Income Security Act of 1974, as
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amended, for which purpose the date of the qualifying event shall not be earlier
than the date specified in the first sentence of Section 5.1(i). However, if the
Executive is covered under a medical, life, or disability insurance plan
provided by a subsequent employer at equal or lesser cost to Executive than the
cost to Executive of coverage under the corresponding Company plan required by
Sections 5.1(i), then the benefits under the corresponding Company plan required
by Sections 5.1(i) shall be secondary to the benefits under the subsequent
employer's medical, life, or disability insurance plan.
5.2 If by the Company for Cause. If the Company terminates the Executive's
employment for Cause during the Post-Change Period pursuant to the procedures
set forth in Section 4.3, this Agreement shall terminate without further
obligation by the Company to the Executive, other than the obligation
immediately to pay the Executive in cash the Executive's Guaranteed Base Salary
through the Termination Date, plus the amount of any compensation previously
deferred by the Executive, plus any accrued vacation pay and business expenses
incurred through the Termination Date, in each case to the extent not previously
paid or reimbursed.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good Reason,
Disability or death, this Agreement shall terminate without further obligations
by the Company, other than the obligation immediately to pay the Executive in
cash all amounts specified in paragraphs (a), (b) and (c) of Section 5.1 (such
amounts collectively, the "Accrued Obligations").
5.4 If by the Company for Disability. If the Company terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than:
(a) the Company's obligation immediately to pay the Executive in cash
all Accrued Obligations, and
(b) the Executive's right after the Disability Effective Date to
receive disability and other benefits at least equal to the greater of (i)
those provided under the most favorable disability Plans applicable to
disabled peer executives of the Company in effect immediately before the
Termination Date or (ii) those provided under the most favorable disability
Plans of the Company in effect at any time during the 90-day period
immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by reason of
the Executive's death during the Post-Change Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than the obligation immediately to pay the
Executive's estate or beneficiary in cash all Accrued Obligations. Despite
anything in this Agreement to the contrary, the Executive's family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company to the surviving families of peer executives of the
Company under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive under such Plans in effect at
any time during the 90-day period immediately before the Effective Date.
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ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are made
to the Executive pursuant to Section 5.1, the Executive hereby waives the right
to receive severance payments under any other Plan or agreement of or with the
Company.
6.2 Other Rights. Except as provided in Section 6.1, this Agreement shall
not prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other Plans provided by the Company or any of its
Subsidiaries and for which the Executive may qualify, nor shall this Agreement
limit or otherwise affect such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any Plan
of the Company or any of its Subsidiaries and any other payment or benefit
required by law at or after the Termination Date shall be payable in accordance
with such Plan or applicable law except as expressly modified by this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Company's independent auditors, which determinations shall be
certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that any benefit received or deemed
received by the Executive from the Company pursuant to this Agreement or
otherwise (collectively, the "Payments") is or will become subject to any excise
tax under Section 4999 of the Code or any similar tax payable under any United
States federal, state, local or other law (such excise tax and all such similar
taxes collectively, "Excise Taxes"), then the Company shall, immediately after
such determination, pay the Executive an amount (the "Gross-up Payment") equal
to the product of
(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the Excise
Taxes and any federal, state, local or other income or excise taxes or other
taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Company may at any time request the Company's
independent auditors to prepare and deliver a Certificate to the Executive. The
Company shall, in addition to complying with Section 7.2, cause all
determinations and certifications under the Article to be made as soon as
reasonably possible and in adequate time to permit the Executive to prepare and
file the Executive's individual tax returns on a timely basis.
7.2 Determination by the Executive.
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(a) If the Company or its independent auditors shall fail to deliver a
Certificate to the Executive (and to pay to the Executive the amount of the
Gross-up Payment, if any) within 14 days after receipt from the Executive
of a written request for a Certificate, or if at any time following receipt
of a Certificate the Executive disputes the amount of the Gross-up Payment
set forth therein, the Executive may elect to demand the payment of the
amount which the Executive, in accordance with an Executive Counsel
Opinion), (as defined in Section 7.5), determines to be the Gross-up
Payment. Any such demand by the Executive shall be made by delivery to the
Company of a written notice which specifies the Gross-up Payment determined
by the Executive and an Executive Counsel Opinion regarding such Gross-up
Payment (such written notice and opinion collectively, the "Executive's
Determination"). Within 14 days after delivery of the Executive's
Determination to the Company, the Company shall either (1) pay the
Executive the Gross-up Payment set forth in the Executive's Determination
(less the portion of such amount, if any, previously paid to the Executive
by the Company) or (2) deliver to the Executive a Certificate specifying
the Gross-up Payment determined by the Company's independent auditors,
together with a Company Counsel Opinion (as defined in Section 7.5), and
pay the Executive the Gross-up Payment specified in such Certificate. If
for any reason the Company fails to comply with clause (2) of the preceding
sentence, the Gross-up Payment specified in the Executive's Determination
shall be controlling for all purposes.
(b) If the Executive does not make a request for, and the Company does
not deliver to the Executive, a Certificate, the Company shall, for
purposes of Section 7.3, be deemed to have determined that no Gross-up
Payment is due.
7.3 Additional Gross-up Amounts. If the amount of Excise Taxes payable by
the Executive with respect to all Payments is determined (pursuant to the
subsequently-enacted provisions of the Code, final regulations or published
rulings of the IRS, final judgment of a court of competent jurisdiction or the
Company's independent auditors) to be greater than the amount previously paid by
the Company to the Executive pursuant to Section 7.1 or 7.2, as applicable, then
the Company shall pay the Executive an amount (which shall also be deemed a
Gross-up Payment) equal to the product of:
(a) the sum of (i) such additional Excise Taxes and (ii) any interest,
fines, penalties, expenses or other costs incurred by the Executive as a
result of having taken a position in accordance with a determination made
pursuant to Section 7.1,
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal the quotient
(greater than one (1.0)) of one (1.0) divided by one (1.0) minus the sum,
expressed as a decimal fraction, of the rates of all federal, state, local and
other income and other taxes and any Excise Taxes applicable to the Gross-up
Payment; provided that, if such sum exceeds 0.75, it shall be deemed equal to
0.75 for purposes of this computation. (If different rates of tax are applicable
to various portions of a Gross-up Payment, the weighted average of such rates
shall be used.)
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7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel who is counsel to the
Executive that there is a reasonable basis to support a conclusion that the
Gross-up Payment determined by the Executive has been calculated in accord with
this Article and applicable law. "Company Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel who is counsel to the
Company that (a) there is a reasonable basis to support a conclusion that the
Gross-up Payment set forth of the Certificate of Company's independent auditors
has been calculated in accord with this Article and applicable law, and (b)
there is no reasonable basis for the calculation of the Gross-up Payment
determined by the Executive.
7.6 Amount Increased or Contested. The Executive shall notify the Company
in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Company of a Gross-up Payment. Such
notice shall include the nature of such claim and the date on which such claim
is due to be paid. The Executive shall give such notice as soon as practicable,
but no later than 10 business days, after the Executive first obtains actual
knowledge of such claim; provided, however, that any failure to give or delay in
giving such notice shall affect the Company's obligations under this Article
only if and to the extent that such failure results in actual prejudice to the
Company. The Executive shall not pay such claim less than 30 days after the
Executive gives such notice to the Company (or, if sooner, the date on which
payment of such claim is due). If the Company notifies the Executive in writing
before the expiration of such period that it desires to contest such claim, the
Executive shall:
(a) give the Company any information that it reasonably requests
relating to such claim,
(b) take such action in connection with contesting such claim as the
Company reasonably requests in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith to contest such claim, and
(d) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax (to the extent not previously paid by the
Company to the Executive) or income tax, including related interest and
penalties, imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing, the Company shall control all
proceedings in connection with such contest and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine;
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provided, however, that if the Company directs the Executive to pay such claim
and sue for a refund, the Company shall advance the amount of such payment to
the Executive, on an interest-free basis and shall indemnify the Executive, on
an after-tax basis, for any Excise Tax or income tax, including related interest
or penalties, imposed with respect to such advance; and further provided that
any extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. The Company's
control of the contest shall be limited to issues with respect to which a
Gross-up Payment would be payable. The Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the IRS or other taxing
authority.
7.7 Refunds. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 7.6, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 7.6) promptly pay the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 7.6, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such determination before the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-up Payment required to be paid. Any contest of a denial of
refund shall be controlled by Section 7.6.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
(a) If the Executive incurs legal, accounting and other fees or other
expenses in a good faith effort to obtain benefits under this Agreement
(including, without limitation, the fees and other expenses of the
Executive's legal counsel, any expert witness fees and expenses, and
accounting and other fees and expenses, including legal and accounting fees
and expenses in connection with the delivery of the Executive Counsel
Opinion referred to in Article VII), regardless of whether the Executive
ultimately prevails, the Company shall reimburse the Executive on a monthly
basis upon the written request for such fees and expenses to the extent not
previously reimbursed under the Company's officers and directors liability
insurance policy, if any. Simultaneously with each such payment Company
shall pay Executive an amount such that after payment of incremental United
States federal, state and local income, excise and other taxes payable by
Executive ("Taxes") with respect to such tax reimbursement, there remains a
balance sufficient to pay the Taxes on the reimbursement of such fees and
expenses. The existence of any controlling case or regulatory law which is
directly inconsistent with the position taken by the Executive shall be
evidence that the Executive did not act in good faith. Executive's payment
of such fees and expenses shall be a
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conclusive determination with respect to the Company that such fees and
expenses are reasonable.
(b) Reimbursement of legal fees and expenses shall be made monthly upon
the written submission of a request for reimbursement together with
evidence that such fees and expenses are due and payable or were paid by
the Executive. If the Company shall have reimbursed the Executive for legal
fees and expenses and it is later determined that the Executive was not
acting in good faith, all amounts paid on behalf of, or reimbursed to, the
Executive shall be promptly refunded to the Company.
(c) To secure its obligations under this Section 8.1 the Company shall
procure and maintain in force during the Agreement Term and thereafter for
one (1) year or if longer until the termination (by final judgment and
after all rights of appeal have been exhausted or waived) of any litigation
involving a good faith effort of an Executive to obtain benefits under this
Agreement, a letter of credit and an escrow in favor of Executive (together
with other executives similarly situated). The letter of credit shall be
issued by a bank or trust company organized under the laws of the United
States or Canada or a state or province thereof and having a combined
capital and surplus of not less than one hundred million dollars
($100,000,000), shall be in the aggregate amount of five hundred thousand
dollars ($500,000) prior to July 1, 2001, and in the aggregate amount of
two million dollars $2,000,000) on and after July 1, 2001, and shall be
substantially in the form of that attached (with its attached Annexes and
Exhibits) to this Agreement as Exhibit A. The escrow shall be maintained in
the state of Illinois under an escrow agreement with a bank or trust
company organized under the laws of the United States or Canada or a state
or province thereof and having a combined capital and surplus of not less
than one hundred million dollars ($100,000,000), and shall be substantially
in the form of that attached (with its attached Exhibits) to this Agreement
as Exhibit B.
8.2 Interest. If the Company does not pay any amount due to the Executive
under this Agreement within three days after such amount became due and owing,
interest shall accrue on such amount from the date it became due and owing until
the date of payment at a annual rate equal to two percent (2.0%) above the base
commercial lending rate announced by the Company's principal revolving credit
lender in effect from time to time during the period of such nonpayment; or, if
the Company does not have a principal revolving credit lender, then at two
percent (2.0%) above the prime rate of interest in effect from time to time
during the period of such nonpayment, as reported from time to time in the Wall
Street Journal; but in no case greater than the maximum rate of interest
permitted by applicable law.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off or Defenses by Company. The Executive's right to receive
when due the payments and other benefits provided for under this Agreement is
absolute, unconditional and shall not be subject to any set-off, counterclaim or
legal or equitable defense. The exclusive method for the Company to avoid
payments to the Executive under this Agreement, to the extent specified in this
Agreement, is to terminate Executive's employment for Cause pursuant to
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Sections 4.3 and 5.2 of this Agreement. Time is of the essence in the
performance by the Company of its obligations under this Agreement. Any claim
which the Company may have against the Executive, whether for a breach of this
Agreement or otherwise, shall be brought in a separate action or proceeding and
not as part of any action or proceeding brought by the Executive to enforce any
rights against the Company under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company under this Agreement by seeking new employment
following termination. Except as specifically otherwise provided in this
Agreement, all amounts payable pursuant to this Agreement shall be paid without
reduction regardless of any amounts of salary, compensation or other amounts
which may be paid or payable to the Executive as the result of the Executive's
employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NONCOMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of the
Company and its subsidiaries to maintain as secret and confidential all valuable
and unique information and techniques acquired, developed or used by the Company
and its Subsidiaries relating to their business, operations, employees and
customers, which gives the Company and its subsidiaries a competitive advantage
in the construction and engineering industry and other businesses in which the
Company and its subsidiaries are engaged ("Confidential Information"). Executive
recognizes that all such Confidential Information is the sole and exclusive
property of the Company and its Subsidiaries, and that disclosure of
Confidential Information would cause damage to the Company and its Subsidiaries.
Executive agrees that, except as required by the duties of his employment with
the Company and/or its Subsidiaries and except in connection with enforcing the
Executive's rights under this Agreement or if compelled by a court or
governmental agency, he will not, without the consent of the Company,
disseminate or otherwise disclose any Confidential Information obtained during
his employment with the Company and/or its Subsidiaries for so long as such
information is valuable and unique.
10.2 Noncompetition/Nonsolicitation.
(a) Executive agrees that, during the period of his employment with the
Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business as
defined in Section 10.2(d).
(b) Executive agrees that, during the period of his employment with the
Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form of
equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose stock is
listed on a
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national securities exchange or actively traded in the over-the-counter
market; provided that (1) such investment does not give Executive the right
or ability to control or influence the policy decisions of any Prohibited
Business, and (2) such investment does not create a conflict of interest
between Executive's duties hereunder and Executive's interest in such
investment.
(c) Executive agrees that, during the period of his employment with the
Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
Subsidiaries or (2) interfere with the Company's or any of its
Subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its Subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after the
date of Executive's termination of employment), was an employee, customer,
vendor or supplier of, or maintained a business relationship with, any
business of the Company and/or its Subsidiaries which was conducted at any
time during the period commencing one year prior to the termination of
employment.
(d) For the purpose of this Section 10.2, "Prohibited Business" shall
be defined as any construction and engineering business specializing in the
engineering and design, materials procurement, fabrication, erection,
repair and modification of steel tanks and other steel plate structures and
associated systems and any branch, office or operation thereof, which is a
direct and material competitor of the Company wherever the Company does
business, including the Netherlands, the United States and any other
country.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing, the Company
shall not be precluded from pursuing any and all remedies it may have at law or
in equity for breach of such obligations; provided, however, that such breach
shall not in any manner or degree whatsoever limit, reduce or otherwise affect
the obligations of the Company under this Agreement, and in no event shall an
asserted breach of the Executive's obligations under this Article X constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. 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.
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11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement.
Any successor to the business and/or assets of the Company which assumes and
agrees to perform this Agreement by operation of law, contract, or otherwise
shall be jointly and severally liable with the Company under this Agreement.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid as soon as administratively practicable in a lump sum to the
beneficiary designated in writing by the Executive, or if none is so designated,
to the Executive's estate.
11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other portions
of this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
11.6 Amendments. Except as provided in Section 2.2 hereof, this Agreement
shall not be altered, amended or modified except by written instrument executed
by the Company and Executive.
11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Gerald M. Glenn
413 West Walnut
Hinsdale, Illinois 60521
If to the Company (including any or all of CBICNV, CBIC or CBICD):
Chicago Bridge & Iron Company
1501 North Division Street
Plainfield, Illinois 60544
Attention: General Counsel
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or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Illinois, without regard to its choice
of law principles.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
11.11 Tax Withholding. The Company may withhold from any amounts payable
under this Agreement any federal, state or local taxes that are required to be
withheld pursuant to any applicable law or regulation.
11.12 Joint and Several Obligations. The obligations of the Company under
this Agreement are joint and several obligations of CBICNV, CBIC and CBICD;
provided, however, that each of CBICNV, CBIC and CBICD may agree between
themselves but without adversely affecting the rights of the Executive which of
them shall provide any particular payment or benefit under this Agreement.
11.13 No Waiver. The Executive's failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision of this Agreement. A waiver of any provision of
this Agreement shall not be deemed a waiver of any other provision, and any
waiver of any default in any such provision shall not be deemed a waiver of any
later default thereof or of any other provision.
11.14 Entire Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to its subject matter and supercedes
any prior change of control severance agreement and any Change of Control
severance benefit provisions in any prior employment agreement between the
Company and the Executive.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
EXECUTIVE
/s/ Gerald M. Glenn
----------------------------------
Gerald M. Glenn
CHICAGO BRIDGE & IRON COMPANY N.V.
By: /s/ Timothy J. Wiggins
-----------------------------
Title: Managing Director
---------------------------
CHICAGO BRIDGE & IRON COMPANY
By: /s/ Robert B. Jordan
-----------------------------
Title:
---------------------------
CHICAGO BRIDGE & IRON COMPANY
(DELAWARE)
By: /s/ Timothy J. Wiggins
-----------------------------
Title:
---------------------------
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
33
TABLE OF CONTENTS
PAGE
----
ARTICLE I. PURPOSES...............................................................................................1
ARTICLE II. CERTAIN DEFINITIONS...................................................................................1
2.1 "Accrued Obligations"....................................................................................1
2.2 "Agreement Term".........................................................................................1
2.3 "Affiliate"..............................................................................................2
2.4 "Article"................................................................................................2
2.5 "Beneficial Owner".......................................................................................2
2.6 "Board"..................................................................................................2
2.7 "Cause"..................................................................................................2
2.8 "Change of Control"......................................................................................2
2.9 "Code"...................................................................................................3
2.10 "Deferral Plan"..........................................................................................3
2.11 "Disability".............................................................................................4
2.12 "Effective Date".........................................................................................4
2.13 "Good Reason"............................................................................................4
2.14 "Gross-up Payment".......................................................................................4
2.15 "Growth Transaction".....................................................................................4
2.16 "Imminent Control Change Date"...........................................................................4
2.17 "IRS"....................................................................................................4
2.18 "1934 Act"...............................................................................................4
2.19 "Notice of Termination"..................................................................................4
2.20 "Plans"..................................................................................................5
2.21 "Policies"...............................................................................................5
2.22 "Post-Change Period".....................................................................................5
2.23 "Present Value"..........................................................................................5
2.24 "SEC" means the Securities and Exchange Commission.......................................................5
2.25 "Section"................................................................................................5
2.26 "SERP"...................................................................................................5
2.27 "Shareholder Agreement"..................................................................................5
2.28 "Subsidiary".............................................................................................5
2.29 "Termination Date".......................................................................................5
2.30 "Transaction Owner"......................................................................................6
2.31 "Voting Securities"......................................................................................6
ARTICLE III. POST-CHANGE PERIOD PROTECTIONS.......................................................................6
3.1 General..................................................................................................6
3.2 Position and Duties......................................................................................6
3.3 Compensation.............................................................................................7
3.4 Pro-Rata Bonus Payment...................................................................................9
3.5 Equity Awards Vesting...................................................................................10
3.6 Nonqualified Deferred Compensation......................................................................10
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE IV. TERMINATION OF EMPLOYMENT............................................................................11
4.1 Disability..............................................................................................11
4.2 Death...................................................................................................11
4.3 Cause...................................................................................................11
4.4 Good Reason.............................................................................................13
ARTICLE V. OBLIGATIONS OF THE COMPANY UPON TERMINATION...........................................................14
5.1 If by the Executive for Good Reason or by the Company Other Than for Cause or Disability...............14
5.2 If by the Company for Cause.............................................................................16
5.3 If by the Executive Other Than for Good Reason..........................................................17
5.4 If by the Company for Disability........................................................................17
5.5 If upon Death...........................................................................................17
ARTICLE VI. NON-EXCLUSIVITY OF RIGHTS............................................................................17
6.1 Waiver of Other Severance Rights........................................................................17
6.2 Other Rights............................................................................................17
ARTICLE VII. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY..........................................................18
7.1 Gross-up for Certain Taxes..............................................................................18
7.2 Determination by the Executive..........................................................................18
7.3 Additional Gross-up Amounts.............................................................................19
7.4 Gross-up Multiple.......................................................................................19
7.5 Opinion of Counsel......................................................................................19
7.6 Amount Increased or Contested...........................................................................20
7.7 Refunds.................................................................................................21
ARTICLE VIII. EXPENSES AND INTEREST..............................................................................21
8.1 Legal Fees and Other Expenses...........................................................................21
8.2 Interest................................................................................................22
ARTICLE IX. NO SET-OFF OR MITIGATION.............................................................................22
9.1 No Set-off or Defenses by Company.......................................................................22
9.2 No Mitigation...........................................................................................22
ARTICLE X. CONFIDENTIALITY AND NONCOMPETITION....................................................................23
10.1 Confidentiality.........................................................................................23
10.2 Noncompetition/Nonsolicitation..........................................................................23
10.3 Remedy..................................................................................................24
ARTICLE XI. MISCELLANEOUS........................................................................................24
11.1 No Assignability........................................................................................24
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
11.2 Successors..............................................................................................24
11.3 Payments to Beneficiary.................................................................................24
11.4 Non-alienation of Benefits..............................................................................25
11.5 Severability............................................................................................25
11.6 Amendments..............................................................................................25
11.7 Notices.................................................................................................25
11.8 Counterparts............................................................................................25
11.9 Governing Law...........................................................................................25
11.10 Captions................................................................................................25
11.11 Tax Withholding.........................................................................................26
11.12 Joint and Several Obligations...........................................................................26
11.13 No Waiver...............................................................................................26
11.14 Prior Agreement.........................................................................................26
11.15 Entire Agreement........................................................................................26
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of October 13, 2000 is made among CHICAGO
BRIDGE & IRON COMPANY N.V. ("CBICNV"), a Netherlands corporation, CHICAGO BRIDGE
& IRON COMPANY, a Delaware corporation ("CBIC"), CHICAGO BRIDGE & IRON COMPANY
(DELAWARE), a Delaware corporation ("CBICD" and, together with CBICNV and CBIC,
the "Company"), each having its principal place of business in Plainfield,
Illinois, and Stephen P. Crain (the "Executive"), a resident of Illinois.
ARTICLE I.
PURPOSES
The Supervisory Board of CBICNV has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued service of the Executive, despite the possibility or
occurrence of a change of control of the Company. The Board believes it is
imperative to reduce the distraction of the Executive that would result from the
personal uncertainties caused by a pending or threatened change of control, to
encourage the Executive's full attention and dedication to the Company, and to
provide the Executive with compensation and benefits arrangements upon a change
of control which ensure that the expectations of the Executive will be satisfied
and are competitive with those of similarly-situated corporations. This
Agreement is intended to accomplish these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" has the meaning defined for that term in
Section 5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is thirty-six (36) months following the
date of this Agreement ("Expiration Date"); provided, however, that the
Agreement Term shall be extended as follows: (a) if neither the Company nor the
Executive gives written notice to the other pursuant to Section 11.7 that this
Agreement shall not be renewed ("Notice of Nonrenewal") within two years from
the date of this Agreement, the Agreement Term shall be extended to an
Expiration Date which shall be the first annual anniversary of the date a Notice
of Nonrenewal is given; (b) if an Imminent Control Change Date occurs before the
Expiration Date (as it may be extended under clause (a) above), then no Notice
of Nonrenewal shall thereafter be effective and the Agreement Term shall
automatically extend to an Expiration Date which is twelve (12) months after the
Imminent Change of Control Date, as further extended under the terms of this
clause should another Imminent Change of Control Date occur prior to the
Expiration Date as from time to time so extended, and (c) if a Change of Control
occurs before the Expiration Date (as extended
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under clause (a) or (b) above or this clause (c)), the Expiration Date shall
automatically be extended to the last day of the Post-Change Period as the
Post-Change Period may be extended as provided in Section 2.22.
2.3 "Affiliate" means an "affiliate" or "associate" as those terms are
defined in Rule 12b-2 under the 1934 Act.
2.4 "Article" means an article of this Agreement.
2.5 "Beneficial Owner" means such term as defined in Rule 13d-3 of the
SEC under the 1934 Act.
2.6 "Board" means the Supervisory Board of Chicago Bridge & Iron
Company N.V.
2.7 "Cause" has the meaning defined for that term in Section 4.3(b).
2.8 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
(a) any person (as such term is used in Rule 13d-5 of the SEC
under the 1934 Act) or group (as such term is defined in Section 13(d)
of the 1934 Act), other than a Subsidiary or any employee benefit plan
(or any related trust) of the Company or a Subsidiary, becomes the
Beneficial Owner of 25% or more of the common shares of any of CBICNV,
CBIC or CBICD or of other Voting Securities representing 25% or more of
the combined voting power of all Voting Securities of any of CBICNV,
CBIC or CBICD; provided, however, that (i) no Change of Control shall
be deemed to have occurred solely by reason of any such acquisition by
a corporation with respect to which, after such acquisition, more than
75% of both the common shares or common stock of such corporation and
the combined voting power of the Voting Securities of such corporation
are then beneficially owned, directly or indirectly, by the persons who
were the Beneficial Owners of the common shares and other Voting
Securities of CBICNV, CBIC or CBICD immediately before such
acquisition, in substantially the same proportion as their ownership of
the common shares and other Voting Securities of CBICNV, CBIC or CBICD,
as the case may be, immediately before such acquisition; and (ii) once
a Change of Control occurs under this subsection (a), the occurrence of
the next Change of Control (if any) under this subsection (a) shall be
determined by reference to a person or group other than the person or
group whose acquisition of Beneficial Ownership created such prior
Change of Control unless the original person or group has in the
meantime ceased to own 25% or more of the common shares of all of
CBICNV, CBIC or CBICD or other Voting Securities representing 25% or
more of the combined voting power of all Voting Securities of all of
CBICNV, CBIC or CBICD; or
(b) individuals who, as of the date of this Agreement or as of
any Effective Date thereafter, are Supervisory Directors of CBICNV (the
"Incumbent Directors") cease for any reason to constitute at least 50%
of the members of the Board; provided, however, that (i) any individual
who becomes a Supervisory Director after the Effective Date whose
binding nomination for election to the Board by the general meeting of
shareholders was approved by a vote or written consent of at least 75%
of the
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Supervisory Directors who are then Incumbent Directors shall be
considered an Incumbent Director, but excluding, for this purpose, any
such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election
of the directors of the Company (as such terms are used in Rule 14a-11
of the SEC under the 1934 Act); and (ii) once a Change of Control
occurs under this subsection (b), the occurrence of the next Change of
Control (if any) under this subsection (b) shall be determined by
reference to the individuals who were Incumbent Directors immediately
after the Effective Date of such prior Change of Control; or
(c) approval by the Board, or by the shareholders of CBICNV,
CBIC or CBICD, of any of the following:
(i) a merger, reorganization or consolidation of
CBICNV, CBIC or CBICD ("Merger"), other than a Merger after
which the individuals and entities who were the respective
beneficial owners of the common shares and other Voting
Securities of CBICNV, CBIC or CBICD (as the case may be)
immediately before such Merger beneficially own, directly or
indirectly, more than 75% of, respectively, the common shares
or common stock and the combined voting power of the Voting
Securities of the corporation resulting from such Merger, in
substantially the same proportion as their ownership of the
common shares or common stock and other Voting Securities of
CBICNV, CBIC or CBICD (as the case may be) immediately before
such Merger, or
(ii) a sale or other disposition by any of CBICNV,
CBIC or CBICD of all or substantially all of the assets owned
by it, or
(iii) any transaction as a result of which CBICNV
would not thereafter directly or indirectly own beneficially
at least 75% of the common stock of CBIC or as a result of
which CBIC would not thereafter directly or indirectly own
beneficially at least 75% of the common stock of CBICD, unless
after either such transaction CBICNV continues to own directly
or indirectly substantially all of the pre-transaction assets
of both CBIC and CBICD.
(d) if a Growth Transaction previously occurred, any
Transaction Owner individually, or Transaction Owners collectively:
(i) materially breach(es) any provision of any
shareholder agreement to which CBICNV and such Transaction
Owner(s) are parties that addresses the governance of CBICNV
following the Growth Transaction; or
(ii) become(s) the Beneficial Owner of more than
66.5% of the common shares of any of CBICNV, CBIC or CBICD or
of other Voting Securities representing more than 66.5% of the
combined voting power of all Voting Securities of any of
CBICNV, CBIC or CBICD.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Deferral Plan" has the meaning defined for that term in Section
3.6.
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39
2.11 "Disability" has the meaning defined for that term in Section
4.1(b).
2.12 "Effective Date" means each date on which a Change of Control
occurs during the Agreement Term; provided, however, that if the Company
terminates the Executive's employment before the date of a Change of Control,
and if the Executive reasonably demonstrates that such termination of employment
(a) was at the request of a third party who had taken steps reasonably
calculated to effect the Change of Control or (b) otherwise arose in connection
with or anticipation of the Change of Control, then "Effective Date" shall mean
the date immediately before the date of such termination of employment.
2.13 "Good Reason" has the meaning defined for that term in Section
4.4(b).
2.14 "Gross-up Payment" has the meaning defined for that term in
Section 7.1.
2.15 "Growth Transaction" means (i) the acquisition by Wedge Group
Incorporated ("WGI"), a Delaware corporation, First Reserve Fund VIII, L.P.
("FRF"), a Delaware limited partnership, or Pitt-Des Moines, Inc. ("PDM"), a
Pennsylvania corporation, or their Affiliates, of common shares or other Voting
Securities of CBICNV as contemplated by an agreement with CBICNV for the
acquisition by CBICNV or an Affiliate of Howe-Baker International, Inc. from WGI
(the "HBI Transaction") or for the acquisition of the PDM Engineered
Construction Division and Water Division from PDM (the "PDM Transaction"); (ii)
the acquisition by a person (other than by public offering) of common shares or
other Voting Securities of CBICNV from CBICNV as part of an arrangement for
financing the HBI Transaction or the PDM Transaction; (iii) the acquisition by a
person of common shares or other Voting Securities of CBICNV from a previous
Transaction Owner if the person acquiring such common shares or other Voting
Securities is or becomes a party to a Shareholder Agreement with CBICNV that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner; or (iv) a transfer of common shares or other
Voting Securities of CBICNV from one Transaction Owner to another Transaction
Owner if the acquiring Transaction Owner is subject with respect to such shares
or other Voting Securities to either a preexisting Shareholder Agreement between
CBICNV and the acquiring Transaction Owner or a Shareholder Agreement that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner. However, a "Growth Transaction" will not include
any event described in Section 2.8(d).
2.16 "Imminent Control Change Date" means any date on which occurs (a)
a presentation to the Company's shareholders generally or any of the Company's
directors or executive officers of a proposal or offer for a Change of Control,
or (b) the public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal or offer for
a Change of Control, or (c) such proposal or offer remains effective and
unrevoked.
2.17 "IRS" means the Internal Revenue Service.
2.18 "1934 Act" means the Securities Exchange Act of 1934, as amended.
2.19 "Notice of Termination" means a written notice given in accordance
with Section 11.7 which sets forth (a) the specific termination provision in
this Agreement relied upon
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by the party giving such notice, (b) in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under such termination provision and (c) if the Termination Date is
other than the date of receipt of such Notice of Termination, the Termination
Date.
2.20 "Plans" means plans, programs, policies or practices of the
Company or any of its Subsidiaries.
2.21 "Policies" means policies, practices or procedures of the Company
or any of its Subsidiaries.
2.22 "Post-Change Period" means the period commencing on each Effective
Date and ending on the third annual anniversary of such Effective Date. If a new
Change of Control creates a new Effective Date during any current Post-Change
Period, the Post-Change Period shall be extended to the third annual anniversary
of such new Effective Date; and shall be further extended upon each new
Effective Date during the Post-Change Period as extended.
2.23 "Present Value" means the present value, determined using (a) the
actuarial assumptions published by the Pension Benefit Guaranty Corporation
("PBGC") for determining immediate annuity values, as in effect on the first day
of the calendar year in which any payment of present value is required, or (b)
if no such actuarial assumptions are published by the PBGC, using the mortality
assumptions of the UP-84 group mortality table and an interest rate assumption
which is the lesser of (i) 75% of the current 30-year Treasury bond rate or (ii)
the current 30-year Treasury bond rate minus 150 basis points.
2.24 "SEC" means the Securities and Exchange Commission.
2.25 "Section" means, unless the context otherwise requires, a section
of this Agreement.
2.26 "SERP" has the meaning defined for that term in Section 3.6.
2.27 "Shareholder Agreement" means an agreement between CBICNV and a
person that limits the ability of such person and its Affiliates to obtain and
exercise control over the management and policies of the CBICNV.
2.28 "Subsidiary" means a corporation as defined in Section 424(f) of
the Code (with the Company being treated as the employer corporation for
purposes of this definition) and any partnership or limited liability company in
which the Company or any Subsidiary has a direct or indirect interest (whether
in the form of voting power or participation in profits or capital contribution)
of 50% or more.
2.29 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company terminates the Executive's employment
other than for Cause or Disability, then the Termination Date shall be the date
of receipt of such Notice of Termination and (b) if the Executive's employment
is terminated by reason of death or Disability, then the Termination Date shall
be the date of death
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of the Executive or the Disability Effective Date (as defined in Section
4.1(a)), as the case may be.
2.30 "Transaction Owner" means a person who acquires common shares or
other Voting Securities of CBICNV in a Growth Transaction, or any Affiliate of
such person.
2.31 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 General. On the Effective Date and during the Post-Change Period
thereafter the Company shall make the payments, provide the benefits and fulfill
the other obligations required by this Article III. However, if, such Effective
Date and Post-Change Period result solely from a Growth Transaction:
(a) Section 3.3(b) shall not apply except for purposes of
determining the obligations of the Company on termination pursuant to
Section 5.1, and to the extent provided in Section 4.4(b)(iii) and as
modified thereby, in determining the existence of Good Reason;
(b) clause (ii) of each of Sections 3.3(c) through 3.3(h)
shall not apply except for purposes of determining the obligations of
the Company on termination pursuant to Section 5.1; but the aggregate
value to the Executive of all Plans, fringe benefits and arrangements
described in Sections 3.3(c) through 3.3(h) shall not be less
favorable, in the aggregate, than the aggregate value to the Executive
of such Plans, fringe benefits and arrangements provided by the Company
to the Executive or peer executives at any time during the 90-day
period immediately before such Effective Date; and
(c) Sections 3.4, 3.5, and 3.6 shall not apply on such
Effective Date; but to the extent such vesting or payment is not
otherwise required by Section 5.1, Sections 3.4, 3.5 and 3.6, shall
apply to the Executive on the Termination Date (as if such Sections
referred to the "Termination Date" instead of the "Effective Date") if
during the Post-Change Period the Company shall terminate Executive's
employment other than for Cause, or if the Executive shall terminate
employment for Good Reason, or if employment terminates as a result of
Disability or death.
3.2 Position and Duties.
(a) During the Post-Change Period, (1) the Executive's
position (including offices, titles, reporting requirements and
responsibilities), authority and duties shall be at least commensurate
in all material respects with the most significant of those held by,
exercised by, or assigned to the Executive at any time during the
90-day period immediately before the Effective Date and (2) the
Executive's services shall be performed at the location where the
Executive was employed immediately before the Effective Date or any
other location less than 40 miles from such former location.
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(b) During the Post-Change Period (other than any periods of
vacation, sick leave, disability leave or other family or medical leave
to which the Executive is entitled), the Executive shall devote his or
her full attention and time to the business and affairs of the Company
and, to the extent necessary to discharge the duties assigned to the
Executive in accordance with this Agreement, shall use his or her best
efforts to perform such duties faithfully and efficiently. During the
Post-Change Period, the Executive may (1) serve on corporate, civic or
charitable boards or committees, (2) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (3) manage
personal investments, so long as such activities are consistent with
the Policies of the Company or its Subsidiaries at the Effective Date
and do not significantly interfere with the performance of the
Executive's duties under this Agreement. To the extent that any such
activities have been conducted by the Executive before the Effective
Date and were consistent with the Policies of the Company or its
Subsidiaries at the Effective Date, the continued conduct of such
activities (or activities similar in nature and scope) after the
Effective Date shall not be deemed to interfere with the performance of
the Executive's duties under this Agreement.
3.3 Compensation.
(a) Base Salary. During the Post-Change Period, the Company
shall pay or cause to be paid to the Executive an annual base salary in
cash ("Guaranteed Base Salary"), which shall be paid in a manner
consistent with the Company's payroll practices in effect immediately
before the Effective Date for such Post-Change Period, at a rate at
least equal to the highest rate of annual salary paid or payable to the
Executive by the Company at any time during the 12-month period
immediately before such Effective Date. During the Post-Change Period,
the Guaranteed Base Salary shall be reviewed at least annually and
shall be increased at any time and from time to time as shall be
substantially consistent with increases in base salary awarded to other
peer executives of the Company. Any increase in Guaranteed Base Salary
shall not limit or reduce any other obligation of the Company to the
Executive under this Agreement. After any such increase, the Guaranteed
Base Salary shall not be reduced and the term "Guaranteed Base Salary"
shall thereafter refer to the increased amount.
(b) Guaranteed Bonus.
(i) During the Post-Change Period, the Company shall
pay or cause to be paid to the Executive a bonus (the
"Guaranteed Bonus") for each Performance Period which ends
during the Post-Change Period. "Performance Period" means each
period of time designated in accordance with any bonus
arrangement ("Bonus Plan") which is based upon performance and
approved by the Board or by any committee of the Board. For
purposes of this Section 3.3, a Bonus Plan includes, without
limitation, the Company's Incentive Compensation Plan as in
effect on the date hereof or any similar plan, but does not
include the Company's 1997 or 1999 Long-Term Incentive Plan
(an "LTIP") or any similar plan under which equity awards
described Section 3.5 are granted, unless failure to consider
the LTIP a Bonus Plan would leave the Company without any
Bonus Plan covering Executive. The Guaranteed Bonus shall be
at least equal to the product
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of (A) the greater of (i) the On Plan Percentage (as defined
below), or (ii) the Actual Bonus Percentage (as defined
below), multiplied by (B) the Guaranteed Base Salary.
(ii) For purposes of this Section 3.3(b):
(A) "On Plan Percentage" means the
percentage of Guaranteed Base Salary to which
the Executive would be entitled under the Bonus
Plan(s) for the Performance Period for which the
Guaranteed Bonus is awarded ("Current
Performance Period") if performance achieved
100% of the target performance goals established
pursuant to such Bonus Plan(s); or, if greater,
the percentage of Guaranteed Base Salary to
which Executive would have been entitled under
the Bonus Plan(s) for the Performance Period
ending immediately prior to the Post-Change
Period if performance achieved 100% of the
performance goals established pursuant to such
Bonus Plan(s) for such prior Performance Period.
(B) "Actual Bonus Percentage" means the
percentage of Guaranteed Base Salary for the
Current Performance Period to which the
Executive would be entitled under any Bonus Plan
if the performance were measured by the actual
performance during the Current Performance
Period; provided, however, that for purposes of
determining the Guaranteed Bonus for purposes of
Sections 3.4 and 5.1(b), "Actual Bonus
Percentage" means the percentage of Guaranteed
Base Salary for the Performance Period during
which the Effective Date (for purposes of
Section 3.4) or Termination Date (for purposes
of Section 5.1(b)) occurs to which the Executive
would be entitled if the performance during such
Performance Period were measured by the actual
performance during the portion of such
Performance Period before the Effective Date or
the Termination Date (whichever is applicable),
projected to the last day of such Performance
Period.
(c) Incentive, Savings and Retirement Plans. During the
Post-Change Period and notwithstanding the payment required by Section
3.6, (i) the Executive shall be entitled to continue to participate in
all incentive (including long-term incentives and management stock
plans), savings, deferred compensation, retirement and benefit
restoration Plans provided by the Company and applicable to other peer
executives of the Company, but (ii) in no event shall such Plans
provide the Executive with incentive (including long-term incentives
and management stock benefits), savings, deferred compensation,
retirement and benefit restoration benefits which, in any case, are
less favorable, in the aggregate, than the most favorable of those
provided by the Company to the Executive or to peer executives under
such Plans as in effect at any time during the 90-day period
immediately before any Effective Date.
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(d) Welfare Benefit Plans. During the Post-Change Period, (i)
the Executive and the Executive's family shall be eligible to
participate in, and receive all benefits under, welfare benefit Plans
(including, without limitation, medical, prescription, dental,
disability, salary continuance, individual life, group life, dependent
life, accidental death and travel accident insurance Plans) provided by
the Company and applicable to other peer executives of the Company and
their families, but (ii) in no event shall such Plans provide benefits
which in any case are less favorable, in the aggregate, than the most
favorable of those provided by the Company to the Executive or to peer
executives under such Plans as in effect at any time during the 90-day
period immediately before any Effective Date.
(e) Fringe Benefits. During the Post-Change Period, (i) the
Executive shall be entitled to fringe benefits (including, without
limitation, any foreign service travel and housing allowances for
Executive and the Executive's family under Plans or Policies of the
Company for foreign service) in accordance with the most favorable
Plans provided by the Company and applicable to other peer executives
of the Company, but (ii) in no event shall such Plans provide fringe
benefits which in any case are less favorable, in the aggregate, than
the most favorable of those provided by the Company to the Executive or
peer executives under such Plans in effect at any time during the
90-day period immediately before any Effective Date.
(f) Expenses. During the Post-Change Period, (i) the Executive
shall be entitled to prompt reimbursement of all reasonable
employment-related expenses incurred by the Executive upon the
Company's receipt of accountings in accordance with the most favorable
Policies applicable to peer executives of the Company, but (ii) in no
event shall such Policies be less favorable, in the aggregate, than the
most favorable of those provided by the Company to the Executive or to
peer executives under such Policies in effect at any time during the
90-day period immediately before any Effective Date.
(g) Office and Support Staff. During the Post-Change Period,
(i) the Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to secretarial and
other assistance in accordance with the most favorable Policies
applicable to peer executives of the Company, but (ii) in no event
shall such Policies be less favorable, in the aggregate, than the most
favorable of those provided by the Company to the Executive or to peer
executives under such Policies in effect at any time during the 90-day
period immediately before any Effective Date.
(h) Vacation. During the Post-Change Period, (i) the Executive
shall be entitled to paid vacation in accordance with the most
favorable Policies applicable to peer executives of the Company, but
(ii) in no event shall such Policies be less favorable, in the
aggregate, than the most favorable of those provided by the Company to
the Executive or to peer executives under such Policies in effect at
any time during the 90-day period immediately before any Effective
Date.
3.4 Pro-Rata Bonus Payment.
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On each Effective Date the Company shall pay to Executive in a single
lump sum in cash the product of (A) the Guaranteed Bonus for the Performance
Period in which falls the Effective Date, multiplied by (B) a fraction, the
numerator of which is the number of days in such Performance Period before the
Effective Date, and the denominator of which is the total number of days in such
Performance Period. The amount of Guaranteed Bonus for such Performance Period
otherwise payable pursuant to Section 3.3(b), or otherwise payable pursuant to
this Section 3.4 by reason of a later Change of Control in the same Performance
Period, shall be reduced by any earlier payment made under this Section 3.4 for
the same Performance Period.
3.5 Equity Awards Vesting.
On the Effective Date, the Executive shall become fully vested in:
(a) any and all outstanding options ("Options") to purchase
common shares of the Company granted to Executive prior to the
Effective Date under any Plan, contract or arrangement for Options,
which Options shall become fully exercisable;
(b) any outstanding shares of restricted common shares of the
Company regardless whether such restrictions are scheduled to lapse
based on service or on performance or both ("Restricted Stock") awarded
to Executive under any Plan, contract or arrangement for Restricted
Stock; which shall become unrestricted and freely transferable; and
(c) any outstanding awards providing for the payment of a
variable number of common shares of the Company dependent on the
achievement of performance goals, or of an amount based on the fair
market value of such shares or the appreciation thereof ("Performance
Shares") awarded to Executive under any Plan, contract or arrangement
for Performance Shares; and there shall be paid out in cash to
Executive within 30 days following the Effective Date of the Change of
Control the value of the Performance Shares to which Executive would
have been entitled if performance achieved 100% of the target
performance goals established for such Performance Shares.
To the extent that for any reason such Options, Restricted Stock and
Performance Shares do not become vested on the Effective Date, the Company shall
pay Executive a cash amount equal to (i) the positive difference, if any,
between the value of the shares of common stock subject to the Options that did
not become vested (or, if greater, the value paid or to be paid in connection
with the Change of Control to a holder of an equal number of shares of common
stock ("Change of Control Value")) and the Option exercise price with respect to
such shares, as of and on the date such Options are forfeited; plus (ii) the
fair market value (determined without regard to any restriction other than a
restriction which by its terms may never lapse) (or, if greater, the Change of
Control Value) of all non-vested forfeited Restricted Stock and Performance
Shares as of and on the date such Restricted Stock or Performance Shares are
forfeited. Nothing in this Section 3.5 shall require the vesting, or payment, of
equity awards granted after such Effective Date unless a new Effective Date has
intervened
3.6 Nonqualified Deferred Compensation.
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On the Effective Date Executive shall become fully vested in and the
Company shall pay to Executive in a single lump sum in cash (1) the value of
Executive's then-accrued benefits, if any, which remain unpaid under any
nonqualified deferred compensation, benefit restoration, excess benefit or other
individual account plan, contract or arrangement for deferred compensation
maintained by the Company under which benefits are calculated by reference to an
individual account (a "Deferral Plan"), and (2) the Present Value of Executive's
then-accrued benefits, if any, which remain unpaid under any nonqualified
supplemental executive retirement plan or other plan, contract or arrangement
for retirement benefits maintained by the Company under which benefits are
calculated by reference to a defined amount payable in connection with or after
retirement or other termination of employment an (a "SERP").
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
(a) During the Post-Change Period, the Company may terminate
the Executive's employment upon the Executive's Disability (as defined
in Section 4.1(b)) by giving the Executive or his legal representative,
as applicable, Notice of Termination accompanied by a certification of
the Executive's Disability by a physician selected by the Company or
its insurers and reasonably acceptable to the Executive or the
Executive's legal representative. The Executive's employment shall
terminate effective on the 30th day (the "Disability Effective Date")
after the Executive's receipt of such Notice of Termination unless,
before the Disability Effective Date, the Executive shall have resumed
the full-time performance of the Executive's duties.
(b) "Disability" means any medically determinable physical or
mental impairment that has lasted for a continuous period of not less
than six months and can be expected to be permanent or of indefinite
duration, and that renders the Executive unable to perform the
essential functions required under this Agreement with or without
reasonable accommodation.
(c) Unless the Company establishes, by clear and convincing
evidence, that Executive has a Disability, any purported termination of
employment for Disability shall be deemed a termination other than for
Disability for all purposes of this Agreement.
4.2 Death. The Executive's employment shall terminate automatically
upon the Executive's death during the Post-Change Period.
4.3 Cause.
(a) During the Post-Change Period, the Company may terminate
the Executive's employment for Cause.
(b) "Cause" means any of the following: Executive's conviction
of a felony or of a crime involving fraud, dishonesty or moral
turpitude; Executive's willful or intentional material breach of this
Agreement that results in financial detriment that is material to the
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Company as a whole; or willful or intentional misconduct by Executive
in the performance of his duties under this Agreement that results in
financial detriment that is material to the Company as a whole; except
that Cause shall not mean:
(i) bad judgment or negligence;
(ii) any act or omission believed by the Executive
in good faith to have been in or not opposed to the interest
of the Company (without intent of the Executive to gain,
directly or indirectly, a profit to which the Executive was
not legally entitled);
(iii) any act or omission with respect to which a
determination could properly have been made by the Board that
the Executive met the applicable standard of conduct for
indemnification or reimbursement under the Company's by-laws,
any applicable indemnification agreement, or applicable law,
in each case in effect at the time of such act or omission; or
(iv) any act or omission with respect to which
Notice of Termination is not given within 12 months after the
earliest date on which any member of the Board, not a party to
the act or omission, knew or should have known of such act or
omission.
(c) The Company may not during the Post-Change Period
terminate Executive's employment for Cause unless the following
procedures are fully complied with:
(i) no fewer than 45 days prior to the Termination
Date, the Company provides Executive with written notice (the
"Notice of Consideration") of its intent to consider
termination of Executive's employment for Cause, including a
detailed description of the specific reasons which form the
basis for such consideration;
(ii) if after providing Notice of Consideration, the
Board may, by the affirmative vote of at least 80% of its
members (excluding for this purpose Executive if he is a
member of the Board, and any other member of the Board
reasonably believed by the Board to be involved in the events
issuing the Notice of Consideration), suspend Executive with
pay until a final determination pursuant to this Section has
been made;
(iii) for a period of not less than 30 days after the
date Notice of Consideration is provided, Executive shall have
the opportunity to appear before the Board, with or without
legal representation, at Executive's election, to present
arguments and evidence on his own behalf; and
(iv) following the presentation to the Board as
provided in (3) above or Executive's failure to appear before
the Board at a date and time specified in the Notice of
Consideration (which date shall not be less than 30 days after
the date the Notice of Consideration is provided), Executive
may be terminated for Cause only if (i) the Board, by the
affirmative vote of at least 80% of its members
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(excluding Executive if he is a member of the Board, and any
other member of the Board reasonably believed by the Board to
be involved in the events leading the Board to terminate
Executive for Cause), determines that the actions or inactions
of Executive specified in the Notice of Consideration
occurred, that such actions or inactions constitute Cause, and
that Executive's employment should accordingly be terminated
for Cause; and (ii) the Board provides Executive with a
written determination (a "Notice of Termination for Cause")
setting forth in specific detail the basis of such Termination
of Employment, which Notice of Termination for Cause shall be
consistent with the reasons set forth in the Notice of
Consideration.
Unless the Company establishes, by clear and convincing evidence, both
(x) its full compliance with the substantive and procedural requirements of this
Section prior to a termination of employment for Cause, and (y) that Executive's
action or inaction specified in the Notice of Termination for Cause did occur
and constituted Cause, any purported termination of employment for Cause shall
be deemed a termination without Cause for all purposes of this Agreement.
4.4 Good Reason.
(a) During the Post-Change Period, the Executive may terminate
employment for Good Reason within 12 months following the Executive's
actual knowledge of an act or omission which constitutes Good Reason;
provided, however, that the Executive's failure to terminate within 12
months following Executive's actual knowledge of a particular act or
omission which constitutes Good Reason shall not prevent Executive's
termination for any other act or omission which constitutes Good
Reason.
(b) "Good Reason" means any of the following:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including offices, titles, reporting requirements or
responsibilities), authority or duties as prescribed by
Section 3.2(a)(1), or the Company's requiring the Executive to
be based at any office or location other than the location
described in Section 3.2(a)(2);or any other action by the
Company which results in a diminution or other material
adverse change in such position, authority or duties;
(ii) the failure to pay Guaranteed Base Salary in at
least the amount prescribed by Section 3.2(a);
(iii) the failure to pay Guaranteed Bonus in at least
the amount prescribed by Section 3.3(b); provided, however,
that if the Post-Change Period results solely from a Growth
Transaction; Good Reason under this clause (iii) shall only be
the failure to provide Executive with a bonus opportunity
(including designation of target performance goals and
percentage of Guaranteed Base Salary payable on achievement of
target performance goals) no less favorable to
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Executive than that provided by the Company to Executive for
either of the two most recent Performance Periods beginning
before such Growth Transaction;
(iv) the failure to provide any plan or fringe
benefits or perquisites prescribed by Sections 3.3(c) through
3.3(h), as modified, if the Post-Change Period results solely
from a Growth Transaction, by Section 3.1(b);
(v) any other failure by the Company to comply
with any of the provisions of Article III;
(vi) any other material adverse change to the terms
and conditions of the Executive's employment (whether or not
also described in clauses (i) through (v) above);
(vii) the Board's giving Notice of Consideration
pursuant to Section 4.3(c) (of the intent to consider
terminating Executive for Cause) but failing to terminate
Executive for Cause within a period of 90 days thereafter in
compliance with all substantive and procedural requirements of
Section 4.3,
(viii) any purported termination by the Company of
the Executive's employment other than as expressly permitted
by this Agreement (any such purported termination shall not be
effective for any other purpose under this Agreement);
(ix) a failure by the Company to cause a successor,
prior to or as of the date it becomes a successor, to assume
and agree to perform this Agreement in accordance with the
provisions of Section 11.2 hereof.
Any determination by Executive that any of the foregoing events has
occurred and constitutes "Good Reason" shall be conclusive and binding
for all purposes unless the Company establishes by clear and convincing
evidence that Executive did not have a reasonable basis for such a
determination.
(c) Any termination of employment by the Executive for Good
Reason shall be communicated to the Company by Notice of Termination.
The passage of time not in excess of 12 months after the Executive has
actual knowledge of an act or omission which constitutes Good Reason
prior to delivery of Notice of Termination or a failure by the
Executive to include 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 under this Agreement or preclude the
Executive from asserting such fact or circumstance in enforcing rights
under this Agreement.
ARTICLE V.
OBLIGATIONS OF THE COMPANY UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Company Other Than
for Cause or Disability. If, during the Post-Change Period, the Company shall
terminate Executive's
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employment other than for Cause, Disability, or death or if the Executive shall
terminate employment for Good Reason, the Company shall pay the Executive within
five (5) days of the Termination Date (or if earlier within five (5) days of the
last day Executive performed services for the Company as an Employee), in
addition to all vested rights arising from the Executive's employment as
specified in Article III, a cash amount equal to the sum of the amounts
described in (a) through (g) below and the additional benefits described in (h)
through (i) below:
(a) The Guaranteed Base Salary, any accrued vacation pay and
business expenses incurred through the Termination Date, to the extent
not previously paid to the Executive by the Company.
(b) The difference between (1) the product of (A) the
Guaranteed Bonus, multiplied by (B) a fraction, the numerator of which
is the number of days in the Termination Performance Period which
elapsed before the Termination Date, and the denominator of which is
the total number of days in the Termination Performance Period, and (2)
the amount of any Guaranteed Bonus previously paid to the Executive by
the Company with respect to the Termination Performance Period.
(c) The value of Executive's then-accrued benefits under any
Deferral Plan plus the present value of Executive's then-accrued
benefits under any SERP, determined without disregarding service and
compensation before any Effective Date but then reduced by the amount,
if any, previously paid to the Executive by the Company pursuant to
Section 3.6.
(d) An amount equal to the product of (1) three (3.0),
multiplied by (2) the sum of (A) the Guaranteed Base Salary and (B) the
Guaranteed Bonus.
(e) An amount equal to the sum of the value of the unvested
portion of the Executive's accounts or accrued benefits under any
qualified plan maintained by the Company as of the Termination Date.
(f) The difference between (1) the amount that would be
determined under Section 5.1(c) above if such amount were calculated
(to the extent applicable in determining such amount) (A) as though the
Executive continued to accrue benefits and be credited with service
under the SERP for a period of three years after the Termination Date,
(B) as though the Executive received compensation during each year of
such three-year period equal to the sum of the Guaranteed Base Salary
and the highest Guaranteed Bonus paid (or payable) to the Executive in
the three calendar years preceding the Termination Date, (C) as though
the Executive were three (3) years older than his age at the
Termination Date, and (D) without disregarding service and compensation
before the Termination Date; reduced by (2) the amount (if any)
previously or simultaneously paid by the Company to the Executive
pursuant to Sections 3.6 and 5.1(c).
(g) In addition to the foregoing amounts, the Company shall
pay on behalf of Executive all fees and costs charged by the
outplacement firm selected by the Executive to provide outplacement
services or at the election of the Executive, an immediate cash
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payment equal to the fees and expenses such outplacement firm would
charge but not in excess of 20% of the Guaranteed Base Salary.
(h) In addition to the foregoing payments, until the third
annual anniversary of the Termination Date or such later date as any
Plan of the Company may specify, the Company shall continue to provide
to the Executive and the Executive's family welfare benefits
(including, without limitation, medical, prescription, dental,
disability, salary continuance, individual life, group life, accidental
death and travel accident insurance plans and programs) which are at
least as favorable as the most favorable Plans of the Company
applicable to other peer executives and their families as of the
Termination Date, but which are in no event less favorable than the
most favorable Plans of the Company applicable to other peer executives
and their families during the 90-day period immediately before the
Effective Date; and the cost of such welfare benefits to Executive
shall not exceed the cost of such benefits to the Executive immediately
before the Termination Date or, if less, the Effective Date.
(i) Beginning on the later of the third annual anniversary of
the Termination Date or the date Executive attains age 50, and
continuing until the death of the last to die of Executive and his or
her spouse, the Company shall provide to the Executive and to
Executive's family medical benefits which (1) until Executive attains
age sixty-five (65) are at least as favorable as the most favorable
medical Plans of the Company applicable to actively employed peer
executives and that covered any active employee of the Company as of
the Effective Date, and (2) from and after the date Executive attains
age 65, are at least as favorable as the most favorable medical Plans
of the Company applicable to eligible retired peer executives and that
covered any retired employee as of the Effective Date; and the cost to
Executive of such medical benefits for the period described in clause
(1) shall not exceed the cost of such benefits to Executive immediately
before the Termination Date or, if less, the Effective Date, and the
cost to Executive of such medical benefits for the period described in
clause (2) shall not exceed the cost of such benefits to any similarly
situated eligible retiree of the Company immediately before the
Termination Date or, if less, the Effective Date.
The Executive's rights under this Section 5.1 shall be in addition to, and not
in lieu of, any post-termination continuation coverage or conversion rights the
Executive may have pursuant to applicable law, including without limitation
continuation coverage required by Section 4980 of the Code or Part 6 of Title I
of the Employee Retirement Income Security Act of 1974, as amended, for which
purpose the date of the qualifying event shall not be earlier than the date
specified in the first sentence of Section 5.1(i). However, if the Executive is
covered under a medical, life, or disability insurance plan provided by a
subsequent employer at equal or lesser cost to Executive than the cost to
Executive of coverage under the corresponding Company plan required by Sections
5.1(i), then the benefits under the corresponding Company plan required by
Sections 5.1(i) shall be secondary to the benefits under the subsequent
employer's medical, life, or disability insurance plan.
5.2 If by the Company for Cause. If the Company terminates the
Executive's employment for Cause during the Post-Change Period pursuant to the
procedures set forth in Section 4.3, this Agreement shall terminate without
further obligation by the Company to the
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Executive, other than the obligation immediately to pay the Executive in cash
the Executive's Guaranteed Base Salary through the Termination Date, plus the
amount of any compensation previously deferred by the Executive, plus any
accrued vacation pay and business expenses incurred through the Termination
Date, in each case to the extent not previously paid or reimbursed.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good Reason,
Disability or death, this Agreement shall terminate without further obligations
by the Company, other than the obligation immediately to pay the Executive in
cash all amounts specified in paragraphs (a), (b) and (c) of Section 5.1 (such
amounts collectively, the "Accrued Obligations").
5.4 If by the Company for Disability. If the Company terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than:
(a) the Company's obligation immediately to pay the Executive
in cash all Accrued Obligations, and
(b) the Executive's right after the Disability Effective Date
to receive disability and other benefits at least equal to the greater
of (i) those provided under the most favorable disability Plans
applicable to disabled peer executives of the Company in effect
immediately before the Termination Date or (ii) those provided under
the most favorable disability Plans of the Company in effect at any
time during the 90-day period immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by
reason of the Executive's death during the Post-Change Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the obligation immediately to
pay the Executive's estate or beneficiary in cash all Accrued Obligations.
Despite anything in this Agreement to the contrary, the Executive's family shall
be entitled to receive benefits at least equal to the most favorable benefits
provided by the Company to the surviving families of peer executives of the
Company under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive under such Plans in effect at
any time during the 90-day period immediately before the Effective Date.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are
made to the Executive pursuant to Section 5.1, the Executive hereby waives the
right to receive severance payments under any other Plan or agreement of or with
the Company.
6.2 Other Rights. Except as provided in Section 6.1, this Agreement
shall not prevent or limit the Executive's continuing or future participation in
any benefit, bonus, incentive or other Plans provided by the Company or any of
its Subsidiaries and for which the Executive may
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qualify, nor shall this Agreement limit or otherwise affect such rights as the
Executive may have under any other agreements with the Company or any of its
Subsidiaries. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any Plan of the Company or any of its
Subsidiaries and any other payment or benefit required by law at or after the
Termination Date shall be payable in accordance with such Plan or applicable law
except as expressly modified by this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Company's independent auditors, which determinations shall be
certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that any benefit received or deemed
received by the Executive from the Company pursuant to this Agreement or
otherwise (collectively, the "Payments") is or will become subject to any excise
tax under Section 4999 of the Code or any similar tax payable under any United
States federal, state, local or other law (such excise tax and all such similar
taxes collectively, "Excise Taxes"), then the Company shall, immediately after
such determination, pay the Executive an amount (the "Gross-up Payment") equal
to the product of
(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the Excise
Taxes and any federal, state, local or other income or excise taxes or other
taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Company may at any time request the Company's
independent auditors to prepare and deliver a Certificate to the Executive. The
Company shall, in addition to complying with Section 7.2, cause all
determinations and certifications under the Article to be made as soon as
reasonably possible and in adequate time to permit the Executive to prepare and
file the Executive's individual tax returns on a timely basis.
7.2 Determination by the Executive.
(a) If the Company or its independent auditors shall fail to
deliver a Certificate to the Executive (and to pay to the Executive the
amount of the Gross-up Payment, if any) within 14 days after receipt
from the Executive of a written request for a Certificate, or if at any
time following receipt of a Certificate the Executive disputes the
amount of the Gross-up Payment set forth therein, the Executive may
elect to demand the payment of the amount which the Executive, in
accordance with an Executive Counsel Opinion), (as defined in Section
7.5), determines to be the Gross-up Payment. Any such demand by the
Executive shall be made by delivery to the Company of a written notice
which specifies the Gross-up Payment determined by the Executive and an
Executive Counsel
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Opinion regarding such Gross-up Payment (such written notice and
opinion collectively, the "Executive's Determination"). Within 14 days
after delivery of the Executive's Determination to the Company, the
Company shall either (1) pay the Executive the Gross-up Payment set
forth in the Executive's Determination (less the portion of such
amount, if any, previously paid to the Executive by the Company) or (2)
deliver to the Executive a Certificate specifying the Gross-up Payment
determined by the Company's independent auditors, together with a
Company Counsel Opinion (as defined in Section 7.5), and pay the
Executive the Gross-up Payment specified in such Certificate. If for
any reason the Company fails to comply with clause (2) of the preceding
sentence, the Gross-up Payment specified in the Executive's
Determination shall be controlling for all purposes.
(b) If the Executive does not make a request for, and the
Company does not deliver to the Executive, a Certificate, the Company
shall, for purposes of Section 7.3, be deemed to have determined that
no Gross-up Payment is due.
7.3 Additional Gross-up Amounts. If the amount of Excise Taxes payable
by the Executive with respect to all Payments is determined (pursuant to the
subsequently-enacted provisions of the Code, final regulations or published
rulings of the IRS, final judgment of a court of competent jurisdiction or the
Company's independent auditors) to be greater than the amount previously paid by
the Company to the Executive pursuant to Section 7.1 or 7.2, as applicable, then
the Company shall pay the Executive an amount (which shall also be deemed a
Gross-up Payment) equal to the product of:
(a) the sum of (i) such additional Excise Taxes and (ii) any
interest, fines, penalties, expenses or other costs incurred by the
Executive as a result of having taken a position in accordance with a
determination made pursuant to Section 7.1,
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal the quotient
(greater than one (1.0)) of one (1.0) divided by one (1.0) minus the sum,
expressed as a decimal fraction, of the rates of all federal, state, local and
other income and other taxes and any Excise Taxes applicable to the Gross-up
Payment; provided that, if such sum exceeds 0.75, it shall be deemed equal to
0.75 for purposes of this computation. (If different rates of tax are applicable
to various portions of a Gross-up Payment, the weighted average of such rates
shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal
opinion of nationally recognized executive compensation counsel who is counsel
to the Executive that there is a reasonable basis to support a conclusion that
the Gross-up Payment determined by the Executive has been calculated in accord
with this Article and applicable law. "Company Counsel Opinion" means a legal
opinion of nationally recognized executive compensation counsel who is counsel
to the Company that (a) there is a reasonable basis to support a conclusion that
the Gross-up Payment set forth of the Certificate of Company's independent
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auditors has been calculated in accord with this Article and applicable law, and
(b) there is no reasonable basis for the calculation of the Gross-up Payment
determined by the Executive.
7.6 Amount Increased or Contested. The Executive shall notify the
Company in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Company of a Gross-up Payment. Such
notice shall include the nature of such claim and the date on which such claim
is due to be paid. The Executive shall give such notice as soon as practicable,
but no later than 10 business days, after the Executive first obtains actual
knowledge of such claim; provided, however, that any failure to give or delay in
giving such notice shall affect the Company's obligations under this Article
only if and to the extent that such failure results in actual prejudice to the
Company. The Executive shall not pay such claim less than 30 days after the
Executive gives such notice to the Company (or, if sooner, the date on which
payment of such claim is due). If the Company notifies the Executive in writing
before the expiration of such period that it desires to contest such claim, the
Executive shall:
(a) give the Company any information that it reasonably
requests relating to such claim,
(b) take such action in connection with contesting such claim
as the Company reasonably requests in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(c) cooperate with the Company in good faith to contest such
claim, and
(d) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax (to the extent not previously paid by the
Company to the Executive) or income tax, including related interest and
penalties, imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing, the Company shall control all
proceedings in connection with such contest and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify the Executive, on an after-tax basis, for any Excise Tax or income
tax, including related interest or penalties, imposed with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a Gross-up Payment would be payable. The Executive
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shall be entitled to settle or contest, as the case may be, any other issue
raised by the IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7.6, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7.6) promptly pay
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 7.6, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such determination before the expiration of 30
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-up Payment required to be paid. Any contest
of a denial of refund shall be controlled by Section 7.6.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
(a) If the Executive incurs legal, accounting and other fees
or other expenses in a good faith effort to obtain benefits under this
Agreement (including, without limitation, the fees and other expenses
of the Executive's legal counsel, any expert witness fees and expenses,
and accounting and other fees and expenses, including legal and
accounting fees and expenses in connection with the delivery of the
Executive Counsel Opinion referred to in Article VII), regardless of
whether the Executive ultimately prevails, the Company shall reimburse
the Executive on a monthly basis upon the written request for such fees
and expenses to the extent not previously reimbursed under the
Company's officers and directors liability insurance policy, if any.
Simultaneously with each such payment Company shall pay Executive an
amount such that after payment of incremental United States federal,
state and local income, excise and other taxes payable by Executive
("Taxes") with respect to such tax reimbursement, there remains a
balance sufficient to pay the Taxes on the reimbursement of such fees
and expenses. The existence of any controlling case or regulatory law
which is directly inconsistent with the position taken by the Executive
shall be evidence that the Executive did not act in good faith.
Executive's payment of such fees and expenses shall be a conclusive
determination with respect to the Company that such fees and expenses
are reasonable.
(b) Reimbursement of legal fees and expenses shall be made
monthly upon the written submission of a request for reimbursement
together with evidence that such fees and expenses are due and payable
or were paid by the Executive. If the Company shall have reimbursed the
Executive for legal fees and expenses and it is later determined that
the Executive was not acting in good faith, all amounts paid on behalf
of, or reimbursed to, the Executive shall be promptly refunded to the
Company.
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(c) To secure its obligations under this Section 8.1 the
Company shall procure and maintain in force during the Agreement Term
and thereafter for one (1) year or if longer until the termination (by
final judgment and after all rights of appeal have been exhausted or
waived) of any litigation involving a good faith effort of an Executive
to obtain benefits under this Agreement, a letter of credit and an
escrow in favor of Executive (together with other executives similarly
situated). The letter of credit shall be issued by a bank or trust
company organized under the laws of the United States or Canada or a
state or province thereof and having a combined capital and surplus of
not less than one hundred million dollars ($100,000,000), shall be in
the aggregate amount of five hundred thousand dollars ($500,000) prior
to July 1, 2001, and in the aggregate amount of two million dollars
($2,000,000) on and after July 1, 2001, and shall be substantially in
the form of that attached (with its attached Annexes and Exhibits) to
this Agreement as Exhibit A. The escrow shall be maintained in the
state of Illinois under an escrow agreement with a bank or trust
company organized under the laws of the United States or Canada or a
state or province thereof and having a combined capital and surplus of
not less than one hundred million dollars ($100,000,000), and shall be
substantially in the form of that attached (with its attached Exhibits)
to this Agreement as Exhibit B.
8.2 Interest. If the Company does not pay any amount due to the
Executive under this Agreement within three days after such amount became due
and owing, interest shall accrue on such amount from the date it became due and
owing until the date of payment at a annual rate equal to two percent (2.0%)
above the base commercial lending rate announced by the Company's principal
revolving credit lender in effect from time to time during the period of such
nonpayment; or, if the Company does not have a principal revolving credit
lender, then at two percent (2.0%) above the prime rate of interest in effect
from time to time during the period of such nonpayment, as reported from time to
time in the Wall Street Journal; but in no case greater than the maximum rate of
interest permitted by applicable law.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off or Defenses by Company. The Executive's right to receive
when due the payments and other benefits provided for under this Agreement is
absolute, unconditional and shall not be subject to any set-off, counterclaim or
legal or equitable defense. The exclusive method for the Company to avoid
payments to the Executive under this Agreement, to the extent specified in this
Agreement, is to terminate Executive's employment for Cause pursuant to Sections
4.3 and 5.2 of this Agreement. Time is of the essence in the performance by the
Company of its obligations under this Agreement. Any claim which the Company may
have against the Executive, whether for a breach of this Agreement or otherwise,
shall be brought in a separate action or proceeding and not as part of any
action or proceeding brought by the Executive to enforce any rights against the
Company under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate
the amounts payable by the Company under this Agreement by seeking new
employment following termination. Except as specifically otherwise provided in
this Agreement, all amounts payable pursuant to this Agreement shall be paid
without reduction regardless of any amounts of salary,
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compensation or other amounts which may be paid or payable to the Executive as
the result of the Executive's employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NONCOMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of
the Company and its subsidiaries to maintain as secret and confidential all
valuable and unique information and techniques acquired, developed or used by
the Company and its Subsidiaries relating to their business, operations,
employees and customers, which gives the Company and its subsidiaries a
competitive advantage in the construction and engineering industry and other
businesses in which the Company and its subsidiaries are engaged ("Confidential
Information"). Executive recognizes that all such Confidential Information is
the sole and exclusive property of the Company and its Subsidiaries, and that
disclosure of Confidential Information would cause damage to the Company and its
Subsidiaries. Executive agrees that, except as required by the duties of his
employment with the Company and/or its Subsidiaries and except in connection
with enforcing the Executive's rights under this Agreement or if compelled by a
court or governmental agency, he will not, without the consent of the Company,
disseminate or otherwise disclose any Confidential Information obtained during
his employment with the Company and/or its Subsidiaries for so long as such
information is valuable and unique.
10.2 Noncompetition/Nonsolicitation.
(a) Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business
as defined in Section 10.2(d).
(b) Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form
of equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose
stock is listed on a national securities exchange or actively traded in
the over-the-counter market; provided that (1) such investment does not
give Executive the right or ability to control or influence the policy
decisions of any Prohibited Business, and (2) such investment does not
create a conflict of interest between Executive's duties hereunder and
Executive's interest in such investment.
(c) Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
Subsidiaries or (2) interfere with the Company's or any of its
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Subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its Subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after
the date of Executive's termination of employment), was an employee,
customer, vendor or supplier of, or maintained a business relationship
with, any business of the Company and/or its Subsidiaries which was
conducted at any time during the period commencing one year prior to
the termination of employment.
(d) For the purpose of this Section 10.2, "Prohibited
Business" shall be defined as any construction and engineering business
specializing in the engineering and design, materials procurement,
fabrication, erection, repair and modification of steel tanks and other
steel plate structures and associated systems and any branch, office or
operation thereof, which is a direct and material competitor of the
Company wherever the Company does business, including the Netherlands,
the United States and any other country.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing, the Company
shall not be precluded from pursuing any and all remedies it may have at law or
in equity for breach of such obligations; provided, however, that such breach
shall not in any manner or degree whatsoever limit, reduce or otherwise affect
the obligations of the Company under this Agreement, and in no event shall an
asserted breach of the Executive's obligations under this Article X constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. 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.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement.
Any successor to the business and/or assets of the Company which assumes and
agrees to perform this Agreement by operation of law, contract, or otherwise
shall be jointly and severally liable with the Company under this Agreement.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid as soon as administratively practicable in a lump sum to the
beneficiary designated in writing by the Executive, or if none is so designated,
to the Executive's estate.
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11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other
portions of this Agreement are declared by any court or governmental authority
to be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
11.6 Amendments. Except as provided in Section 2.2 hereof, this
Agreement shall not be altered, amended or modified except by written instrument
executed by the Company and Executive.
11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Stephen P. Crain
1507 Grommon Road
Naperville, Illinois 60565
If to the Company (including any or all of CBICNV, CBIC or
CBICD):
Chicago Bridge & Iron Company
1501 North Division Street
Plainfield, Illinois 60544
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed
in accordance with the laws of the State of Illinois, without regard to its
choice of law principles.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
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11.11 Tax Withholding. The Company may withhold from any amounts
payable under this Agreement any federal, state or local taxes that are required
to be withheld pursuant to any applicable law or regulation.
11.12 Joint and Several Obligations. The obligations of the Company
under this Agreement are joint and several obligations of CBICNV, CBIC and
CBICD; provided, however, that each of CBICNV, CBIC and CBICD may agree between
themselves but without adversely affecting the rights of the Executive which of
them shall provide any particular payment or benefit under this Agreement.
11.13 No Waiver. The Executive's failure to insist upon strict
compliance with any provision of this Agreement shall not be deemed a waiver of
such provision or any other provision of this Agreement. A waiver of any
provision of this Agreement shall not be deemed a waiver of any other provision,
and any waiver of any default in any such provision shall not be deemed a waiver
of any later default thereof or of any other provision.
11.14 Prior Agreement. The Change of Control Severance Agreement dated
March 4, 1999, between CBIC and the Executive is hereby terminated effective on
the date of this Agreement.
11.15 Entire Agreement. This Agreement contains the entire
understanding of the Company and the Executive with respect to its subject
matter and supercedes any prior change of control severance agreement and any
Change of Control severance benefit provisions in any prior employment agreement
between the Company and the Executive.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
EXECUTIVE
/s/ Stephen P. Crain
----------------------------------
Stephen P. Crain
CHICAGO BRIDGE & IRON COMPANY N.V.
By: /s/ Gerald M. Glenn
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Title: Managing Director
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CHICAGO BRIDGE & IRON COMPANY
By: /s/ Robert B. Jordan
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Title:
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CHICAGO BRIDGE & IRON COMPANY
(DELAWARE)
By: /s/ Timothy J. Wiggins
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Title:
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
64
TABLE OF CONTENTS
PAGE
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ARTICLE I. PURPOSES...............................................................................................1
ARTICLE II. CERTAIN DEFINITIONS...................................................................................1
2.1 "Accrued Obligations"...................................................................................1
2.2 "Agreement Term"........................................................................................1
2.3 "Affiliate".............................................................................................2
2.4 "Article"...............................................................................................2
2.5 "Beneficial Owner"......................................................................................2
2.6 "Board".................................................................................................2
2.7 "Cause".................................................................................................2
2.8 "Change of Control".....................................................................................2
2.9 "Code"..................................................................................................3
2.10 "Deferral Plan".........................................................................................3
2.11 "Disability"............................................................................................4
2.12 "Effective Date"........................................................................................4
2.13 "Good Reason"...........................................................................................4
2.14 "Gross-up Payment"......................................................................................4
2.15 "Growth Transaction"....................................................................................4
2.16 "Imminent Control Change Date"..........................................................................4
2.17 "IRS"...................................................................................................4
2.18 "1934 Act"..............................................................................................4
2.19 "Notice of Termination".................................................................................4
2.20 "Plans".................................................................................................5
2.21 "Policies" .............................................................................................5
2.22 "Post-Change Period"....................................................................................5
2.23 "Present Value".........................................................................................5
2.24 "SEC"...................................................................................................5
2.25 "Section"...............................................................................................5
2.26 "SERP"..................................................................................................5
2.27 "Shareholder Agreement".................................................................................5
2.28 "Subsidiary"............................................................................................5
2.29 "Termination Date"......................................................................................5
2.30 "Transaction Owner".....................................................................................6
2.31 "Voting Securities".....................................................................................6
ARTICLE III. POST-CHANGE PERIOD PROTECTIONS.......................................................................6
3.1 General.................................................................................................6
3.2 Position and Duties.....................................................................................6
3.3 Compensation............................................................................................7
3.4 Pro-Rata Bonus Payment..................................................................................9
3.5 Equity Awards Vesting..................................................................................10
3.6 Nonqualified Deferred Compensation.....................................................................10
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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ARTICLE IV. TERMINATION OF EMPLOYMENT............................................................................11
4.1 Disability.............................................................................................11
4.2 Death..................................................................................................11
4.3 Cause..................................................................................................11
4.4 Good Reason............................................................................................13
ARTICLE V. OBLIGATIONS OF THE COMPANY UPON TERMINATION...........................................................14
5.1 If by the Executive for Good Reason or by the Company Other Than for Cause or Disability..............14
5.2 If by the Company for Cause............................................................................16
5.3 If by the Executive Other Than for Good Reason.........................................................17
5.4 If by the Company for Disability.......................................................................17
5.5 If upon Death..........................................................................................17
ARTICLE VI. NON-EXCLUSIVITY OF RIGHTS............................................................................17
6.1 Waiver of Other Severance Rights.......................................................................17
6.2 Other Rights...........................................................................................17
ARTICLE VII. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY..........................................................18
7.1 Gross-up for Certain Taxes.............................................................................18
7.2 Determination by the Executive.........................................................................18
7.3 Additional Gross-up Amounts............................................................................19
7.4 Gross-up Multiple......................................................................................19
7.5 Opinion of Counsel.....................................................................................19
7.6 Amount Increased or Contested..........................................................................20
7.7 Refunds................................................................................................21
ARTICLE VIII. EXPENSES AND INTEREST..............................................................................21
8.1 Legal Fees and Other Expenses..........................................................................21
8.2 Interest...............................................................................................22
ARTICLE IX. NO SET-OFF OR MITIGATION.............................................................................22
9.1 No Set-off or Defenses by Company......................................................................22
9.2 No Mitigation..........................................................................................22
ARTICLE X. CONFIDENTIALITY AND NONCOMPETITION....................................................................23
10.1 Confidentiality........................................................................................23
10.2 Noncompetition/Nonsolicitation.........................................................................23
10.3 Remedy.................................................................................................24
ARTICLE XI. MISCELLANEOUS........................................................................................24
11.1 No Assignability.......................................................................................24
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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11.2 Successors.............................................................................................24
11.3 Payments to Beneficiary................................................................................24
11.4 Non-alienation of Benefits.............................................................................25
11.5 Severability...........................................................................................25
11.6 Amendments.............................................................................................25
11.7 Notices................................................................................................25
11.8 Counterparts...........................................................................................25
11.9 Governing Law..........................................................................................25
11.10 Captions...............................................................................................25
11.11 Tax Withholding........................................................................................26
11.12 Joint and Several Obligations..........................................................................26
11.13 No Waiver..............................................................................................26
11.14 Prior Agreement........................................................................................26
11.15 Entire Agreement.......................................................................................26
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of October 13, 2000 is made among CHICAGO BRIDGE &
IRON COMPANY N.V. ("CBICNV"), a Netherlands corporation, CHICAGO BRIDGE & IRON
COMPANY, a Delaware corporation ("CBIC"), CHICAGO BRIDGE & IRON COMPANY
(DELAWARE), a Delaware corporation ("CBICD" and, together with CBICNV and CBIC,
the "Company"), each having its principal place of business in Plainfield,
Illinois, and Stephen M. Duffy (the "Executive"), a resident of Illinois.
ARTICLE I.
PURPOSES
The Supervisory Board of CBICNV has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued service of the Executive, despite the possibility or
occurrence of a change of control of the Company. The Board believes it is
imperative to reduce the distraction of the Executive that would result from the
personal uncertainties caused by a pending or threatened change of control, to
encourage the Executive's full attention and dedication to the Company, and to
provide the Executive with compensation and benefits arrangements upon a change
of control which ensure that the expectations of the Executive will be satisfied
and are competitive with those of similarly-situated corporations. This
Agreement is intended to accomplish these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" has the meaning defined for that term in Section
5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is thirty-six (36) months following the
date of this Agreement ("Expiration Date"); provided, however, that the
Agreement Term shall be extended as follows: (a) if neither the Company nor the
Executive gives written notice to the other pursuant to Section 11.7 that this
Agreement shall not be renewed ("Notice of Nonrenewal") within two years from
the date of this Agreement, the Agreement Term shall be extended to an
Expiration Date which shall be the first annual anniversary of the date a Notice
of Nonrenewal is given; (b) if an Imminent Control Change Date occurs before the
Expiration Date (as it may be extended under clause (a) above), then no Notice
of Nonrenewal shall thereafter be effective and the Agreement Term shall
automatically extend to an Expiration Date which is twelve (12) months after the
Imminent Change of Control Date, as further extended under the terms of this
clause should another Imminent Change of Control Date occur prior to the
Expiration Date as from time to time so extended, and (c) if a Change of Control
occurs before the Expiration Date (as extended
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under clause (a) or (b) above or this clause (c)), the Expiration Date shall
automatically be extended to the last day of the Post-Change Period as the
Post-Change Period may be extended as provided in Section 2.22.
2.3 "Affiliate" means an "affiliate" or "associate" as those terms are
defined in Rule 12b-2 under the 1934 Act.
2.4 "Article" means an article of this Agreement.
2.5 "Beneficial Owner" means such term as defined in Rule 13d-3 of the SEC
under the 1934 Act.
2.6 "Board" means the Supervisory Board of Chicago Bridge & Iron Company
N.V.
2.7 "Cause" has the meaning defined for that term in Section 4.3(b).
2.8 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
(a) any person (as such term is used in Rule 13d-5 of the SEC under the
1934 Act) or group (as such term is defined in Section 13(d) of the 1934
Act), other than a Subsidiary or any employee benefit plan (or any related
trust) of the Company or a Subsidiary, becomes the Beneficial Owner of 25%
or more of the common shares of any of CBICNV, CBIC or CBICD or of other
Voting Securities representing 25% or more of the combined voting power of
all Voting Securities of any of CBICNV, CBIC or CBICD; provided, however,
that (i) no Change of Control shall be deemed to have occurred solely by
reason of any such acquisition by a corporation with respect to which,
after such acquisition, more than 75% of both the common shares or common
stock of such corporation and the combined voting power of the Voting
Securities of such corporation are then beneficially owned, directly or
indirectly, by the persons who were the Beneficial Owners of the common
shares and other Voting Securities of CBICNV, CBIC or CBICD immediately
before such acquisition, in substantially the same proportion as their
ownership of the common shares and other Voting Securities of CBICNV, CBIC
or CBICD, as the case may be, immediately before such acquisition; and (ii)
once a Change of Control occurs under this subsection (a), the occurrence
of the next Change of Control (if any) under this subsection (a) shall be
determined by reference to a person or group other than the person or group
whose acquisition of Beneficial Ownership created such prior Change of
Control unless the original person or group has in the meantime ceased to
own 25% or more of the common shares of all of CBICNV, CBIC or CBICD or
other Voting Securities representing 25% or more of the combined voting
power of all Voting Securities of all of CBICNV, CBIC or CBICD; or
(b) individuals who, as of the date of this Agreement or as of any
Effective Date thereafter, are Supervisory Directors of CBICNV (the
"Incumbent Directors") cease for any reason to constitute at least 50% of
the members of the Board; provided, however, that (i) any individual who
becomes a Supervisory Director after the Effective Date whose binding
nomination for election to the Board by the general meeting of shareholders
was approved by a vote or written consent of at least 75% of the
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Supervisory Directors who are then Incumbent Directors shall be considered
an Incumbent Director, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of
the Company (as such terms are used in Rule 14a-11 of the SEC under the
1934 Act); and (ii) once a Change of Control occurs under this subsection
(b), the occurrence of the next Change of Control (if any) under this
subsection (b) shall be determined by reference to the individuals who were
Incumbent Directors immediately after the Effective Date of such prior
Change of Control; or
(c) approval by the Board, or by the shareholders of CBICNV, CBIC or
CBICD, of any of the following:
(i) a merger, reorganization or consolidation of CBICNV, CBIC or
CBICD ("Merger"), other than a Merger after which the individuals and
entities who were the respective beneficial owners of the common shares
and other Voting Securities of CBICNV, CBIC or CBICD (as the case may
be) immediately before such Merger beneficially own, directly or
indirectly, more than 75% of, respectively, the common shares or common
stock and the combined voting power of the Voting Securities of the
corporation resulting from such Merger, in substantially the same
proportion as their ownership of the common shares or common stock and
other Voting Securities of CBICNV, CBIC or CBICD (as the case may be)
immediately before such Merger, or
(ii) a sale or other disposition by any of CBICNV, CBIC or CBICD
of all or substantially all of the assets owned by it, or
(iii) any transaction as a result of which CBICNV would not
thereafter directly or indirectly own beneficially at least 75% of the
common stock of CBIC or as a result of which CBIC would not thereafter
directly or indirectly own beneficially at least 75% of the common
stock of CBICD, unless after either such transaction CBICNV continues
to own directly or indirectly substantially all of the pre-transaction
assets of both CBIC and CBICD.
(d) if a Growth Transaction previously occurred, any Transaction Owner
individually, or Transaction Owners collectively:
(i) materially breach(es) any provision of any shareholder
agreement to which CBICNV and such Transaction Owner(s) are parties
that addresses the governance of CBICNV following the Growth
Transaction; or
(ii) become(s) the Beneficial Owner of more than 66.5% of the
common shares of any of CBICNV, CBIC or CBICD or of other Voting
Securities representing more than 66.5% of the combined voting power of
all Voting Securities of any of CBICNV, CBIC or CBICD.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Deferral Plan" has the meaning defined for that term in Section 3.6.
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2.11 "Disability" has the meaning defined for that term in Section 4.1(b).
2.12 "Effective Date" means each date on which a Change of Control occurs
during the Agreement Term; provided, however, that if the Company terminates the
Executive's employment before the date of a Change of Control, and if the
Executive reasonably demonstrates that such termination of employment (a) was at
the request of a third party who had taken steps reasonably calculated to effect
the Change of Control or (b) otherwise arose in connection with or anticipation
of the Change of Control, then "Effective Date" shall mean the date immediately
before the date of such termination of employment.
2.13 "Good Reason" has the meaning defined for that term in Section 4.4(b).
2.14 "Gross-up Payment" has the meaning defined for that term in Section
7.1.
2.15 "Growth Transaction" means (i) the acquisition by Wedge Group
Incorporated ("WGI"), a Delaware corporation, First Reserve Fund VIII, L.P.
("FRF"), a Delaware limited partnership, or Pitt-Des Moines, Inc. ("PDM"), a
Pennsylvania corporation, or their Affiliates, of common shares or other Voting
Securities of CBICNV as contemplated by an agreement with CBICNV for the
acquisition by CBICNV or an Affiliate of Howe-Baker International, Inc. from WGI
(the "HBI Transaction") or for the acquisition of the PDM Engineered
Construction Division and Water Division from PDM (the "PDM Transaction"); (ii)
the acquisition by a person (other than by public offering) of common shares or
other Voting Securities of CBICNV from CBICNV as part of an arrangement for
financing the HBI Transaction or the PDM Transaction; (iii) the acquisition by a
person of common shares or other Voting Securities of CBICNV from a previous
Transaction Owner if the person acquiring such common shares or other Voting
Securities is or becomes a party to a Shareholder Agreement with CBICNV that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner; or (iv) a transfer of common shares or other
Voting Securities of CBICNV from one Transaction Owner to another Transaction
Owner if the acquiring Transaction Owner is subject with respect to such shares
or other Voting Securities to either a preexisting Shareholder Agreement between
CBICNV and the acquiring Transaction Owner or a Shareholder Agreement that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner. However, a "Growth Transaction" will not include
any event described in Section 2.8(d).
2.16 "Imminent Control Change Date" means any date on which occurs (a) a
presentation to the Company's shareholders generally or any of the Company's
directors or executive officers of a proposal or offer for a Change of Control,
or (b) the public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal or offer for
a Change of Control, or (c) such proposal or offer remains effective and
unrevoked.
2.17 "IRS" means the Internal Revenue Service.
2.18 "1934 Act" means the Securities Exchange Act of 1934, as amended.
2.19 "Notice of Termination" means a written notice given in accordance
with Section 11.7 which sets forth (a) the specific termination provision in
this Agreement relied upon
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by the party giving such notice, (b) in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under such termination provision and (c) if the Termination Date is
other than the date of receipt of such Notice of Termination, the Termination
Date.
2.20 "Plans" means plans, programs, policies or practices of the Company or
any of its Subsidiaries.
2.21 "Policies" means policies, practices or procedures of the Company or
any of its Subsidiaries.
2.22 "Post-Change Period" means the period commencing on each Effective
Date and ending on the third annual anniversary of such Effective Date. If a new
Change of Control creates a new Effective Date during any current Post-Change
Period, the Post-Change Period shall be extended to the third annual anniversary
of such new Effective Date; and shall be further extended upon each new
Effective Date during the Post-Change Period as extended.
2.23 "Present Value" means the present value, determined using (a) the
actuarial assumptions published by the Pension Benefit Guaranty Corporation
("PBGC") for determining immediate annuity values, as in effect on the first day
of the calendar year in which any payment of present value is required, or (b)
if no such actuarial assumptions are published by the PBGC, using the mortality
assumptions of the UP-84 group mortality table and an interest rate assumption
which is the lesser of (i) 75% of the current 30-year Treasury bond rate or (ii)
the current 30-year Treasury bond rate minus 150 basis points.
2.24 "SEC" means the Securities and Exchange Commission.
2.25 "Section" means, unless the context otherwise requires, a section of
this Agreement.
2.26 "SERP" has the meaning defined for that term in Section 3.6.
2.27 "Shareholder Agreement" means an agreement between CBICNV and a person
that limits the ability of such person and its Affiliates to obtain and exercise
control over the management and policies of the CBICNV.
2.28 "Subsidiary" means a corporation as defined in Section 424(f) of the
Code (with the Company being treated as the employer corporation for purposes of
this definition) and any partnership or limited liability company in which the
Company or any Subsidiary has a direct or indirect interest (whether in the form
of voting power or participation in profits or capital contribution) of 50% or
more.
2.29 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company terminates the Executive's employment
other than for Cause or Disability, then the Termination Date shall be the date
of receipt of such Notice of Termination and (b) if the Executive's employment
is terminated by reason of death or Disability, then the Termination Date shall
be the date of death
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of the Executive or the Disability Effective Date (as defined in Section
4.1(a)), as the case may be.
2.30 "Transaction Owner" means a person who acquires common shares or other
Voting Securities of CBICNV in a Growth Transaction, or any Affiliate of such
person.
2.31 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 General. On the Effective Date and during the Post-Change Period
thereafter the Company shall make the payments, provide the benefits and fulfill
the other obligations required by this Article III. However, if , such Effective
Date and Post-Change Period result solely from a Growth Transaction:
(a) Section 3.3(b) shall not apply except for purposes of determining
the obligations of the Company on termination pursuant to Section 5.1, and
to the extent provided in Section 4.4(b)(iii) and as modified thereby, in
determining the existence of Good Reason;
(b) clause (ii) of each of Sections 3.3(c) through 3.3(h) shall not
apply except for purposes of determining the obligations of the Company on
termination pursuant to Section 5.1; but the aggregate value to the
Executive of all Plans, fringe benefits and arrangements described in
Sections 3.3(c) through 3.3(h) shall not be less favorable, in the
aggregate, than the aggregate value to the Executive of such Plans, fringe
benefits and arrangements provided by the Company to the Executive or peer
executives at any time during the 90-day period immediately before such
Effective Date; and
(c) Sections 3.4, 3.5, and 3.6 shall not apply on such Effective Date;
but to the extent such vesting or payment is not otherwise required by
Section 5.1, Sections 3.4, 3.5 and 3.6, shall apply to the Executive on the
Termination Date (as if such Sections referred to the "Termination Date"
instead of the "Effective Date") if during the Post-Change Period the
Company shall terminate Executive's employment other than for Cause, or if
the Executive shall terminate employment for Good Reason, or if employment
terminates as a result of Disability or death.
3.2 Position and Duties.
(a) During the Post-Change Period, (1) the Executive's position
(including offices, titles, reporting requirements and responsibilities),
authority and duties shall be at least commensurate in all material
respects with the most significant of those held by, exercised by, or
assigned to the Executive at any time during the 90-day period immediately
before the Effective Date and (2) the Executive's services shall be
performed at the location where the Executive was employed immediately
before the Effective Date or any other location less than 40 miles from
such former location.
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(b) During the Post-Change Period (other than any periods of vacation,
sick leave, disability leave or other family or medical leave to which the
Executive is entitled), the Executive shall devote his or her full
attention and time to the business and affairs of the Company and, to the
extent necessary to discharge the duties assigned to the Executive in
accordance with this Agreement, shall use his or her best efforts to
perform such duties faithfully and efficiently. During the Post-Change
Period, the Executive may (1) serve on corporate, civic or charitable
boards or committees, (2) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (3) manage personal investments, so
long as such activities are consistent with the Policies of the Company or
its Subsidiaries at the Effective Date and do not significantly interfere
with the performance of the Executive's duties under this Agreement. To the
extent that any such activities have been conducted by the Executive before
the Effective Date and were consistent with the Policies of the Company or
its Subsidiaries at the Effective Date, the continued conduct of such
activities (or activities similar in nature and scope) after the Effective
Date shall not be deemed to interfere with the performance of the
Executive's duties under this Agreement.
3.3 Compensation.
(a) Base Salary. During the Post-Change Period, the Company shall pay
or cause to be paid to the Executive an annual base salary in cash
("Guaranteed Base Salary"), which shall be paid in a manner consistent with
the Company's payroll practices in effect immediately before the Effective
Date for such Post-Change Period, at a rate at least equal to the highest
rate of annual salary paid or payable to the Executive by the Company at
any time during the 12-month period immediately before such Effective Date.
During the Post-Change Period, the Guaranteed Base Salary shall be reviewed
at least annually and shall be increased at any time and from time to time
as shall be substantially consistent with increases in base salary awarded
to other peer executives of the Company. Any increase in Guaranteed Base
Salary shall not limit or reduce any other obligation of the Company to the
Executive under this Agreement. After any such increase, the Guaranteed
Base Salary shall not be reduced and the term "Guaranteed Base Salary"
shall thereafter refer to the increased amount.
(b) Guaranteed Bonus.
(i) During the Post-Change Period, the Company shall pay or cause
to be paid to the Executive a bonus (the "Guaranteed Bonus") for each
Performance Period which ends during the Post-Change Period.
"Performance Period" means each period of time designated in accordance
with any bonus arrangement ("Bonus Plan") which is based upon
performance and approved by the Board or by any committee of the Board.
For purposes of this Section 3.3, a Bonus Plan includes, without
limitation, the Company's Incentive Compensation Plan as in effect on
the date hereof or any similar plan, but does not include the Company's
1997 or 1999 Long-Term Incentive Plan (an "LTIP") or any similar plan
under which equity awards described Section 3.5 are granted, unless
failure to consider the LTIP a Bonus Plan would leave the Company
without any Bonus Plan covering Executive. The Guaranteed Bonus shall
be at least equal to the product
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of (A) the greater of (i) the On Plan Percentage (as defined below), or
(ii) the Actual Bonus Percentage (as defined below), multiplied by (B)
the Guaranteed Base Salary.
(ii) For purposes of this Section 3.3(b):
(A) "On Plan Percentage" means the percentage of
Guaranteed Base Salary to which the Executive would be
entitled under the Bonus Plan(s) for the Performance Period
for which the Guaranteed Bonus is awarded ("Current
Performance Period") if performance achieved 100% of the
target performance goals established pursuant to such Bonus
Plan(s); or, if greater, the percentage of Guaranteed Base
Salary to which Executive would have been entitled under the
Bonus Plan(s) for the Performance Period ending immediately
prior to the Post-Change Period if performance achieved 100%
of the performance goals established pursuant to such Bonus
Plan(s) for such prior Performance Period.
(B) "Actual Bonus Percentage" means the percentage of
Guaranteed Base Salary for the Current Performance Period to
which the Executive would be entitled under any Bonus Plan if
the performance were measured by the actual performance
during the Current Performance Period; provided, however,
that for purposes of determining the Guaranteed Bonus for
purposes of Sections 3.4 and 5.1(b), "Actual Bonus
Percentage" means the percentage of Guaranteed Base Salary
for the Performance Period during which the Effective Date
(for purposes of Section 3.4) or Termination Date (for
purposes of Section 5.1(b)) occurs to which the Executive
would be entitled if the performance during such Performance
Period were measured by the actual performance during the
portion of such Performance Period before the Effective Date
or the Termination Date (whichever is applicable), projected
to the last day of such Performance Period.
(c) Incentive, Savings and Retirement Plans. During the Post-Change
Period and notwithstanding the payment required by Section 3.6, (i) the
Executive shall be entitled to continue to participate in all incentive
(including long-term incentives and management stock plans), savings,
deferred compensation, retirement and benefit restoration Plans provided by
the Company and applicable to other peer executives of the Company, but
(ii) in no event shall such Plans provide the Executive with incentive
(including long-term incentives and management stock benefits), savings,
deferred compensation, retirement and benefit restoration benefits which,
in any case, are less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive or to peer executives
under such Plans as in effect at any time during the 90-day period
immediately before any Effective Date.
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(d) Welfare Benefit Plans. During the Post-Change Period, (i) the
Executive and the Executive's family shall be eligible to participate in,
and receive all benefits under, welfare benefit Plans (including, without
limitation, medical, prescription, dental, disability, salary continuance,
individual life, group life, dependent life, accidental death and travel
accident insurance Plans) provided by the Company and applicable to other
peer executives of the Company and their families, but (ii) in no event
shall such Plans provide benefits which in any case are less favorable, in
the aggregate, than the most favorable of those provided by the Company to
the Executive or to peer executives under such Plans as in effect at any
time during the 90-day period immediately before any Effective Date.
(e) Fringe Benefits. During the Post-Change Period, (i) the Executive
shall be entitled to fringe benefits (including, without limitation, any
foreign service travel and housing allowances for Executive and the
Executive's family under Plans or Policies of the Company for foreign
service) in accordance with the most favorable Plans provided by the
Company and applicable to other peer executives of the Company, but (ii) in
no event shall such Plans provide fringe benefits which in any case are
less favorable, in the aggregate, than the most favorable of those provided
by the Company to the Executive or peer executives under such Plans in
effect at any time during the 90-day period immediately before any
Effective Date.
(f) Expenses. During the Post-Change Period, (i) the Executive shall be
entitled to prompt reimbursement of all reasonable employment-related
expenses incurred by the Executive upon the Company's receipt of
accountings in accordance with the most favorable Policies applicable to
peer executives of the Company, but (ii) in no event shall such Policies be
less favorable, in the aggregate, than the most favorable of those provided
by the Company to the Executive or to peer executives under such Policies
in effect at any time during the 90-day period immediately before any
Effective Date.
(g) Office and Support Staff. During the Post-Change Period, (i) the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance
in accordance with the most favorable Policies applicable to peer
executives of the Company, but (ii) in no event shall such Policies be less
favorable, in the aggregate, than the most favorable of those provided by
the Company to the Executive or to peer executives under such Policies in
effect at any time during the 90-day period immediately before any
Effective Date.
(h) Vacation. During the Post-Change Period, (i) the Executive shall be
entitled to paid vacation in accordance with the most favorable Policies
applicable to peer executives of the Company, but (ii) in no event shall
such Policies be less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive or to peer executives
under such Policies in effect at any time during the 90-day period
immediately before any Effective Date.
3.4 Pro-Rata Bonus Payment.
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On each Effective Date the Company shall pay to Executive in a single lump
sum in cash the product of (A) the Guaranteed Bonus for the Performance Period
in which falls the Effective Date, multiplied by (B) a fraction, the numerator
of which is the number of days in such Performance Period before the Effective
Date, and the denominator of which is the total number of days in such
Performance Period. The amount of Guaranteed Bonus for such Performance Period
otherwise payable pursuant to Section 3.3(b), or otherwise payable pursuant to
this Section 3.4 by reason of a later Change of Control in the same Performance
Period, shall be reduced by any earlier payment made under this Section 3.4 for
the same Performance Period.
3.5 Equity Awards Vesting.
On the Effective Date, the Executive shall become fully vested in:
(a) any and all outstanding options ("Options") to purchase common
shares of the Company granted to Executive prior to the Effective Date
under any Plan, contract or arrangement for Options, which Options shall
become fully exercisable;
(b) any outstanding shares of restricted common shares of the Company
regardless whether such restrictions are scheduled to lapse based on
service or on performance or both ("Restricted Stock") awarded to Executive
under any Plan, contract or arrangement for Restricted Stock; which shall
become unrestricted and freely transferable; and
(c) any outstanding awards providing for the payment of a variable
number of common shares of the Company dependent on the achievement of
performance goals, or of an amount based on the fair market value of such
shares or the appreciation thereof ("Performance Shares") awarded to
Executive under any Plan, contract or arrangement for Performance Shares;
and there shall be paid out in cash to Executive within 30 days following
the Effective Date of the Change of Control the value of the Performance
Shares to which Executive would have been entitled if performance achieved
100% of the target performance goals established for such Performance
Shares.
To the extent that for any reason such Options, Restricted Stock and
Performance Shares do not become vested on the Effective Date, the Company shall
pay Executive a cash amount equal to (i) the positive difference, if any,
between the value of the shares of common stock subject to the Options that did
not become vested (or, if greater, the value paid or to be paid in connection
with the Change of Control to a holder of an equal number of shares of common
stock ("Change of Control Value")) and the Option exercise price with respect to
such shares, as of and on the date such Options are forfeited; plus (ii) the
fair market value (determined without regard to any restriction other than a
restriction which by its terms may never lapse) (or, if greater, the Change of
Control Value) of all non-vested forfeited Restricted Stock and Performance
Shares as of and on the date such Restricted Stock or Performance Shares are
forfeited. Nothing in this Section 3.5 shall require the vesting, or payment, of
equity awards granted after such Effective Date unless a new Effective Date has
intervened
3.6 Nonqualified Deferred Compensation.
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On the Effective Date Executive shall become fully vested in and the
Company shall pay to Executive in a single lump sum in cash (1) the value of
Executive's then-accrued benefits, if any, which remain unpaid under any
nonqualified deferred compensation, benefit restoration, excess benefit or other
individual account plan, contract or arrangement for deferred compensation
maintained by the Company under which benefits are calculated by reference to an
individual account (a "Deferral Plan"), and (2) the Present Value of Executive's
then-accrued benefits, if any, which remain unpaid under any nonqualified
supplemental executive retirement plan or other plan, contract or arrangement
for retirement benefits maintained by the Company under which benefits are
calculated by reference to a defined amount payable in connection with or after
retirement or other termination of employment an (a "SERP").
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
(a) During the Post-Change Period, the Company may terminate the
Executive's employment upon the Executive's Disability (as defined in
Section 4.1(b)) by giving the Executive or his legal representative, as
applicable, Notice of Termination accompanied by a certification of the
Executive's Disability by a physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the Executive's
legal representative. The Executive's employment shall terminate effective
on the 30th day (the "Disability Effective Date") after the Executive's
receipt of such Notice of Termination unless, before the Disability
Effective Date, the Executive shall have resumed the full-time performance
of the Executive's duties.
(b) "Disability" means any medically determinable physical or mental
impairment that has lasted for a continuous period of not less than six
months and can be expected to be permanent or of indefinite duration, and
that renders the Executive unable to perform the essential functions
required under this Agreement with or without reasonable accommodation.
(c) Unless the Company establishes, by clear and convincing evidence,
that Executive has a Disability, any purported termination of employment
for Disability shall be deemed a termination other than for Disability for
all purposes of this Agreement.
4.2 Death. The Executive's employment shall terminate automatically upon
the Executive's death during the Post-Change Period.
4.3 Cause.
(a) During the Post-Change Period, the Company may terminate the
Executive's employment for Cause.
(b) "Cause" means any of the following: Executive's conviction of a
felony or of a crime involving fraud, dishonesty or moral turpitude;
Executive's willful or intentional material breach of this Agreement that
results in financial detriment that is material to the
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Company as a whole; or willful or intentional misconduct by Executive in
the performance of his duties under this Agreement that results in
financial detriment that is material to the Company as a whole; except that
Cause shall not mean:
(i) bad judgment or negligence;
(ii) any act or omission believed by the Executive in good faith
to have been in or not opposed to the interest of the Company (without
intent of the Executive to gain, directly or indirectly, a profit to
which the Executive was not legally entitled);
(iii) any act or omission with respect to which a determination
could properly have been made by the Board that the Executive met the
applicable standard of conduct for indemnification or reimbursement
under the Company's by-laws, any applicable indemnification agreement,
or applicable law, in each case in effect at the time of such act or
omission; or
(iv) any act or omission with respect to which Notice of
Termination is not given within 12 months after the earliest date on
which any member of the Board, not a party to the act or omission, knew
or should have known of such act or omission.
(c) The Company may not during the Post-Change Period terminate
Executive's employment for Cause unless the following procedures are fully
complied with:
(i) no fewer than 45 days prior to the Termination Date, the
Company provides Executive with written notice (the "Notice of
Consideration") of its intent to consider termination of Executive's
employment for Cause, including a detailed description of the specific
reasons which form the basis for such consideration;
(ii) if after providing Notice of Consideration, the Board may, by
the affirmative vote of at least 80% of its members (excluding for this
purpose Executive if he is a member of the Board, and any other member
of the Board reasonably believed by the Board to be involved in the
events issuing the Notice of Consideration), suspend Executive with pay
until a final determination pursuant to this Section has been made;
(iii) for a period of not less than 30 days after the date Notice
of Consideration is provided, Executive shall have the opportunity to
appear before the Board, with or without legal representation, at
Executive's election, to present arguments and evidence on his own
behalf; and
(iv) following the presentation to the Board as provided in (3)
above or Executive's failure to appear before the Board at a date and
time specified in the Notice of Consideration (which date shall not be
less than 30 days after the date the Notice of Consideration is
provided), Executive may be terminated for Cause only if (i) the Board,
by the affirmative vote of at least 80% of its members
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(excluding Executive if he is a member of the Board, and any other
member of the Board reasonably believed by the Board to be involved in
the events leading the Board to terminate Executive for Cause),
determines that the actions or inactions of Executive specified in the
Notice of Consideration occurred, that such actions or inactions
constitute Cause, and that Executive's employment should accordingly be
terminated for Cause; and (ii) the Board provides Executive with a
written determination (a "Notice of Termination for Cause") setting
forth in specific detail the basis of such Termination of Employment,
which Notice of Termination for Cause shall be consistent with the
reasons set forth in the Notice of Consideration.
Unless the Company establishes, by clear and convincing evidence, both (x)
its full compliance with the substantive and procedural requirements of this
Section prior to a termination of employment for Cause, and (y) that Executive's
action or inaction specified in the Notice of Termination for Cause did occur
and constituted Cause, any purported termination of employment for Cause shall
be deemed a termination without Cause for all purposes of this Agreement.
4.4 Good Reason.
(a) During the Post-Change Period, the Executive may terminate
employment for Good Reason within 12 months following the Executive's
actual knowledge of an act or omission which constitutes Good Reason;
provided, however, that the Executive's failure to terminate within 12
months following Executive's actual knowledge of a particular act or
omission which constitutes Good Reason shall not prevent Executive's
termination for any other act or omission which constitutes Good Reason.
(b) "Good Reason" means any of the following:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including offices, titles,
reporting requirements or responsibilities), authority or duties as
prescribed by Section 3.2(a)(1), or the Company's requiring the
Executive to be based at any office or location other than the location
described in Section 3.2(a)(2);or any other action by the Company which
results in a diminution or other material adverse change in such
position, authority or duties;
(ii) the failure to pay Guaranteed Base Salary in at least the
amount prescribed by Section 3.2(a);
(iii) the failure to pay Guaranteed Bonus in at least the amount
prescribed by Section 3.3(b); provided, however, that if the
Post-Change Period results solely from a Growth Transaction; Good
Reason under this clause (iii) shall only be the failure to provide
Executive with a bonus opportunity (including designation of target
performance goals and percentage of Guaranteed Base Salary payable on
achievement of target performance goals) no less favorable to
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Executive than that provided by the Company to Executive for either of
the two most recent Performance Periods beginning before such Growth
Transaction;
(iv) the failure to provide any plan or fringe benefits or
perquisites prescribed by Sections 3.3(c) through 3.3(h), as modified,
if the Post-Change Period results solely from a Growth Transaction, by
Section 3.1(b);
(v) any other failure by the Company to comply with any of the
provisions of Article III;
(vi) any other material adverse change to the terms and conditions
of the Executive's employment (whether or not also described in clauses
(i) through (v) above);
(vii) the Board's giving Notice of Consideration pursuant to
Section 4.3(c) (of the intent to consider terminating Executive for
Cause) but failing to terminate Executive for Cause within a period of
90 days thereafter in compliance with all substantive and procedural
requirements of Section 4.3,
(viii) any purported termination by the Company of the Executive's
employment other than as expressly permitted by this Agreement (any
such purported termination shall not be effective for any other purpose
under this Agreement);
(ix) a failure by the Company to cause a successor, prior to or as
of the date it becomes a successor, to assume and agree to perform this
Agreement in accordance with the provisions of Section 11.2 hereof.
Any determination by Executive that any of the foregoing events has
occurred and constitutes "Good Reason" shall be conclusive and binding for
all purposes unless the Company establishes by clear and convincing
evidence that Executive did not have a reasonable basis for such a
determination.
(c) Any termination of employment by the Executive for Good Reason
shall be communicated to the Company by Notice of Termination. The passage
of time not in excess of 12 months after the Executive has actual knowledge
of an act or omission which constitutes Good Reason prior to delivery of
Notice of Termination or a failure by the Executive to include 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 under
this Agreement or preclude the Executive from asserting such fact or
circumstance in enforcing rights under this Agreement.
ARTICLE V.
OBLIGATIONS OF THE COMPANY UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Company Other Than for
Cause or Disability. If, during the Post-Change Period, the Company shall
terminate Executive's
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employment other than for Cause, Disability, or death or if the Executive shall
terminate employment for Good Reason, the Company shall pay the Executive within
five (5) days of the Termination Date (or if earlier within five (5) days of the
last day Executive performed services for the Company as an Employee), in
addition to all vested rights arising from the Executive's employment as
specified in Article III, a cash amount equal to the sum of the amounts
described in (a) through (g) below and the additional benefits described in (h)
through (i) below:
(a) The Guaranteed Base Salary, any accrued vacation pay and business
expenses incurred through the Termination Date, to the extent not
previously paid to the Executive by the Company.
(b) The difference between (1) the product of (A) the Guaranteed Bonus,
multiplied by (B) a fraction, the numerator of which is the number of days
in the Termination Performance Period which elapsed before the Termination
Date, and the denominator of which is the total number of days in the
Termination Performance Period, and (2) the amount of any Guaranteed Bonus
previously paid to the Executive by the Company with respect to the
Termination Performance Period.
(c) The value of Executive's then-accrued benefits under any Deferral
Plan plus the present value of Executive's then-accrued benefits under any
SERP, determined without disregarding service and compensation before any
Effective Date but then reduced by the amount, if any, previously paid to
the Executive by the Company pursuant to Section 3.6.
(d) An amount equal to the product of (1) three (3.0), multiplied by
(2) the sum of (A) the Guaranteed Base Salary and (B) the Guaranteed Bonus.
(e) An amount equal to the sum of the value of the unvested portion of
the Executive's accounts or accrued benefits under any qualified plan
maintained by the Company as of the Termination Date.
(f) The difference between (1) the amount that would be determined
under Section 5.1(c) above if such amount were calculated (to the extent
applicable in determining such amount) (A) as though the Executive
continued to accrue benefits and be credited with service under the SERP
for a period of three years after the Termination Date, (B) as though the
Executive received compensation during each year of such three-year period
equal to the sum of the Guaranteed Base Salary and the highest Guaranteed
Bonus paid (or payable) to the Executive in the three calendar years
preceding the Termination Date, (C) as though the Executive were three (3)
years older than his age at the Termination Date, and (D) without
disregarding service and compensation before the Termination Date; reduced
by (2) the amount (if any) previously or simultaneously paid by the Company
to the Executive pursuant to Sections 3.6 and 5.1(c).
(g) In addition to the foregoing amounts, the Company shall pay on
behalf of Executive all fees and costs charged by the outplacement firm
selected by the Executive to provide outplacement services or at the
election of the Executive, an immediate cash
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payment equal to the fees and expenses such outplacement firm would charge
but not in excess of 20% of the Guaranteed Base Salary.
(h) In addition to the foregoing payments, until the third annual
anniversary of the Termination Date or such later date as any Plan of the
Company may specify, the Company shall continue to provide to the Executive
and the Executive's family welfare benefits (including, without limitation,
medical, prescription, dental, disability, salary continuance, individual
life, group life, accidental death and travel accident insurance plans and
programs) which are at least as favorable as the most favorable Plans of
the Company applicable to other peer executives and their families as of
the Termination Date, but which are in no event less favorable than the
most favorable Plans of the Company applicable to other peer executives and
their families during the 90-day period immediately before the Effective
Date; and the cost of such welfare benefits to Executive shall not exceed
the cost of such benefits to the Executive immediately before the
Termination Date or, if less, the Effective Date.
(i) Beginning on the later of the third annual anniversary of the
Termination Date or the date Executive attains age 50, and continuing until
the death of the last to die of Executive and his or her spouse, the
Company shall provide to the Executive and to Executive's family medical
benefits which (1) until Executive attains age sixty-five (65) are at least
as favorable as the most favorable medical Plans of the Company applicable
to actively employed peer executives and that covered any active employee
of the Company as of the Effective Date, and (2) from and after the date
Executive attains age 65, are at least as favorable as the most favorable
medical Plans of the Company applicable to eligible retired peer executives
and that covered any retired employee as of the Effective Date; and the
cost to Executive of such medical benefits for the period described in
clause (1) shall not exceed the cost of such benefits to Executive
immediately before the Termination Date or, if less, the Effective Date,
and the cost to Executive of such medical benefits for the period described
in clause (2) shall not exceed the cost of such benefits to any similarly
situated eligible retiree of the Company immediately before the Termination
Date or, if less, the Effective Date.
The Executive's rights under this Section 5.1 shall be in addition to, and not
in lieu of, any post-termination continuation coverage or conversion rights the
Executive may have pursuant to applicable law, including without limitation
continuation coverage required by Section 4980 of the Code or Part 6 of Title I
of the Employee Retirement Income Security Act of 1974, as amended, for which
purpose the date of the qualifying event shall not be earlier than the date
specified in the first sentence of Section 5.1(i). However, if the Executive is
covered under a medical, life, or disability insurance plan provided by a
subsequent employer at equal or lesser cost to Executive than the cost to
Executive of coverage under the corresponding Company plan required by Sections
5.1(i), then the benefits under the corresponding Company plan required by
Sections 5.1(i) shall be secondary to the benefits under the subsequent
employer's medical, life, or disability insurance plan.
5.2 If by the Company for Cause. If the Company terminates the Executive's
employment for Cause during the Post-Change Period pursuant to the procedures
set forth in Section 4.3, this Agreement shall terminate without further
obligation by the Company to the
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Executive, other than the obligation immediately to pay the Executive in cash
the Executive's Guaranteed Base Salary through the Termination Date, plus the
amount of any compensation previously deferred by the Executive, plus any
accrued vacation pay and business expenses incurred through the Termination
Date, in each case to the extent not previously paid or reimbursed.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good Reason,
Disability or death, this Agreement shall terminate without further obligations
by the Company, other than the obligation immediately to pay the Executive in
cash all amounts specified in paragraphs (a), (b) and (c) of Section 5.1 (such
amounts collectively, the "Accrued Obligations").
5.4 If by the Company for Disability. If the Company terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than:
(a) the Company's obligation immediately to pay the Executive in cash
all Accrued Obligations, and
(b) the Executive's right after the Disability Effective Date to
receive disability and other benefits at least equal to the greater of (i)
those provided under the most favorable disability Plans applicable to
disabled peer executives of the Company in effect immediately before the
Termination Date or (ii) those provided under the most favorable disability
Plans of the Company in effect at any time during the 90-day period
immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by reason of
the Executive's death during the Post-Change Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than the obligation immediately to pay the
Executive's estate or beneficiary in cash all Accrued Obligations. Despite
anything in this Agreement to the contrary, the Executive's family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company to the surviving families of peer executives of the
Company under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive under such Plans in effect at
any time during the 90-day period immediately before the Effective Date.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are made
to the Executive pursuant to Section 5.1, the Executive hereby waives the right
to receive severance payments under any other Plan or agreement of or with the
Company.
6.2 Other Rights. Except as provided in Section 6.1, this Agreement shall
not prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other Plans provided by the Company or any of its
Subsidiaries and for which the Executive may
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qualify, nor shall this Agreement limit or otherwise affect such rights as the
Executive may have under any other agreements with the Company or any of its
Subsidiaries. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any Plan of the Company or any of its
Subsidiaries and any other payment or benefit required by law at or after the
Termination Date shall be payable in accordance with such Plan or applicable law
except as expressly modified by this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Company's independent auditors, which determinations shall be
certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that any benefit received or deemed
received by the Executive from the Company pursuant to this Agreement or
otherwise (collectively, the "Payments") is or will become subject to any excise
tax under Section 4999 of the Code or any similar tax payable under any United
States federal, state, local or other law (such excise tax and all such similar
taxes collectively, "Excise Taxes"), then the Company shall, immediately after
such determination, pay the Executive an amount (the "Gross-up Payment") equal
to the product of
(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the Excise
Taxes and any federal, state, local or other income or excise taxes or other
taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Company may at any time request the Company's
independent auditors to prepare and deliver a Certificate to the Executive. The
Company shall, in addition to complying with Section 7.2, cause all
determinations and certifications under the Article to be made as soon as
reasonably possible and in adequate time to permit the Executive to prepare and
file the Executive's individual tax returns on a timely basis.
7.2 Determination by the Executive.
(a) If the Company or its independent auditors shall fail to deliver a
Certificate to the Executive (and to pay to the Executive the amount of the
Gross-up Payment, if any) within 14 days after receipt from the Executive
of a written request for a Certificate, or if at any time following receipt
of a Certificate the Executive disputes the amount of the Gross-up Payment
set forth therein, the Executive may elect to demand the payment of the
amount which the Executive, in accordance with an Executive Counsel
Opinion), (as defined in Section 7.5), determines to be the Gross-up
Payment. Any such demand by the Executive shall be made by delivery to the
Company of a written notice which specifies the Gross-up Payment determined
by the Executive and an Executive Counsel
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Opinion regarding such Gross-up Payment (such written notice and opinion
collectively, the "Executive's Determination"). Within 14 days after
delivery of the Executive's Determination to the Company, the Company shall
either (1) pay the Executive the Gross-up Payment set forth in the
Executive's Determination (less the portion of such amount, if any,
previously paid to the Executive by the Company) or (2) deliver to the
Executive a Certificate specifying the Gross-up Payment determined by the
Company's independent auditors, together with a Company Counsel Opinion (as
defined in Section 7.5), and pay the Executive the Gross-up Payment
specified in such Certificate. If for any reason the Company fails to
comply with clause (2) of the preceding sentence, the Gross-up Payment
specified in the Executive's Determination shall be controlling for all
purposes.
(b) If the Executive does not make a request for, and the Company does
not deliver to the Executive, a Certificate, the Company shall, for
purposes of Section 7.3, be deemed to have determined that no Gross-up
Payment is due.
7.3 Additional Gross-up Amounts. If the amount of Excise Taxes payable by
the Executive with respect to all Payments is determined (pursuant to the
subsequently-enacted provisions of the Code, final regulations or published
rulings of the IRS, final judgment of a court of competent jurisdiction or the
Company's independent auditors) to be greater than the amount previously paid by
the Company to the Executive pursuant to Section 7.1 or 7.2, as applicable, then
the Company shall pay the Executive an amount (which shall also be deemed a
Gross-up Payment) equal to the product of:
(a) the sum of (i) such additional Excise Taxes and (ii) any interest,
fines, penalties, expenses or other costs incurred by the Executive as a
result of having taken a position in accordance with a determination made
pursuant to Section 7.1,
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal the quotient
(greater than one (1.0)) of one (1.0) divided by one (1.0) minus the sum,
expressed as a decimal fraction, of the rates of all federal, state, local and
other income and other taxes and any Excise Taxes applicable to the Gross-up
Payment; provided that, if such sum exceeds 0.75, it shall be deemed equal to
0.75 for purposes of this computation. (If different rates of tax are applicable
to various portions of a Gross-up Payment, the weighted average of such rates
shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel who is counsel to the
Executive that there is a reasonable basis to support a conclusion that the
Gross-up Payment determined by the Executive has been calculated in accord with
this Article and applicable law. "Company Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel who is counsel to the
Company that (a) there is a reasonable basis to support a conclusion that the
Gross-up Payment set forth of the Certificate of Company's independent
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auditors has been calculated in accord with this Article and applicable law, and
(b) there is no reasonable basis for the calculation of the Gross-up Payment
determined by the Executive.
7.6 Amount Increased or Contested. The Executive shall notify the Company
in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Company of a Gross-up Payment. Such
notice shall include the nature of such claim and the date on which such claim
is due to be paid. The Executive shall give such notice as soon as practicable,
but no later than 10 business days, after the Executive first obtains actual
knowledge of such claim; provided, however, that any failure to give or delay in
giving such notice shall affect the Company's obligations under this Article
only if and to the extent that such failure results in actual prejudice to the
Company. The Executive shall not pay such claim less than 30 days after the
Executive gives such notice to the Company (or, if sooner, the date on which
payment of such claim is due). If the Company notifies the Executive in writing
before the expiration of such period that it desires to contest such claim, the
Executive shall:
(a) give the Company any information that it reasonably requests
relating to such claim,
(b) take such action in connection with contesting such claim as the
Company reasonably requests in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith to contest such claim, and
(d) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax (to the extent not previously paid by the
Company to the Executive) or income tax, including related interest and
penalties, imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing, the Company shall control all
proceedings in connection with such contest and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify the Executive, on an after-tax basis, for any Excise Tax or income
tax, including related interest or penalties, imposed with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a Gross-up Payment would be payable. The Executive
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shall be entitled to settle or contest, as the case may be, any other issue
raised by the IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 7.6, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 7.6) promptly pay the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 7.6, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such determination before the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-up Payment required to be paid. Any contest of a denial of
refund shall be controlled by Section 7.6.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
(a) If the Executive incurs legal, accounting and other fees or other
expenses in a good faith effort to obtain benefits under this Agreement
(including, without limitation, the fees and other expenses of the
Executive's legal counsel, any expert witness fees and expenses, and
accounting and other fees and expenses, including legal and accounting fees
and expenses in connection with the delivery of the Executive Counsel
Opinion referred to in Article VII), regardless of whether the Executive
ultimately prevails, the Company shall reimburse the Executive on a monthly
basis upon the written request for such fees and expenses to the extent not
previously reimbursed under the Company's officers and directors liability
insurance policy, if any. Simultaneously with each such payment Company
shall pay Executive an amount such that after payment of incremental United
States federal, state and local income, excise and other taxes payable by
Executive ("Taxes") with respect to such tax reimbursement, there remains a
balance sufficient to pay the Taxes on the reimbursement of such fees and
expenses. The existence of any controlling case or regulatory law which is
directly inconsistent with the position taken by the Executive shall be
evidence that the Executive did not act in good faith. Executive's payment
of such fees and expenses shall be a conclusive determination with respect
to the Company that such fees and expenses are reasonable.
(b) Reimbursement of legal fees and expenses shall be made monthly upon
the written submission of a request for reimbursement together with
evidence that such fees and expenses are due and payable or were paid by
the Executive. If the Company shall have reimbursed the Executive for legal
fees and expenses and it is later determined that the Executive was not
acting in good faith, all amounts paid on behalf of, or reimbursed to, the
Executive shall be promptly refunded to the Company.
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(c) To secure its obligations under this Section 8.1 the Company shall
procure and maintain in force during the Agreement Term and thereafter for
one (1) year or if longer until the termination (by final judgment and
after all rights of appeal have been exhausted or waived) of any litigation
involving a good faith effort of an Executive to obtain benefits under this
Agreement, a letter of credit and an escrow in favor of Executive (together
with other executives similarly situated). The letter of credit shall be
issued by a bank or trust company organized under the laws of the United
States or Canada or a state or province thereof and having a combined
capital and surplus of not less than one hundred million dollars
($100,000,000), shall be in the aggregate amount of five hundred thousand
dollars ($500,000) prior to July 1, 2001, and in the aggregate amount of
two million dollars $2,000,000) on and after July 1, 2001, and shall be
substantially in the form of that attached (with its attached Annexes and
Exhibits) to this Agreement as Exhibit A. The escrow shall be maintained in
the state of Illinois under an escrow agreement with a bank or trust
company organized under the laws of the United States or Canada or a state
or province thereof and having a combined capital and surplus of not less
than one hundred million dollars ($100,000,000), and shall be substantially
in the form of that attached (with its attached Exhibits) to this Agreement
as Exhibit B.
8.2 Interest. If the Company does not pay any amount due to the Executive
under this Agreement within three days after such amount became due and owing,
interest shall accrue on such amount from the date it became due and owing until
the date of payment at a annual rate equal to two percent (2.0%) above the base
commercial lending rate announced by the Company's principal revolving credit
lender in effect from time to time during the period of such nonpayment; or, if
the Company does not have a principal revolving credit lender, then at two
percent (2.0%) above the prime rate of interest in effect from time to time
during the period of such nonpayment, as reported from time to time in the Wall
Street Journal; but in no case greater than the maximum rate of interest
permitted by applicable law.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off or Defenses by Company. The Executive's right to receive
when due the payments and other benefits provided for under this Agreement is
absolute, unconditional and shall not be subject to any set-off, counterclaim or
legal or equitable defense. The exclusive method for the Company to avoid
payments to the Executive under this Agreement, to the extent specified in this
Agreement, is to terminate Executive's employment for Cause pursuant to Sections
4.3 and 5.2 of this Agreement. Time is of the essence in the performance by the
Company of its obligations under this Agreement. Any claim which the Company may
have against the Executive, whether for a breach of this Agreement or otherwise,
shall be brought in a separate action or proceeding and not as part of any
action or proceeding brought by the Executive to enforce any rights against the
Company under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company under this Agreement by seeking new employment
following termination. Except as specifically otherwise provided in this
Agreement, all amounts payable pursuant to this Agreement shall be paid without
reduction regardless of any amounts of salary,
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compensation or other amounts which may be paid or payable to the Executive as
the result of the Executive's employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NONCOMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of the
Company and its subsidiaries to maintain as secret and confidential all valuable
and unique information and techniques acquired, developed or used by the Company
and its Subsidiaries relating to their business, operations, employees and
customers, which gives the Company and its subsidiaries a competitive advantage
in the construction and engineering industry and other businesses in which the
Company and its subsidiaries are engaged ("Confidential Information"). Executive
recognizes that all such Confidential Information is the sole and exclusive
property of the Company and its Subsidiaries, and that disclosure of
Confidential Information would cause damage to the Company and its Subsidiaries.
Executive agrees that, except as required by the duties of his employment with
the Company and/or its Subsidiaries and except in connection with enforcing the
Executive's rights under this Agreement or if compelled by a court or
governmental agency, he will not, without the consent of the Company,
disseminate or otherwise disclose any Confidential Information obtained during
his employment with the Company and/or its Subsidiaries for so long as such
information is valuable and unique.
10.2 Noncompetition/Nonsolicitation.
(a) Executive agrees that, during the period of his employment with the
Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business as
defined in Section 10.2(d).
(b) Executive agrees that, during the period of his employment with the
Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form of
equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose stock is
listed on a national securities exchange or actively traded in the
over-the-counter market; provided that (1) such investment does not give
Executive the right or ability to control or influence the policy decisions
of any Prohibited Business, and (2) such investment does not create a
conflict of interest between Executive's duties hereunder and Executive's
interest in such investment.
(c) Executive agrees that, during the period of his employment with the
Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
Subsidiaries or (2) interfere with the Company's or any of its
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Subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its Subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after the
date of Executive's termination of employment), was an employee, customer,
vendor or supplier of, or maintained a business relationship with, any
business of the Company and/or its Subsidiaries which was conducted at any
time during the period commencing one year prior to the termination of
employment.
(d) For the purpose of this Section 10.2, "Prohibited Business" shall
be defined as any construction and engineering business specializing in the
engineering and design, materials procurement, fabrication, erection,
repair and modification of steel tanks and other steel plate structures and
associated systems and any branch, office or operation thereof, which is a
direct and material competitor of the Company wherever the Company does
business, including the Netherlands, the United States and any other
country.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing, the Company
shall not be precluded from pursuing any and all remedies it may have at law or
in equity for breach of such obligations; provided, however, that such breach
shall not in any manner or degree whatsoever limit, reduce or otherwise affect
the obligations of the Company under this Agreement, and in no event shall an
asserted breach of the Executive's obligations under this Article X constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. 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.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement.
Any successor to the business and/or assets of the Company which assumes and
agrees to perform this Agreement by operation of law, contract, or otherwise
shall be jointly and severally liable with the Company under this Agreement.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid as soon as administratively practicable in a lump sum to the
beneficiary designated in writing by the Executive, or if none is so designated,
to the Executive's estate.
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11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other portions
of this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
11.6 Amendments. Except as provided in Section 2.2 hereof, this Agreement
shall not be altered, amended or modified except by written instrument executed
by the Company and Executive.
11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Stephen M. Duffy
15117 Ginger Creek Lane
Orland Park, Illinois 60467
If to the Company (including any or all of CBICNV, CBIC or CBICD):
Chicago Bridge & Iron Company
1501 North Division Street
Plainfield, Illinois 60544
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Illinois, without regard to its choice
of law principles.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
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11.11 Tax Withholding. The Company may withhold from any amounts payable
under this Agreement any federal, state or local taxes that are required to be
withheld pursuant to any applicable law or regulation.
11.12 Joint and Several Obligations. The obligations of the Company under
this Agreement are joint and several obligations of CBICNV, CBIC and CBICD;
provided, however, that each of CBICNV, CBIC and CBICD may agree between
themselves but without adversely affecting the rights of the Executive which of
them shall provide any particular payment or benefit under this Agreement.
11.13 No Waiver. The Executive's failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision of this Agreement. A waiver of any provision of
this Agreement shall not be deemed a waiver of any other provision, and any
waiver of any default in any such provision shall not be deemed a waiver of any
later default thereof or of any other provision.
11.14 Prior Agreement. The Change of Control Severance Agreement dated
March 4, 1999, between CBIC and the Executive is hereby terminated effective on
the date of this Agreement.
11.15 Entire Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to its subject matter and supercedes
any prior change of control severance agreement and any Change of Control
severance benefit provisions in any prior employment agreement between the
Company and the Executive.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
EXECUTIVE
/s/ Stephen M. Duffy
----------------------------------------------
Stephen M. Duffy
CHICAGO BRIDGE & IRON COMPANY N.V.
By: /s/ Gerald M. Glenn
-----------------------------------------
Title: Managing Director
---------------------------------------
CHICAGO BRIDGE & IRON COMPANY
By: /s/ Robert B. Jordan
-----------------------------------------
Title:
---------------------------------------
CHICAGO BRIDGE & IRON COMPANY (DELAWARE)
By: /s/ Timothy J. Wiggins
-----------------------------------------
Title:
---------------------------------------
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
95
TABLE OF CONTENTS
PAGE
----
ARTICLE I. PURPOSES...............................................................................................1
ARTICLE II. CERTAIN DEFINITIONS...................................................................................1
2.1 "Accrued Obligations"..................................................................................1
2.2 "Agreement Term".......................................................................................1
2.3 "Affiliate" ...........................................................................................2
2.4 "Article"..............................................................................................2
2.5 "Beneficial Owner".....................................................................................2
2.6 "Board"................................................................................................2
2.7 "Cause"................................................................................................2
2.8 "Change of Control"....................................................................................2
2.9 "Code".................................................................................................3
2.10 "Deferral Plan"........................................................................................3
2.11 "Disability"...........................................................................................4
2.12 "Effective Date".......................................................................................4
2.13 "Good Reason"..........................................................................................4
2.14 "Gross-up Payment".....................................................................................4
2.15 "Growth Transaction"...................................................................................4
2.16 "Imminent Control Change Date".........................................................................4
2.17 "IRS"..................................................................................................4
2.18 "1934 Act".............................................................................................4
2.19 "Notice of Termination"................................................................................4
2.20 "Plans"................................................................................................5
2.21 "Policies".............................................................................................5
2.22 "Post-Change Period"...................................................................................5
2.23 "Present Value"........................................................................................5
2.24 "SEC"..................................................................................................5
2.25 "Section"..............................................................................................5
2.26 "SERP".................................................................................................5
2.27 "Shareholder Agreement"................................................................................5
2.28 "Subsidiary"...........................................................................................5
2.29 "Termination Date" ....................................................................................5
2.30 "Transaction Owner"....................................................................................6
2.31 "Voting Securities"....................................................................................6
ARTICLE III. POST-CHANGE PERIOD PROTECTIONS.......................................................................6
3.1 General................................................................................................6
3.2 Position and Duties....................................................................................6
3.3 Compensation...........................................................................................7
3.4 Pro-Rata Bonus Payment.................................................................................9
3.5 Equity Awards Vesting.................................................................................10
3.6 Nonqualified Deferred Compensation....................................................................10
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE IV. TERMINATION OF EMPLOYMENT............................................................................11
4.1 Disability............................................................................................11
4.2 Death.................................................................................................11
4.3 Cause.................................................................................................11
4.4 Good Reason...........................................................................................13
ARTICLE V. OBLIGATIONS OF THE COMPANY UPON TERMINATION...........................................................14
5.1 If by the Executive for Good Reason or by the Company Other Than for Cause or Disability.............14
5.2 If by the Company for Cause...........................................................................16
5.3 If by the Executive Other Than for Good Reason........................................................17
5.4 If by the Company for Disability......................................................................17
5.5 If upon Death.........................................................................................17
ARTICLE VI. NON-EXCLUSIVITY OF RIGHTS............................................................................17
6.1 Waiver of Other Severance Rights......................................................................17
6.2 Other Rights..........................................................................................17
ARTICLE VII. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY..........................................................18
7.1 Gross-up for Certain Taxes............................................................................18
7.2 Determination by the Executive........................................................................18
7.3 Additional Gross-up Amounts...........................................................................19
7.4 Gross-up Multiple.....................................................................................19
7.5 Opinion of Counsel....................................................................................19
7.6 Amount Increased or Contested.........................................................................20
7.7 Refunds...............................................................................................21
ARTICLE VIII. EXPENSES AND INTEREST..............................................................................21
8.1 Legal Fees and Other Expenses.........................................................................21
8.2 Interest..............................................................................................22
ARTICLE IX. NO SET-OFF OR MITIGATION.............................................................................22
9.1 No Set-off or Defenses by Company.....................................................................22
9.2 No Mitigation.........................................................................................22
ARTICLE X. CONFIDENTIALITY AND NONCOMPETITION....................................................................23
10.1 Confidentiality.......................................................................................23
10.2 Noncompetition/Nonsolicitation........................................................................23
10.3 Remedy................................................................................................24
ARTICLE XI. MISCELLANEOUS........................................................................................24
11.1 No Assignability......................................................................................24
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
11.2 Successors............................................................................................24
11.3 Payments to Beneficiary...............................................................................24
11.4 Non-alienation of Benefits............................................................................25
11.5 Severability..........................................................................................25
11.6 Amendments............................................................................................25
11.7 Notices...............................................................................................25
11.8 Counterparts..........................................................................................25
11.9 Governing Law.........................................................................................25
11.10 Captions..............................................................................................25
11.11 Tax Withholding.......................................................................................26
11.12 Joint and Several Obligations.........................................................................26
11.13 No Waiver.............................................................................................26
11.14 Prior Agreement.......................................................................................26
11.15 Entire Agreement......................................................................................26
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of October 13, 2000 is made among CHICAGO BRIDGE &
IRON COMPANY N.V. ("CBICNV"), a Netherlands corporation, CHICAGO BRIDGE & IRON
COMPANY, a Delaware corporation ("CBIC"), CHICAGO BRIDGE & IRON COMPANY
(DELAWARE), a Delaware corporation ("CBICD" and, together with CBICNV and CBIC,
the "Company"), each having its principal place of business in Plainfield,
Illinois, and Robert B. Jordan (the "Executive"), a resident of Illinois.
ARTICLE I
PURPOSES
The Supervisory Board of CBICNV has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued service of the Executive, despite the possibility or
occurrence of a change of control of the Company. The Board believes it is
imperative to reduce the distraction of the Executive that would result from the
personal uncertainties caused by a pending or threatened change of control, to
encourage the Executive's full attention and dedication to the Company, and to
provide the Executive with compensation and benefits arrangements upon a change
of control which ensure that the expectations of the Executive will be satisfied
and are competitive with those of similarly-situated corporations. This
Agreement is intended to accomplish these objectives.
ARTICLE II
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" has the meaning defined for that term in Section
5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is thirty-six (36) months following the
date of this Agreement ("Expiration Date"); provided, however, that the
Agreement Term shall be extended as follows: (a) if neither the Company nor the
Executive gives written notice to the other pursuant to Section 11.7 that this
Agreement shall not be renewed ("Notice of Nonrenewal") within two years from
the date of this Agreement, the Agreement Term shall be extended to an
Expiration Date which shall be the first annual anniversary of the date a Notice
of Nonrenewal is given; (b) if an Imminent Control Change Date occurs before the
Expiration Date (as it may be extended under clause (a) above), then no Notice
of Nonrenewal shall thereafter be effective and the Agreement Term shall
automatically extend to an Expiration Date which is twelve (12) months after the
Imminent Change of Control Date, as further extended under the terms of this
clause should another Imminent Change of Control Date, occur prior to the
Expiration Date as from time to time so extended, and (c) if a Change of Control
occurs before the Expiration Date (as extended
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under clause (a) or (b) above or this clause (c)), the Expiration Date shall
automatically be extended to the last day of the Post-Change Period as the
Post-Change Period may be extended as provided in Section 2.22
2.3 "Affiliate" means an "affiliate" or "associate" as those terms are
defined in Rule 12b-2 under the 1934 Act.
2.4 "Article" means an article of this Agreement.
2.5 "Beneficial Owner" means such term as defined in Rule 13d-3 of the SEC
under the 1934 Act.
2.6 "Board" means the Supervisory Board of Chicago Bridge & Iron Company
N.V.
2.7 "Cause" has the meaning defined for that term in Section 4.3(b).
2.8 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
(a) any person (as such term is used in Rule 13d-5 of the SEC under the
1934 Act) or group (as such term is defined in Section 13(d) of the 1934
Act), other than a Subsidiary or any employee benefit plan (or any related
trust) of the Company or a Subsidiary, becomes the Beneficial Owner of 25%
or more of the common shares of any of CBICNV, CBIC or CBICD or of other
Voting Securities representing 25% or more of the combined voting power of
all Voting Securities of any of CBICNV, CBIC or CBICD; provided, however,
that (i) no Change of Control shall be deemed to have occurred solely by
reason of any such acquisition by a corporation with respect to which,
after such acquisition, more than 75% of both the common shares or common
stock of such corporation and the combined voting power of the Voting
Securities of such corporation are then beneficially owned, directly or
indirectly, by the persons who were the Beneficial Owners of the common
shares and other Voting Securities of CBICNV, CBIC or CBICD immediately
before such acquisition, in substantially the same proportion as their
ownership of the common shares and other Voting Securities of CBICNV, CBIC
or CBICD, as the case may be, immediately before such acquisition; and (ii)
once a Change of Control occurs under this subsection (a), the occurrence
of the next Change of Control (if any) under this subsection (a) shall be
determined by reference to a person or group other than the person or group
whose acquisition of Beneficial Ownership created such prior Change of
Control unless the original person or group has in the meantime ceased to
own 25% or more of the common shares of all of CBICNV, CBIC or CBICD or
other Voting Securities representing 25% or more of the combined voting
power of all Voting Securities of all of CBICNV, CBIC or CBICD; or
(b) individuals who, as of the date of this Agreement or as of any
Effective Date thereafter, are Supervisory Directors of CBICNV (the
"Incumbent Directors") cease for any reason to constitute at least 50% of
the members of the Board; provided, however, that (i) any individual who
becomes a Supervisory Director after the Effective Date whose binding
nomination for election to the Board by the general meeting of shareholders
was approved by a vote or written consent of at least 75% of the
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Supervisory Directors who are then Incumbent Directors shall be considered
an Incumbent Director, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of
the Company (as such terms are used in Rule 14a-11 of the SEC under the
1934 Act); and (ii) once a Change of Control occurs under this subsection
(b), the occurrence of the next Change of Control (if any) under this
subsection (b) shall be determined by reference to the individuals who were
Incumbent Directors immediately after the Effective Date of such prior
Change of Control; or
(c) approval by the Board, or by the shareholders of CBICNV, CBIC or
CBICD, of any of the following:
(i) a merger, reorganization or consolidation of CBICNV, CBIC or
CBICD ("Merger"), other than a Merger after which the individuals and
entities who were the respective beneficial owners of the common shares
and other Voting Securities of CBICNV, CBIC or CBICD (as the case may
be) immediately before such Merger beneficially own, directly or
indirectly, more than 75% of, respectively, the common shares or common
stock and the combined voting power of the Voting Securities of the
corporation resulting from such Merger, in substantially the same
proportion as their ownership of the common shares or common stock and
other Voting Securities of CBICNV, CBIC or CBICD (as the case may be)
immediately before such Merger, or
(ii) a sale or other disposition by any of CBICNV, CBIC or CBICD
of all or substantially all of the assets owned by it, or
(iii) any transaction as a result of which CBICNV would not
thereafter directly or indirectly own beneficially at least 75% of the
common stock of CBIC or as a result of which CBIC would not thereafter
directly or indirectly own beneficially at least 75% of the common
stock of CBICD, unless after either such transaction CBICNV continues
to own directly or indirectly substantially all of the pre-transaction
assets of both CBIC and CBICD.
(d) if a Growth Transaction previously occurred, any Transaction Owner
individually, or Transaction Owners collectively:
(i) materially breach(es) any provision of any shareholder
agreement to which CBICNV and such Transaction Owner(s) are parties
that addresses the governance of CBICNV following the Growth
Transaction; or
(ii) become(s) the Beneficial Owner of more than 66.5% of the
common shares of any of CBICNV, CBIC or CBICD or of other Voting
Securities representing more than 66.5% of the combined voting power of
all Voting Securities of any of CBICNV, CBIC or CBICD.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Deferral Plan" has the meaning defined for that term in Section 3.6.
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2.11 "Disability" has the meaning defined for that term in Section 4.1(b).
2.12 "Effective Date" means each date on which a Change of Control occurs
during the Agreement Term; provided, however, that if the Company terminates the
Executive's employment before the date of a Change of Control, and if the
Executive reasonably demonstrates that such termination of employment (a) was at
the request of a third party who had taken steps reasonably calculated to effect
the Change of Control or (b) otherwise arose in connection with or anticipation
of the Change of Control, then "Effective Date" shall mean the date immediately
before the date of such termination of employment.
2.13 "Good Reason" has the meaning defined for that term in Section 4.4(b).
2.14 "Gross-up Payment" has the meaning defined for that term in Section
7.1.
2.15 "Growth Transaction" means (i) the acquisition by Wedge Group
Incorporated ("WGI"), a Delaware corporation, First Reserve Fund VIII, L.P.
("FRF"), a Delaware limited partnership, or Pitt-Des Moines, Inc. ("PDM"), a
Pennsylvania corporation, or their Affiliates, of common shares or other Voting
Securities of CBICNV as contemplated by an agreement with CBICNV for the
acquisition by CBICNV or an Affiliate of Howe-Baker International, Inc. from WGI
(the "HBI Transaction") or for the acquisition of the PDM Engineered
Construction Division and Water Division from PDM (the "PDM Transaction"); (ii)
the acquisition by a person (other than by public offering) of common shares or
other Voting Securities of CBICNV from CBICNV as part of an arrangement for
financing the HBI Transaction or the PDM Transaction; (iii) the acquisition by a
person of common shares or other Voting Securities of CBICNV from a previous
Transaction Owner if the person acquiring such common shares or other Voting
Securities is or becomes a party to a Shareholder Agreement with CBICNV that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner; or (iv) a transfer of common shares or other
Voting Securities of CBICNV from one Transaction Owner to another Transaction
Owner if the acquiring Transaction Owner is subject with respect to such shares
or other Voting Securities to either a preexisting Shareholder Agreement between
CBICNV and the acquiring Transaction Owner or a Shareholder Agreement that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner. However, a "Growth Transaction" will not include
any event described in Section 2.8(d).
2.16 "Imminent Control Change Date" means any date on which occurs (a) a
presentation to the Company's shareholders generally or any of the Company's
directors or executive officers of a proposal or offer for a Change of Control,
or (b) the public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal or offer for
a Change of Control, or (c) such proposal or offer remains effective and
unrevoked.
2.17 "IRS" means the Internal Revenue Service.
2.18 "1934 Act" means the Securities Exchange Act of 1934, as amended.
2.19 "Notice of Termination" means a written notice given in accordance
with Section 11.7 which sets forth (a) the specific termination provision in
this Agreement relied upon
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by the party giving such notice, (b) in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under such termination provision and (c) if the Termination Date is
other than the date of receipt of such Notice of Termination, the Termination
Date.
2.20 "Plans" means plans, programs, policies or practices of the Company or
any of its Subsidiaries.
2.21 "Policies" means policies, practices or procedures of the Company or
any of its Subsidiaries.
2.22 "Post-Change Period" means the period commencing on each Effective
Date and ending on the third annual anniversary of such Effective Date. If a new
Change of Control creates a new Effective Date during any current Post-Change
Period, the Post-Change Period shall be extended to the third annual anniversary
of such new Effective Date; and shall be further extended upon each new
Effective Date during the Post-Change Period as extended.
2.23 "Present Value" means the present value, determined using (a) the
actuarial assumptions published by the Pension Benefit Guaranty Corporation
("PBGC") for determining immediate annuity values, as in effect on the first day
of the calendar year in which any payment of present value is required, or (b)
if no such actuarial assumptions are published by the PBGC, using the mortality
assumptions of the UP-84 group mortality table and an interest rate assumption
which is the lesser of (i) 75% of the current 30-year Treasury bond rate or (ii)
the current 30-year Treasury bond rate minus 150 basis points.
2.24 "SEC" means the Securities and Exchange Commission.
2.25 "Section" means, unless the context otherwise requires, a section of
this Agreement.
2.26 "SERP" has the meaning defined for that term in Section 3.6.
2.27 "Shareholder Agreement" means an agreement between CBICNV and a person
that limits the ability of such person and its Affiliates to obtain and exercise
control over the management and policies of the CBICNV.
2.28 "Subsidiary" means a corporation as defined in Section 424(f) of the
Code (with the Company being treated as the employer corporation for purposes of
this definition) and any partnership or limited liability company in which the
Company or any Subsidiary has a direct or indirect interest (whether in the form
of voting power or participation in profits or capital contribution) of 50% or
more.
2.29 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company terminates the Executive's employment
other than for Cause or Disability, then the Termination Date shall be the date
of receipt of such Notice of Termination and (b) if the Executive's employment
is terminated by reason of death or Disability, then the Termination Date shall
be the date of death
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of the Executive or the Disability Effective Date (as defined in Section
4.1(a)), as the case may be.
2.30 "Transaction Owner" means a person who acquires common shares or other
Voting Securities of CBICNV in a Growth Transaction, or any Affiliate of such
person.
2.31 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 General. On the Effective Date and during the Post-Change Period
thereafter the Company shall make the payments, provide the benefits and fulfill
the other obligations required by this Article III. However, if , such Effective
Date and Post-Change Period result solely from a Growth Transaction:
(a) Section 3.3(b) shall not apply except for purposes of determining
the obligations of the Company on termination pursuant to Section 5.1, and
to the extent provided in Section 4.4(b)(iii) and as modified thereby, in
determining the existence of Good Reason;
(b) clause (ii) of each of Sections 3.3(c) through 3.3(h) shall not
apply except for purposes of determining the obligations of the Company on
termination pursuant to Section 5.1; but the aggregate value to the
Executive of all Plans, fringe benefits and arrangements described in
Sections 3.3(c) through 3.3(h) shall not be less favorable, in the
aggregate, than the aggregate value to the Executive of such Plans, fringe
benefits and arrangements provided by the Company to the Executive or peer
executives at any time during the 90-day period immediately before such
Effective Date; and
(c) Sections 3.4, 3.5, and 3.6 shall not apply on such Effective Date;
but to the extent such vesting or payment is not otherwise required by
Section 5.1, Sections 3.4, 3.5 and 3.6, shall apply to the Executive on the
Termination Date (as if such Sections referred to the "Termination Date"
instead of the "Effective Date") if during the Post-Change Period the
Company shall terminate Executive's employment other than for Cause, or if
the Executive shall terminate employment for Good Reason, or if employment
terminates as a result of Disability or death.
3.2 Position and Duties.
(a) During the Post-Change Period, (1) the Executive's position
(including offices, titles, reporting requirements and responsibilities),
authority and duties shall be at least commensurate in all material
respects with the most significant of those held by, exercised by, or
assigned to the Executive at any time during the 90-day period immediately
before the Effective Date and (2) the Executive's services shall be
performed at the location where the Executive was employed immediately
before the Effective Date or any other location less than 40 miles from
such former location.
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(b) During the Post-Change Period (other than any periods of vacation,
sick leave, disability leave or other family or medical leave to which the
Executive is entitled), the Executive shall devote his or her full
attention and time to the business and affairs of the Company and, to the
extent necessary to discharge the duties assigned to the Executive in
accordance with this Agreement, shall use his or her best efforts to
perform such duties faithfully and efficiently. During the Post-Change
Period, the Executive may (1) serve on corporate, civic or charitable
boards or committees, (2) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (3) manage personal investments, so
long as such activities are consistent with the Policies of the Company or
its Subsidiaries at the Effective Date and do not significantly interfere
with the performance of the Executive's duties under this Agreement. To the
extent that any such activities have been conducted by the Executive before
the Effective Date and were consistent with the Policies of the Company or
its Subsidiaries at the Effective Date, the continued conduct of such
activities (or activities similar in nature and scope) after the Effective
Date shall not be deemed to interfere with the performance of the
Executive's duties under this Agreement.
3.3 Compensation.
(a) Base Salary. During the Post-Change Period, the Company shall pay
or cause to be paid to the Executive an annual base salary in cash
("Guaranteed Base Salary"), which shall be paid in a manner consistent with
the Company's payroll practices in effect immediately before the Effective
Date for such Post-Change Period, at a rate at least equal to the highest
rate of annual salary paid or payable to the Executive by the Company at
any time during the 12-month period immediately before such Effective Date.
During the Post-Change Period, the Guaranteed Base Salary shall be reviewed
at least annually and shall be increased at any time and from time to time
as shall be substantially consistent with increases in base salary awarded
to other peer executives of the Company. Any increase in Guaranteed Base
Salary shall not limit or reduce any other obligation of the Company to the
Executive under this Agreement. After any such increase, the Guaranteed
Base Salary shall not be reduced and the term "Guaranteed Base Salary"
shall thereafter refer to the increased amount.
(b) Guaranteed Bonus.
(i) During the Post-Change Period, the Company shall pay or cause
to be paid to the Executive a bonus (the "Guaranteed Bonus") for each
Performance Period which ends during the Post-Change Period.
"Performance Period" means each period of time designated in accordance
with any bonus arrangement ("Bonus Plan") which is based upon
performance and approved by the Board or by any committee of the Board.
For purposes of this Section 3.3, a Bonus Plan includes, without
limitation, the Company's Incentive Compensation Plan as in effect on
the date hereof or any similar plan, but does not include the Company's
1997 or 1999 Long-Term Incentive Plan (an "LTIP") or any similar plan
under which equity awards described Section 3.5 are granted, unless
failure to consider the LTIP a Bonus Plan would leave the Company
without any Bonus Plan covering Executive. The Guaranteed Bonus shall
be at least equal to the product
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of (A) the greater of (i) the On Plan Percentage (as defined below), or
(ii) the Actual Bonus Percentage (as defined below), multiplied by (B)
the Guaranteed Base Salary.
(ii) For purposes of this Section 3.3(b):
(A) "On Plan Percentage" means the percentage of
Guaranteed Base Salary to which the Executive would be
entitled under the Bonus Plan(s) for the Performance Period
for which the Guaranteed Bonus is awarded ("Current
Performance Period") if performance achieved 100% of the
target performance goals established pursuant to such Bonus
Plan(s); or, if greater, the percentage of Guaranteed Base
Salary to which Executive would have been entitled under the
Bonus Plan(s) for the Performance Period ending immediately
prior to the Post-Change Period if performance achieved 100%
of the performance goals established pursuant to such Bonus
Plan(s) for such prior Performance Period.
(B) "Actual Bonus Percentage" means the percentage of
Guaranteed Base Salary for the Current Performance Period to
which the Executive would be entitled under any Bonus Plan if
the performance were measured by the actual performance
during the Current Performance Period; provided, however,
that for purposes of determining the Guaranteed Bonus for
purposes of Sections 3.4 and 5.1(b), "Actual Bonus
Percentage" means the percentage of Guaranteed Base Salary
for the Performance Period during which the Effective Date
(for purposes of Section 3.4) or Termination Date (for
purposes of Section 5.1(b)) occurs to which the Executive
would be entitled if the performance during such Performance
Period were measured by the actual performance during the
portion of such Performance Period before the Effective Date
or the Termination Date (whichever is applicable), projected
to the last day of such Performance Period.
(c) Incentive, Savings and Retirement Plans. During the
Post-Change Period and notwithstanding the payment required by Section
3.6, (i) the Executive shall be entitled to continue to participate in
all incentive (including long-term incentives and management stock
plans), savings, deferred compensation, retirement and benefit
restoration Plans provided by the Company and applicable to other peer
executives of the Company, but (ii) in no event shall such Plans
provide the Executive with incentive (including long-term incentives
and management stock benefits), savings, deferred compensation,
retirement and benefit restoration benefits which, in any case, are
less favorable, in the aggregate, than the most favorable of those
provided by the Company to the Executive or to peer executives under
such Plans as in effect at any time during the 90-day period
immediately before any Effective Date.
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(d) Welfare Benefit Plans. During the Post-Change Period, (i) the
Executive and the Executive's family shall be eligible to participate in,
and receive all benefits under, welfare benefit Plans (including, without
limitation, medical, prescription, dental, disability, salary continuance,
individual life, group life, dependent life, accidental death and travel
accident insurance Plans) provided by the Company and applicable to other
peer executives of the Company and their families, but (ii) in no event
shall such Plans provide benefits which in any case are less favorable, in
the aggregate, than the most favorable of those provided by the Company to
the Executive or to peer executives under such Plans as in effect at any
time during the 90-day period immediately before any Effective Date.
(e) Fringe Benefits. During the Post-Change Period, (i) the Executive
shall be entitled to fringe benefits (including, without limitation, any
foreign service travel and housing allowances for Executive and the
Executive's family under Plans or Policies of the Company for foreign
service) in accordance with the most favorable Plans provided by the
Company and applicable to other peer executives of the Company, but (ii) in
no event shall such Plans provide fringe benefits which in any case are
less favorable, in the aggregate, than the most favorable of those provided
by the Company to the Executive or peer executives under such Plans in
effect at any time during the 90-day period immediately before any
Effective Date.
(f) Expenses. During the Post-Change Period, (i) the Executive shall be
entitled to prompt reimbursement of all reasonable employment-related
expenses incurred by the Executive upon the Company's receipt of
accountings in accordance with the most favorable Policies applicable to
peer executives of the Company, but (ii) in no event shall such Policies be
less favorable, in the aggregate, than the most favorable of those provided
by the Company to the Executive or to peer executives under such Policies
in effect at any time during the 90-day period immediately before any
Effective Date.
(g) Office and Support Staff. During the Post-Change Period, (i) the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance
in accordance with the most favorable Policies applicable to peer
executives of the Company, but (ii) in no event shall such Policies be less
favorable, in the aggregate, than the most favorable of those provided by
the Company to the Executive or to peer executives under such Policies in
effect at any time during the 90-day period immediately before any
Effective Date.
(h) Vacation. During the Post-Change Period, (i) the Executive shall be
entitled to paid vacation in accordance with the most favorable Policies
applicable to peer executives of the Company, but (ii) in no event shall
such Policies be less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive or to peer executives
under such Policies in effect at any time during the 90-day period
immediately before any Effective Date.
3.4 Pro-Rata Bonus Payment.
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On each Effective Date the Company shall pay to Executive in a single lump
sum in cash the product of (A) the Guaranteed Bonus for the Performance Period
in which falls the Effective Date, multiplied by (B) a fraction, the numerator
of which is the number of days in such Performance Period before the Effective
Date, and the denominator of which is the total number of days in such
Performance Period. The amount of Guaranteed Bonus for such Performance Period
otherwise payable pursuant to Section 3.3(b), or otherwise payable pursuant to
this Section 3.4 by reason of a later Change of Control in the same Performance
Period, shall be reduced by any earlier payment made under this Section 3.4 for
the same Performance Period.
3.5 Equity Awards Vesting.
On the Effective Date, the Executive shall become fully vested in:
(a) any and all outstanding options ("Options") to purchase common
shares of the Company granted to Executive prior to the Effective Date
under any Plan, contract or arrangement for Options, which Options shall
become fully exercisable;
(b) any outstanding shares of restricted common shares of the Company
regardless whether such restrictions are scheduled to lapse based on
service or on performance or both ("Restricted Stock") awarded to Executive
under any Plan, contract or arrangement for Restricted Stock; which shall
become unrestricted and freely transferable; and
(c) any outstanding awards providing for the payment of a variable
number of common shares of the Company dependent on the achievement of
performance goals, or of an amount based on the fair market value of such
shares or the appreciation thereof ("Performance Shares") awarded to
Executive under any Plan, contract or arrangement for Performance Shares;
and there shall be paid out in cash to Executive within 30 days following
the Effective Date of the Change of Control the value of the Performance
Shares to which Executive would have been entitled if performance achieved
100% of the target performance goals established for such Performance
Shares.
To the extent that for any reason such Options, Restricted Stock and
Performance Shares do not become vested on the Effective Date, the Company shall
pay Executive a cash amount equal to (i) the positive difference, if any,
between the value of the shares of common stock subject to the Options that did
not become vested (or, if greater, the value paid or to be paid in connection
with the Change of Control to a holder of an equal number of shares of common
stock ("Change of Control Value")) and the Option exercise price with respect to
such shares, as of and on the date such Options are forfeited; plus (ii) the
fair market value (determined without regard to any restriction other than a
restriction which by its terms may never lapse) (or, if greater, the Change of
Control Value) of all non-vested forfeited Restricted Stock and Performance
Shares as of and on the date such Restricted Stock or Performance Shares are
forfeited. Nothing in this Section 3.5 shall require the vesting, or payment, of
equity awards granted after such Effective Date unless a new Effective Date has
intervened
3.6 Nonqualified Deferred Compensation.
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On the Effective Date Executive shall become fully vested in and the
Company shall pay to Executive in a single lump sum in cash (1) the value of
Executive's then-accrued benefits, if any, which remain unpaid under any
nonqualified deferred compensation, benefit restoration, excess benefit or other
individual account plan, contract or arrangement for deferred compensation
maintained by the Company under which benefits are calculated by reference to an
individual account (a "Deferral Plan"), and (2) the Present Value of Executive's
then-accrued benefits, if any, which remain unpaid under any nonqualified
supplemental executive retirement plan or other plan, contract or arrangement
for retirement benefits maintained by the Company under which benefits are
calculated by reference to a defined amount payable in connection with or after
retirement or other termination of employment an (a "SERP").
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
(a) During the Post-Change Period, the Company may terminate the
Executive's employment upon the Executive's Disability (as defined in
Section 4.1(b)) by giving the Executive or his legal representative, as
applicable, Notice of Termination accompanied by a certification of the
Executive's Disability by a physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the Executive's
legal representative. The Executive's employment shall terminate effective
on the 30th day (the "Disability Effective Date") after the Executive's
receipt of such Notice of Termination unless, before the Disability
Effective Date, the Executive shall have resumed the full-time performance
of the Executive's duties.
(b) "Disability" means any medically determinable physical or mental
impairment that has lasted for a continuous period of not less than six
months and can be expected to be permanent or of indefinite duration, and
that renders the Executive unable to perform the essential functions
required under this Agreement with or without reasonable accommodation.
(c) Unless the Company establishes, by clear and convincing evidence,
that Executive has a Disability, any purported termination of employment
for Disability shall be deemed a termination other than for Disability for
all purposes of this Agreement.
4.2 Death. The Executive's employment shall terminate automatically upon
the Executive's death during the Post-Change Period.
4.3 Cause.
(a) During the Post-Change Period, the Company may terminate the
Executive's employment for Cause.
(b) "Cause" means any of the following: Executive's conviction of a
felony or of a crime involving fraud, dishonesty or moral turpitude;
Executive's willful or intentional material breach of this Agreement that
results in financial detriment that is material to the
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Company as a whole; or willful or intentional misconduct by Executive in
the performance of his duties under this Agreement that results in
financial detriment that is material to the Company as a whole; except that
Cause shall not mean:
(i) bad judgment or negligence;
(ii) any act or omission believed by the Executive in good faith
to have been in or not opposed to the interest of the Company (without
intent of the Executive to gain, directly or indirectly, a profit to
which the Executive was not legally entitled);
(iii) any act or omission with respect to which a determination
could properly have been made by the Board that the Executive met the
applicable standard of conduct for indemnification or reimbursement
under the Company's by-laws, any applicable indemnification agreement,
or applicable law, in each case in effect at the time of such act or
omission; or
(iv) any act or omission with respect to which Notice of
Termination is not given within 12 months after the earliest date on
which any member of the Board, not a party to the act or omission, knew
or should have known of such act or omission.
(c) The Company may not during the Post-Change Period terminate
Executive's employment for Cause unless the following procedures are fully
complied with:
(i) no fewer than 45 days prior to the Termination Date, the
Company provides Executive with written notice (the "Notice of
Consideration") of its intent to consider termination of Executive's
employment for Cause, including a detailed description of the specific
reasons which form the basis for such consideration;
(ii) if after providing Notice of Consideration, the Board may, by
the affirmative vote of at least 80% of its members (excluding for this
purpose Executive if he is a member of the Board, and any other member
of the Board reasonably believed by the Board to be involved in the
events issuing the Notice of Consideration), suspend Executive with pay
until a final determination pursuant to this Section has been made;
(iii) for a period of not less than 30 days after the date Notice
of Consideration is provided, Executive shall have the opportunity to
appear before the Board, with or without legal representation, at
Executive's election, to present arguments and evidence on his own
behalf; and
(iv) following the presentation to the Board as provided in (3)
above or Executive's failure to appear before the Board at a date and
time specified in the Notice of Consideration (which date shall not be
less than 30 days after the date the Notice of Consideration is
provided), Executive may be terminated for Cause only if (i) the Board,
by the affirmative vote of at least 80% of its members
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(excluding Executive if he is a member of the Board, and any other
member of the Board reasonably believed by the Board to be involved in
the events leading the Board to terminate Executive for Cause),
determines that the actions or inactions of Executive specified in the
Notice of Consideration occurred, that such actions or inactions
constitute Cause, and that Executive's employment should accordingly be
terminated for Cause; and (ii) the Board provides Executive with a
written determination (a "Notice of Termination for Cause") setting
forth in specific detail the basis of such Termination of Employment,
which Notice of Termination for Cause shall be consistent with the
reasons set forth in the Notice of Consideration.
Unless the Company establishes, by clear and convincing evidence, both (x)
its full compliance with the substantive and procedural requirements of this
Section prior to a termination of employment for Cause, and (y) that Executive's
action or inaction specified in the Notice of Termination for Cause did occur
and constituted Cause, any purported termination of employment for Cause shall
be deemed a termination without Cause for all purposes of this Agreement.
4.4 Good Reason.
(a) During the Post-Change Period, the Executive may terminate
employment for Good Reason within 12 months following the Executive's
actual knowledge of an act or omission which constitutes Good Reason;
provided, however, that the Executive's failure to terminate within 12
months following Executive's actual knowledge of a particular act or
omission which constitutes Good Reason shall not prevent Executive's
termination for any other act or omission which constitutes Good Reason.
(b) "Good Reason" means any of the following:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including offices,
titles, reporting requirements or responsibilities), authority or
duties as prescribed by Section 3.2(a)(1), or the Company's requiring
the Executive to be based at any office or location other than the
location described in Section 3.2(a)(2); or any other action by the
Company which results in a diminution or other material adverse change
in such position, authority or duties;
(ii) the failure to pay Guaranteed Base Salary in at least the
amount prescribed by Section 3.2(a);
(iii) the failure to pay Guaranteed Bonus in at least the amount
prescribed by Section 3.3(b); provided, however, that if the
Post-Change Period results solely from a Growth Transaction; Good
Reason under this clause (iii) shall only be the failure to provide
Executive with a bonus opportunity (including designation of target
performance goals and percentage of Guaranteed Base Salary payable on
achievement of target performance goals) no less favorable to
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Executive than that provided by the Company to Executive for either of
the two most recent Performance Periods beginning before such Growth
Transaction;
(iv) the failure to provide any plan or fringe benefits or
perquisites prescribed by Sections 3.3(c) through 3.3(h), as modified,
if the Post-Change Period results solely from a Growth Transaction, by
Section 3.1(b);
(v) any other failure by the Company to comply with any of the
provisions of Article III;
(vi) any other material adverse change to the terms and
conditions of the Executive's employment (whether or not also described
in clauses (i) through (v) above);
(vii) the Board's giving Notice of Consideration pursuant to
Section 4.3(c) (of the intent to consider terminating Executive for
Cause) but failing to terminate Executive for Cause within a period of
90 days thereafter in compliance with all substantive and procedural
requirements of Section 4.3,
(viii) any purported termination by the Company of the Executive's
employment other than as expressly permitted by this Agreement (any
such purported termination shall not be effective for any other purpose
under this Agreement);
(ix) a failure by the Company to cause a successor, prior to or
as of the date it becomes a successor, to assume and agree to perform
this Agreement in accordance with the provisions of Section 11.2
hereof.
Any determination by Executive that any of the foregoing events has occurred and
constitutes "Good Reason" shall be conclusive and binding for all purposes
unless the Company establishes by clear and convincing evidence that Executive
did not have a reasonable basis for such a determination.
(c) Any termination of employment by the Executive for Good Reason shall be
communicated to the Company by Notice of Termination. The passage of time not in
excess of 12 months after the Executive has actual knowledge of an act or
omission which constitutes Good Reason prior to delivery of Notice of
Termination or a failure by the Executive to include 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 under this Agreement or
preclude the Executive from asserting such fact or circumstance in enforcing
rights under this Agreement.
ARTICLE V.
OBLIGATIONS OF THE COMPANY UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Company Other Than for
Cause or Disability. If, during the Post-Change Period, the Company shall
terminate Executive's
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employment other than for Cause, Disability, or death or if the Executive shall
terminate employment for Good Reason, the Company shall pay the Executive within
five (5) days of the Termination Date (or if earlier within five (5) days of the
last day Executive performed services for the Company as an Employee), in
addition to all vested rights arising from the Executive's employment as
specified in Article III, a cash amount equal to the sum of the amounts
described in (a) through (g) below and the additional benefits described in (h)
through (i) below:
(a) The Guaranteed Base Salary, any accrued vacation pay and business
expenses incurred through the Termination Date, to the extent not
previously paid to the Executive by the Company.
(b) The difference between (1) the product of (A) the Guaranteed Bonus,
multiplied by (B) a fraction, the numerator of which is the number of days
in the Termination Performance Period which elapsed before the Termination
Date, and the denominator of which is the total number of days in the
Termination Performance Period, and (2) the amount of any Guaranteed Bonus
previously paid to the Executive by the Company with respect to the
Termination Performance Period.
(c) The value of Executive's then-accrued benefits under any Deferral
Plan plus the present value of Executive's then-accrued benefits under any
SERP, determined without disregarding service and compensation before any
Effective Date but then reduced by the amount, if any, previously paid to
the Executive by the Company pursuant to Section 3.6.
(d) An amount equal to the product of (1) three (3.0), multiplied by
(2) the sum of (A) the Guaranteed Base Salary and (B) the Guaranteed Bonus.
(e) An amount equal to the sum of the value of the unvested portion of
the Executive's accounts or accrued benefits under any qualified plan
maintained by the Company as of the Termination Date.
(f) The difference between (1) the amount that would be determined
under Section 5.1(c) above if such amount were calculated (to the extent
applicable in determining such amount) (A) as though the Executive
continued to accrue benefits and be credited with service under the SERP
for a period of three years after the Termination Date, (B) as though the
Executive received compensation during each year of such three-year
period equal to the sum of the Guaranteed Base Salary and the highest
Guaranteed Bonus paid (or payable) to the Executive in the three calendar
years preceding the Termination Date, (C) as though the Executive were
three (3) years older than his age at the Termination Date, and (D) without
disregarding service and compensation before the Termination Date; reduced
by (2) the amount (if any) previously or simultaneously paid by the Company
to the Executive pursuant to Sections 3.6 and 5.1(c).
(g) In addition to the foregoing amounts, the Company shall pay on
behalf of Executive all fees and costs charged by the outplacement firm
selected by the Executive to provide outplacement services or at the
election of the Executive, an immediate cash
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payment equal to the fees and expenses such outplacement firm would charge
but not in excess of 20% of the Guaranteed Base Salary.
(h) In addition to the foregoing payments, until the third annual
anniversary of the Termination Date or such later date as any Plan of the
Company may specify, the Company shall continue to provide to the Executive
and the Executive's family welfare benefits (including, without limitation,
medical, prescription, dental, disability, salary continuance, individual
life, group life, accidental death and travel accident insurance plans and
programs) which are at least as favorable as the most favorable Plans of
the Company applicable to other peer executives and their families as of
the Termination Date, but which are in no event less favorable than the
most favorable Plans of the Company applicable to other peer executives and
their families during the 90-day period immediately before the Effective
Date; and the cost of such welfare benefits to Executive shall not exceed
the cost of such benefits to the Executive immediately before the
Termination Date or, if less, the Effective Date.
(i) Beginning on the later of the third annual anniversary of the
Termination Date or the date Executive attains age 50, and continuing until
the death of the last to die of Executive and his or her spouse, the
Company shall provide to the Executive and to Executive's family medical
benefits which (1) until Executive attains age sixty-five (65) are at least
as favorable as the most favorable medical Plans of the Company applicable
to actively employed peer executives and that covered any active employee
of the Company as of the Effective Date, and (2) from and after the date
Executive attains age 65, are at least as favorable as the most favorable
medical Plans of the Company applicable to eligible retired peer executives
and that covered any retired employee as of the Effective Date; and the
cost to Executive of such medical benefits for the period described in
clause (1) shall not exceed the cost of such benefits to Executive
immediately before the Termination Date or, if less, the Effective Date,
and the cost to Executive of such medical benefits for the period described
in clause (2) shall not exceed the cost of such benefits to any similarly
situated eligible retiree of the Company immediately before the Termination
Date or, if less, the Effective Date.
The Executive's rights under this Section 5.1 shall be in addition to, and not
in lieu of, any post-termination continuation coverage or conversion rights the
Executive may have pursuant to applicable law, including without limitation
continuation coverage required by Section 4980 of the Code or Part 6 of Title I
of the Employee Retirement Income Security Act of 1974, as amended, for which
purpose the date of the qualifying event shall not be earlier than the date
specified in the first sentence of Section 5.1(i). However, if the Executive is
covered under a medical, life, or disability insurance plan provided by a
subsequent employer at equal or lesser cost to Executive than the cost to
Executive of coverage under the corresponding Company plan required by Sections
5.1(i), then the benefits under the corresponding Company plan required by
Sections 5.1(i) shall be secondary to the benefits under the subsequent
employer's medical, life, or disability insurance plan.
5.2 If by the Company for Cause. If the Company terminates the Executive's
employment for Cause during the Post-Change Period pursuant to the procedures
set forth in Section 4.3, this Agreement shall terminate without further
obligation by the Company to the
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Executive, other than the obligation immediately to pay the Executive in cash
the Executive's Guaranteed Base Salary through the Termination Date, plus the
amount of any compensation previously deferred by the Executive, plus any
accrued vacation pay and business expenses incurred through the Termination
Date, in each case to the extent not previously paid or reimbursed.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good Reason,
Disability or death, this Agreement shall terminate without further obligations
by the Company, other than the obligation immediately to pay the Executive in
cash all amounts specified in paragraphs (a), (b) and (c) of Section 5.1 (such
amounts collectively, the "Accrued Obligations").
5.4 If by the Company for Disability. If the Company terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than:
(a) the Company's obligation immediately to pay the Executive in cash
all Accrued Obligations, and
(b) the Executive's right after the Disability Effective Date to
receive disability and other benefits at least equal to the greater of (i)
those provided under the most favorable disability Plans applicable to
disabled peer executives of the Company in effect immediately before the
Termination Date or (ii) those provided under the most favorable disability
Plans of the Company in effect at any time during the 90-day period
immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by reason of
the Executive's death during the Post-Change Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than the obligation immediately to pay the
Executive's estate or beneficiary in cash all Accrued Obligations. Despite
anything in this Agreement to the contrary, the Executive's family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company to the surviving families of peer executives of the
Company under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive under such Plans in effect at
any time during the 90-day period immediately before the Effective Date.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are made
to the Executive pursuant to Section 5.1, the Executive hereby waives the right
to receive severance payments under any other Plan or agreement of or with the
Company.
6.2 Other Rights. Except as provided in Section 6.1, this Agreement shall
not prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other Plans provided by the Company or any of its
Subsidiaries and for which the Executive may
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qualify, nor shall this Agreement limit or otherwise affect such rights as the
Executive may have under any other agreements with the Company or any of its
Subsidiaries. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any Plan of the Company or any of its
Subsidiaries and any other payment or benefit required by law at or after the
Termination Date shall be payable in accordance with such Plan or applicable law
except as expressly modified by this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Company's independent auditors, which determinations shall be
certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that any benefit received or deemed
received by the Executive from the Company pursuant to this Agreement or
otherwise (collectively, the "Payments") is or will become subject to any excise
tax under Section 4999 of the Code or any similar tax payable under any United
States federal, state, local or other law (such excise tax and all such similar
taxes collectively, "Excise Taxes"), then the Company shall, immediately after
such determination, pay the Executive an amount (the "Gross-up Payment") equal
to the product of
(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the Excise
Taxes and any federal, state, local or other income or excise taxes or other
taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Company may at any time request the Company's
independent auditors to prepare and deliver a Certificate to the Executive. The
Company shall, in addition to complying with Section 7.2, cause all
determinations and certifications under the Article to be made as soon as
reasonably possible and in adequate time to permit the Executive to prepare and
file the Executive's individual tax returns on a timely basis.
7.2 Determination by the Executive.
(a) If the Company or its independent auditors shall fail to deliver a
Certificate to the Executive (and to pay to the Executive the amount of the
Gross-up Payment, if any) within 14 days after receipt from the Executive
of a written request for a Certificate, or if at any time following receipt
of a Certificate the Executive disputes the amount of the Gross-up Payment
set forth therein, the Executive may elect to demand the payment of the
amount which the Executive, in accordance with an Executive Counsel
Opinion), (as defined in Section 7.5), determines to be the Gross-up
Payment. Any such demand by the Executive shall be made by delivery to the
Company of a written notice which specifies the Gross-up Payment determined
by the Executive and an Executive Counsel
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Opinion regarding such Gross-up Payment (such written notice and opinion
collectively, the "Executive's Determination"). Within 14 days after
delivery of the Executive's Determination to the Company, the Company shall
either (1) pay the Executive the Gross-up Payment set forth in the
Executive's Determination (less the portion of such amount, if any,
previously paid to the Executive by the Company) or (2) deliver to the
Executive a Certificate specifying the Gross-up Payment determined by the
Company's independent auditors, together with a Company Counsel Opinion (as
defined in Section 7.5), and pay the Executive the Gross-up Payment
specified in such Certificate. If for any reason the Company fails to
comply with clause (2) of the preceding sentence, the Gross-up Payment
specified in the Executive's Determination shall be controlling for all
purposes.
(b) If the Executive does not make a request for, and the Company does
not deliver to the Executive, a Certificate, the Company shall, for
purposes of Section 7.3, be deemed to have determined that no Gross-up
Payment is due.
7.3 Additional Gross-up Amounts. If the amount of Excise Taxes payable by
the Executive with respect to all Payments is determined (pursuant to the
subsequently-enacted provisions of the Code, final regulations or published
rulings of the IRS, final judgment of a court of competent jurisdiction or the
Company's independent auditors) to be greater than the amount previously paid by
the Company to the Executive pursuant to Section 7.1 or 7.2, as applicable, then
the Company shall pay the Executive an amount (which shall also be deemed a
Gross-up Payment) equal to the product of:
(a) the sum of (i) such additional Excise Taxes and (ii) any interest,
fines, penalties, expenses or other costs incurred by the Executive as a
result of having taken a position in accordance with a determination made
pursuant to Section 7.1,
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal the quotient
(greater than one (1.0)) of one (1.0) divided by one (1.0) minus the sum,
expressed as a decimal fraction, of the rates of all federal, state, local and
other income and other taxes and any Excise Taxes applicable to the Gross-up
Payment; provided that, if such sum exceeds 0.75, it shall be deemed equal to
0.75 for purposes of this computation. (If different rates of tax are applicable
to various portions of a Gross-up Payment, the weighted average of such rates
shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel who is counsel to the
Executive that there is a reasonable basis to support a conclusion that the
Gross-up Payment determined by the Executive has been calculated in accord with
this Article and applicable law. "Company Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel who is counsel to the
Company that (a) there is a reasonable basis to support a conclusion that the
Gross-up Payment set forth of the Certificate of Company's independent
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auditors has been calculated in accord with this Article and applicable law, and
(b) there is no reasonable basis for the calculation of the Gross-up Payment
determined by the Executive.
7.6 Amount Increased or Contested. The Executive shall notify the Company
in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Company of a Gross-up Payment. Such
notice shall include the nature of such claim and the date on which such claim
is due to be paid. The Executive shall give such notice as soon as practicable,
but no later than 10 business days, after the Executive first obtains actual
knowledge of such claim; provided, however, that any failure to give or delay in
giving such notice shall affect the Company's obligations under this Article
only if and to the extent that such failure results in actual prejudice to the
Company. The Executive shall not pay such claim less than 30 days after the
Executive gives such notice to the Company (or, if sooner, the date on which
payment of such claim is due). If the Company notifies the Executive in writing
before the expiration of such period that it desires to contest such claim, the
Executive shall:
(a) give the Company any information that it reasonably requests
relating to such claim,
(b) take such action in connection with contesting such claim as the
Company reasonably requests in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith to contest such claim, and
(d) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax (to the extent not previously paid by the
Company to the Executive) or income tax, including related interest and
penalties, imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing, the Company shall control all
proceedings in connection with such contest and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify the Executive, on an after-tax basis, for any Excise Tax or income
tax, including related interest or penalties, imposed with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a Gross-up Payment would be payable. The Executive
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shall be entitled to settle or contest, as the case may be, any other issue
raised by the IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 7.6, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 7.6) promptly pay the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 7.6, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such determination before the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-up Payment required to be paid. Any contest of a denial of
refund shall be controlled by Section 7.6.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
(a) If the Executive incurs legal, accounting and other fees or other
expenses in a good faith effort to obtain benefits under this Agreement
(including, without limitation, the fees and other expenses of the
Executive's legal counsel, any expert witness fees and expenses, and
accounting and other fees and expenses, including legal and accounting fees
and expenses in connection with the delivery of the Executive Counsel
Opinion referred to in Article VII), regardless of whether the Executive
ultimately prevails, the Company shall reimburse the Executive on a monthly
basis upon the written request for such fees and expenses to the extent not
previously reimbursed under the Company's officers and directors liability
insurance policy, if any. Simultaneously with each such payment Company
shall pay Executive an amount such that after payment of incremental United
States federal, state and local income, excise and other taxes payable by
Executive ("Taxes") with respect to such tax reimbursement, there remains a
balance sufficient to pay the Taxes on the reimbursement of such fees and
expenses. The existence of any controlling case or regulatory law which is
directly inconsistent with the position taken by the Executive shall be
evidence that the Executive did not act in good faith. Executive's payment
of such fees and expenses shall be a conclusive determination with respect
to the Company that such fees and expenses are reasonable.
(b) Reimbursement of legal fees and expenses shall be made monthly upon
the written submission of a request for reimbursement together with
evidence that such fees and expenses are due and payable or were paid by
the Executive. If the Company shall have reimbursed the Executive for legal
fees and expenses and it is later determined that the Executive was not
acting in good faith, all amounts paid on behalf of, or reimbursed to, the
Executive shall be promptly refunded to the Company.
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(c) To secure its obligations under this Section 8.1 the Company shall
procure and maintain in force during the Agreement Term and thereafter for
one (1) year or if longer until the termination (by final judgment and
after all rights of appeal have been exhausted or waived) of any litigation
involving a good faith effort of an Executive to obtain benefits under this
Agreement, a letter of credit and an escrow in favor of Executive (together
with other executives similarly situated). The letter of credit shall be
issued by a bank or trust company organized under the laws of the United
States or Canada or a state or province thereof and having a combined
capital and surplus of not less than one hundred million dollars
($100,000,000), shall be in the aggregate amount of five hundred thousand
dollars ($500,000) prior to July 1, 2001, and in the aggregate amount of
two million dollars $2,000,000) on and after July 1, 2001, and shall be
substantially in the form of that attached (with its attached Annexes and
Exhibits) to this Agreement as Exhibit A. The escrow shall be maintained in
the state of Illinois under an escrow agreement with a bank or trust
company organized under the laws of the United States or Canada or a state
or province thereof and having a combined capital and surplus of not less
than one hundred million dollars ($100,000,000), and shall be substantially
in the form of that attached (with its attached Exhibits) to this Agreement
as Exhibit B.
8.2 Interest. If the Company does not pay any amount due to the Executive
under this Agreement within three days after such amount became due and owing,
interest shall accrue on such amount from the date it became due and owing until
the date of payment at a annual rate equal to two percent (2.0%) above the base
commercial lending rate announced by the Company's principal revolving credit
lender in effect from time to time during the period of such nonpayment; or, if
the Company does not have a principal revolving credit lender, then at two
percent (2.0%) above the prime rate of interest in effect from time to time
during the period of such nonpayment, as reported from time to time in the Wall
Street Journal; but in no case greater than the maximum rate of interest
permitted by applicable law.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off or Defenses by Company. The Executive's right to receive
when due the payments and other benefits provided for under this Agreement is
absolute, unconditional and shall not be subject to any set-off, counterclaim or
legal or equitable defense. The exclusive method for the Company to avoid
payments to the Executive under this Agreement, to the extent specified in this
Agreement, is to terminate Executive's employment for Cause pursuant to Sections
4.3 and 5.2 of this Agreement. Time is of the essence in the performance by the
Company of its obligations under this Agreement. Any claim which the Company may
have against the Executive, whether for a breach of this Agreement or otherwise,
shall be brought in a separate action or proceeding and not as part of any
action or proceeding brought by the Executive to enforce any rights against the
Company under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company under this Agreement by seeking new employment
following termination. Except as specifically otherwise provided in this
Agreement, all amounts payable pursuant to this Agreement shall be paid without
reduction regardless of any amounts of salary,
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compensation or other amounts which may be paid or payable to the Executive as
the result of the Executive's employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NONCOMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of the
Company and its subsidiaries to maintain as secret and confidential all valuable
and unique information and techniques acquired, developed or used by the Company
and its Subsidiaries relating to their business, operations, employees and
customers, which gives the Company and its subsidiaries a competitive advantage
in the construction and engineering industry and other businesses in which the
Company and its subsidiaries are engaged ("Confidential Information"). Executive
recognizes that all such Confidential Information is the sole and exclusive
property of the Company and its Subsidiaries, and that disclosure of
Confidential Information would cause damage to the Company and its Subsidiaries.
Executive agrees that, except as required by the duties of his employment with
the Company and/or its Subsidiaries and except in connection with enforcing the
Executive's rights under this Agreement or if compelled by a court or
governmental agency, he will not, without the consent of the Company,
disseminate or otherwise disclose any Confidential Information obtained during
his employment with the Company and/or its Subsidiaries for so long as such
information is valuable and unique.
10.2 Noncompetition/Nonsolicitation.
(a) Executive agrees that, during the period of his employment with the
Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business as
defined in Section 10.2(d).
(b) Executive agrees that, during the period of his employment with the
Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form of
equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose stock is
listed on a national securities exchange or actively traded in the
over-the-counter market; provided that (1) such investment does not give
Executive the right or ability to control or influence the policy decisions
of any Prohibited Business, and (2) such investment does not create a
conflict of interest between Executive's duties hereunder and Executive's
interest in such investment.
(c) Executive agrees that, during the period of his employment with the
Company and/or its Subsidiaries and, if Executive's employment is
terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
Subsidiaries or (2) interfere with the Company's or any of its
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Subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its Subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after the
date of Executive's termination of employment), was an employee, customer,
vendor or supplier of, or maintained a business relationship with, any
business of the Company and/or its Subsidiaries which was conducted at any
time during the period commencing one year prior to the termination of
employment.
(d) For the purpose of this Section 10.2, "Prohibited Business" shall
be defined as any construction and engineering business specializing in the
engineering and design, materials procurement, fabrication, erection,
repair and modification of steel tanks and other steel plate structures and
associated systems and any branch, office or operation thereof, which is a
direct and material competitor of the Company wherever the Company does
business, including the Netherlands, the United States and any other
country.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing, the Company
shall not be precluded from pursuing any and all remedies it may have at law or
in equity for breach of such obligations; provided, however, that such breach
shall not in any manner or degree whatsoever limit, reduce or otherwise affect
the obligations of the Company under this Agreement, and in no event shall an
asserted breach of the Executive's obligations under this Article X constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. 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.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement.
Any successor to the business and/or assets of the Company which assumes and
agrees to perform this Agreement by operation of law, contract, or otherwise
shall be jointly and severally liable with the Company under this Agreement.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid as soon as administratively practicable in a lump sum to the
beneficiary designated in writing by the Executive, or if none is so designated,
to the Executive's estate.
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11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other portions
of this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
11.6 Amendments. Except as provided in Section 2.2 hereof, this Agreement
shall not be altered, amended or modified except by written instrument executed
by the Company and Executive.
11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Robert B. Jordan
2319 Fleetwood Court
Naperville, Illinois 60565
If to the Company (including any or all of CBICNV, CBIC or CBICD):
Chicago Bridge & Iron Company
1501 North Division Street
Plainfield, Illinois 60544
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Illinois, without regard to its choice
of law principles.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
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11.11 Tax Withholding. The Company may withhold from any amounts payable
under this Agreement any federal, state or local taxes that are required to be
withheld pursuant to any applicable law or regulation.
11.12 Joint and Several Obligations. The obligations of the Company under
this Agreement are joint and several obligations of CBICNV, CBIC and CBICD;
provided, however, that each of CBICNV, CBIC and CBICD may agree between
themselves but without adversely affecting the rights of the Executive which of
them shall provide any particular payment or benefit under this Agreement.
11.13 No Waiver. The Executive's failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision of this Agreement. A waiver of any provision of
this Agreement shall not be deemed a waiver of any other provision, and any
waiver of any default in any such provision shall not be deemed a waiver of any
later default thereof or of any other provision.
11.14 Prior Agreement. The Change of Control Severance Agreement dated
March 4, 1999, between CBIC and the Executive is hereby terminated effective on
the date of this Agreement.
11.15 Entire Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to its subject matter and supercedes
any prior change of control severance agreement and any Change of Control
severance benefit provisions in any prior employment agreement between the
Company and the Executive.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
EXECUTIVE
/s/ Robert B. Jordan
------------------------------------------------
Robert B. Jordan
CHICAGO BRIDGE & IRON COMPANY N.V.
By: /s/ Gerald M. Glenn
-------------------------------------------
Title: Managing Director
-----------------------------------------
CHICAGO BRIDGE & IRON COMPANY
By: /s/ Stephen M. Duffy
-------------------------------------------
Title:
-----------------------------------------
CHICAGO BRIDGE & IRON COMPANY (DELAWARE)
By: /s/ Timothy J. Wiggins
-------------------------------------------
Title:
-----------------------------------------
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
126
TABLE OF CONTENTS
PAGE
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ARTICLE I. PURPOSES...............................................................................................1
ARTICLE II. CERTAIN DEFINITIONS...................................................................................1
2.1 "Accrued Obligations"...................................................................................1
2.2 "Agreement Term"........................................................................................1
2.3 "Affiliate".............................................................................................2
2.4 "Article" means an article of this Agreement............................................................2
2.5 "Beneficial Owner" .....................................................................................2
2.6 "Board".................................................................................................2
2.7 "Cause".................................................................................................2
2.8 "Change of Control".....................................................................................2
2.9 "Code"..................................................................................................3
2.10 "Deferral Plan" has the meaning defined for that term in Section 3.6....................................3
2.11 "Disability"............................................................................................4
2.12 "Effective Date"........................................................................................4
2.13 "Good Reason" has the meaning defined for that term in Section 4.4(b)...................................4
2.14 "Gross-up Payment"......................................................................................4
2.15 "Growth Transaction" ...................................................................................4
2.16 "Imminent Control Change Date"..........................................................................4
2.17 "IRS"...................................................................................................4
2.18 "1934 Act"..............................................................................................4
2.19 "Notice of Termination".................................................................................5
2.20 "Plans".................................................................................................5
2.21 "Policies"..............................................................................................5
2.22 "Post-Change Period". .................................................................................5
2.23 "Present Value".........................................................................................5
2.24 "SEC"...................................................................................................5
2.25 "Section"...............................................................................................5
2.26 "SERP"..................................................................................................5
2.27 "Shareholder Agreement".................................................................................5
2.28 "Subsidiary"............................................................................................5
2.29 "Termination Date"......................................................................................5
2.30 "Transaction Owner".....................................................................................6
2.31 "Voting Securities".....................................................................................6
ARTICLE III. POST-CHANGE PERIOD PROTECTIONS.......................................................................6
3.1 General.................................................................................................6
3.2 Position and Duties.....................................................................................6
3.3 Compensation............................................................................................7
3.4 Pro-Rata Bonus Payment.................................................................................10
3.5 Equity Awards Vesting..................................................................................10
3.6 Nonqualified Deferred Compensation.....................................................................10
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ARTICLE IV. TERMINATION OF EMPLOYMENT............................................................................11
4.1 Disability..............................................................................................11
4.2 Death...................................................................................................11
4.3 Cause...................................................................................................11
4.4 Good Reason.............................................................................................13
ARTICLE V. OBLIGATIONS OF THE COMPANY UPON TERMINATION...........................................................14
5.1 If by the Executive for Good Reason or by the Company Other Than for Cause or Disability...............14
5.2 If by the Company for Cause.............................................................................17
5.4 If by the Company for Disability........................................................................17
5.5 If upon Death...........................................................................................17
ARTICLE VI. NON-EXCLUSIVITY OF RIGHTS............................................................................17
6.1 Waiver of Other Severance Rights........................................................................17
6.2 Other Rights............................................................................................17
ARTICLE VII. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY..........................................................18
7.1 Gross-up for Certain Taxes.............................................................................18
7.2 Determination by the Executive.........................................................................18
7.3 Additional Gross-up Amounts............................................................................19
7.4 Gross-up Multiple......................................................................................19
7.5 Opinion of Counsel.....................................................................................19
7.6 Amount Increased or Contested..........................................................................20
7.7 Refunds................................................................................................21
ARTICLE VIII. EXPENSES AND INTEREST..............................................................................21
8.1 Legal Fees and Other Expenses..........................................................................21
8.2 Interest...............................................................................................22
ARTICLE IX. NO SET-OFF OR MITIGATION.............................................................................22
9.1 No Set-off or Defenses by Company......................................................................22
9.2 No Mitigation..........................................................................................23
ARTICLE X. CONFIDENTIALITY AND NONCOMPETITION....................................................................23
10.1 Confidentiality........................................................................................23
10.2 Noncompetition/Nonsolicitation.........................................................................23
10.3 Remedy.................................................................................................24
ARTICLE XI. MISCELLANEOUS........................................................................................24
11.1 No Assignability.......................................................................................24
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11.2 Successors.............................................................................................24
11.3 Payments to Beneficiary................................................................................25
11.4 Non-alienation of Benefits.............................................................................25
11.5 Severability...........................................................................................25
11.6 Amendments.............................................................................................25
11.7 Notices................................................................................................25
11.8 Counterparts...........................................................................................25
11.9 Governing Law..........................................................................................25
11.10 Captions...............................................................................................26
11.11 Tax Withholding........................................................................................26
11.12 Joint and Several Obligations..........................................................................26
11.13 No Waiver..............................................................................................26
11.14 Prior Agreement........................................................................................26
11.15 Entire Agreement.......................................................................................26
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of October 13, 2000 is made among CHICAGO
BRIDGE & IRON COMPANY N.V. ("CBICNV"), a Netherlands corporation, CHICAGO BRIDGE
& IRON COMPANY, a Delaware corporation ("CBIC"), CHICAGO BRIDGE & IRON COMPANY
(DELAWARE), a Delaware corporation ("CBICD" and, together with CBICNV and CBIC,
the "Company"), each having its principal place of business in Plainfield,
Illinois, and Timothy J. Wiggins (the "Executive"), a resident of Illinois.
ARTICLE I.
PURPOSES
The Supervisory Board of CBICNV has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued service of the Executive, despite the possibility or
occurrence of a change of control of the Company. The Board believes it is
imperative to reduce the distraction of the Executive that would result from the
personal uncertainties caused by a pending or threatened change of control, to
encourage the Executive's full attention and dedication to the Company, and to
provide the Executive with compensation and benefits arrangements upon a change
of control which ensure that the expectations of the Executive will be satisfied
and are competitive with those of similarly-situated corporations. This
Agreement is intended to accomplish these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" has the meaning defined for that term in
Section 5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is thirty-six (36) months following the
date of this Agreement ("Expiration Date"); provided, however, that the
Agreement Term shall be extended as follows: (a) if neither the Company nor the
Executive gives written notice to the other pursuant to Section 11.7 that this
Agreement shall not be renewed ("Notice of Nonrenewal") within two years from
the date of this Agreement, the Agreement Term shall be extended to an
Expiration Date which shall be the first annual anniversary of the date a Notice
of Nonrenewal is given; (b) if an Imminent Control Change Date occurs before the
Expiration Date (as it may be extended under clause (a) above), then no Notice
of Nonrenewal shall thereafter be effective and the Agreement Term shall
automatically extend to an Expiration Date which is twelve (12) months after the
Imminent Change of Control Date, as further extended under the terms of this
clause should another Imminent Change of Control Date occur prior to the
Expiration Date as from time to time so extended, and (c) if a Change of Control
occurs before the Expiration Date (as extended
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under clause (a) or (b) above or this clause (c)), the Expiration Date shall
automatically be extended to the last day of the Post-Change Period as the
Post-Change Period may be extended as provided in Section 2.22.
2.3 "Affiliate" means an "affiliate" or "associate" as those terms are
defined in Rule 12b-2 under the 1934 Act.
2.4 "Article" means an article of this Agreement.
2.5 "Beneficial Owner" means such term as defined in Rule 13d-3 of the
SEC under the 1934 Act.
2.6 "Board" means the Supervisory Board of Chicago Bridge & Iron
Company N.V.
2.7 "Cause" has the meaning defined for that term in Section 4.3(b).
2.8 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
(a) any person (as such term is used in Rule 13d-5 of the SEC
under the 1934 Act) or group (as such term is defined in Section 13(d)
of the 1934 Act), other than a Subsidiary or any employee benefit plan
(or any related trust) of the Company or a Subsidiary, becomes the
Beneficial Owner of 25% or more of the common shares of any of CBICNV,
CBIC or CBICD or of other Voting Securities representing 25% or more of
the combined voting power of all Voting Securities of any of CBICNV,
CBIC or CBICD; provided, however, that (i) no Change of Control shall
be deemed to have occurred solely by reason of any such acquisition by
a corporation with respect to which, after such acquisition, more than
75% of both the common shares or common stock of such corporation and
the combined voting power of the Voting Securities of such corporation
are then beneficially owned, directly or indirectly, by the persons who
were the Beneficial Owners of the common shares and other Voting
Securities of CBICNV, CBIC or CBICD immediately before such
acquisition, in substantially the same proportion as their ownership of
the common shares and other Voting Securities of CBICNV, CBIC or CBICD,
as the case may be, immediately before such acquisition; and (ii) once
a Change of Control occurs under this subsection (a), the occurrence of
the next Change of Control (if any) under this subsection (a) shall be
determined by reference to a person or group other than the person or
group whose acquisition of Beneficial Ownership created such prior
Change of Control unless the original person or group has in the
meantime ceased to own 25% or more of the common shares of all of
CBICNV, CBIC or CBICD or other Voting Securities representing 25% or
more of the combined voting power of all Voting Securities of all of
CBICNV, CBIC or CBICD; or
(b) individuals who, as of the date of this Agreement or as of
any Effective Date thereafter, are Supervisory Directors of CBICNV (the
"Incumbent Directors") cease for any reason to constitute at least 50%
of the members of the Board; provided, however, that (i) any individual
who becomes a Supervisory Director after the Effective Date whose
binding nomination for election to the Board by the general meeting of
shareholders was approved by a vote or written consent of at least 75%
of the
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Supervisory Directors who are then Incumbent Directors shall be
considered an Incumbent Director, but excluding, for this purpose, any
such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election
of the directors of the Company (as such terms are used in Rule 14a-11
of the SEC under the 1934 Act); and (ii) once a Change of Control
occurs under this subsection (b), the occurrence of the next Change of
Control (if any) under this subsection (b) shall be determined by
reference to the individuals who were Incumbent Directors immediately
after the Effective Date of such prior Change of Control; or
(c) approval by the Board, or by the shareholders of CBICNV,
CBIC or CBICD, of any of the following:
(i) a merger, reorganization or consolidation of
CBICNV, CBIC or CBICD ("Merger"), other than a Merger after
which the individuals and entities who were the respective
beneficial owners of the common shares and other Voting
Securities of CBICNV, CBIC or CBICD (as the case may be)
immediately before such Merger beneficially own, directly or
indirectly, more than 75% of, respectively, the common shares
or common stock and the combined voting power of the Voting
Securities of the corporation resulting from such Merger, in
substantially the same proportion as their ownership of the
common shares or common stock and other Voting Securities of
CBICNV, CBIC or CBICD (as the case may be) immediately before
such Merger, or
(ii) a sale or other disposition by any of CBICNV,
CBIC or CBICD of all or substantially all of the assets owned
by it, or
(iii) any transaction as a result of which CBICNV
would not thereafter directly or indirectly own beneficially
at least 75% of the common stock of CBIC or as a result of
which CBIC would not thereafter directly or indirectly own
beneficially at least 75% of the common stock of CBICD, unless
after either such transaction CBICNV continues to own directly
or indirectly substantially all of the pre-transaction assets
of both CBIC and CBICD.
(d) if a Growth Transaction previously occurred, any
Transaction Owner individually, or Transaction Owners collectively:
(i) materially breach(es) any provision of any
shareholder agreement to which CBICNV and such Transaction
Owner(s) are parties that addresses the governance of CBICNV
following the Growth Transaction; or
(ii) become(s) the Beneficial Owner of more than
66.5% of the common shares of any of CBICNV, CBIC or CBICD or
of other Voting Securities representing more than 66.5% of the
combined voting power of all Voting Securities of any of
CBICNV, CBIC or CBICD.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Deferral Plan" has the meaning defined for that term in Section
3.6.
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2.11 "Disability" has the meaning defined for that term in Section
4.1(b).
2.12 "Effective Date" means each date on which a Change of Control
occurs during the Agreement Term; provided, however, that if the Company
terminates the Executive's employment before the date of a Change of Control,
and if the Executive reasonably demonstrates that such termination of employment
(a) was at the request of a third party who had taken steps reasonably
calculated to effect the Change of Control or (b) otherwise arose in connection
with or anticipation of the Change of Control, then "Effective Date" shall mean
the date immediately before the date of such termination of employment.
2.13 "Good Reason" has the meaning defined for that term in Section
4.4(b).
2.14 "Gross-up Payment" has the meaning defined for that term in
Section 7.1.
2.15 "Growth Transaction" means (i) the acquisition by Wedge Group
Incorporated ("WGI"), a Delaware corporation, First Reserve Fund VIII, L.P.
("FRF"), a Delaware limited partnership, or Pitt-Des Moines, Inc. ("PDM"), a
Pennsylvania corporation, or their Affiliates, of common shares or other Voting
Securities of CBICNV as contemplated by an agreement with CBICNV for the
acquisition by CBICNV or an Affiliate of Howe-Baker International, Inc. from WGI
(the "HBI Transaction") or for the acquisition of the PDM Engineered
Construction Division and Water Division from PDM (the "PDM Transaction"); (ii)
the acquisition by a person (other than by public offering) of common shares or
other Voting Securities of CBICNV from CBICNV as part of an arrangement for
financing the HBI Transaction or the PDM Transaction; (iii) the acquisition by a
person of common shares or other Voting Securities of CBICNV from a previous
Transaction Owner if the person acquiring such common shares or other Voting
Securities is or becomes a party to a Shareholder Agreement with CBICNV that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner; or (iv) a transfer of common shares or other
Voting Securities of CBICNV from one Transaction Owner to another Transaction
Owner if the acquiring Transaction Owner is subject with respect to such shares
or other Voting Securities to either a preexisting Shareholder Agreement between
CBICNV and the acquiring Transaction Owner or a Shareholder Agreement that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner. However, a "Growth Transaction" will not include
any event described in Section 2.8(d).
2.16 "Imminent Control Change Date" means any date on which occurs (a)
a presentation to the Company's shareholders generally or any of the Company's
directors or executive officers of a proposal or offer for a Change of Control,
or (b) the public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal or offer for
a Change of Control, or (c) such proposal or offer remains effective and
unrevoked.
2.17 "IRS" means the Internal Revenue Service.
2.18 "1934 Act" means the Securities Exchange Act of 1934, as amended.
2.19 "Notice of Termination" means a written notice given in accordance
with Section 11.7 which sets forth (a) the specific termination provision in
this Agreement relied upon
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by the party giving such notice, (b) in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under such termination provision and (c) if the Termination Date is
other than the date of receipt of such Notice of Termination, the Termination
Date.
2.20 "Plans" means plans, programs, policies or practices of the
Company or any of its Subsidiaries.
2.21 "Policies" means policies, practices or procedures of the Company
or any of its Subsidiaries.
2.22 "Post-Change Period" means the period commencing on each Effective
Date and ending on the third annual anniversary of such Effective Date. If a new
Change of Control creates a new Effective Date during any current Post-Change
Period, the Post-Change Period shall be extended to the third annual anniversary
of such new Effective Date; and shall be further extended upon each new
Effective Date during the Post-Change Period as extended.
2.23 "Present Value" means the present value, determined using (a) the
actuarial assumptions published by the Pension Benefit Guaranty Corporation
("PBGC") for determining immediate annuity values, as in effect on the first day
of the calendar year in which any payment of present value is required, or (b)
if no such actuarial assumptions are published by the PBGC, using the mortality
assumptions of the UP-84 group mortality table and an interest rate assumption
which is the lesser of (i) 75% of the current 30-year Treasury bond rate or (ii)
the current 30-year Treasury bond rate minus 150 basis points.
2.24 "SEC" means the Securities and Exchange Commission.
2.25 "Section" means, unless the context otherwise requires, a section
of this Agreement.
2.26 "SERP" has the meaning defined for that term in Section 3.6.
2.27 "Shareholder Agreement" means an agreement between CBICNV and a
person that limits the ability of such person and its Affiliates to obtain and
exercise control over the management and policies of the CBICNV.
2.28 "Subsidiary" means a corporation as defined in Section 424(f) of
the Code (with the Company being treated as the employer corporation for
purposes of this definition) and any partnership or limited liability company in
which the Company or any Subsidiary has a direct or indirect interest (whether
in the form of voting power or participation in profits or capital contribution)
of 50% or more.
2.29 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company terminates the Executive's employment
other than for Cause or Disability, then the Termination Date shall be the date
of receipt of such Notice of Termination and (b) if the Executive's employment
is terminated by reason of death or Disability, then the Termination Date shall
be the date of death
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of the Executive or the Disability Effective Date (as defined in Section
4.1(a)), as the case may be.
2.30 "Transaction Owner" means a person who acquires common shares or
other Voting Securities of CBICNV in a Growth Transaction, or any Affiliate of
such person.
2.31 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 General. On the Effective Date and during the Post-Change Period
thereafter the Company shall make the payments, provide the benefits and fulfill
the other obligations required by this Article III. However, if, such Effective
Date and Post-Change Period result solely from a Growth Transaction:
(a) Section 3.3(b) shall not apply except for purposes of
determining the obligations of the Company on termination pursuant to
Section 5.1, and to the extent provided in Section 4.4(b)(iii) and as
modified thereby, in determining the existence of Good Reason;
(b) clause (ii) of each of Sections 3.3(c) through 3.3(h)
shall not apply except for purposes of determining the obligations of
the Company on termination pursuant to Section 5.1; but the aggregate
value to the Executive of all Plans, fringe benefits and arrangements
described in Sections 3.3(c) through 3.3(h) shall not be less
favorable, in the aggregate, than the aggregate value to the Executive
of such Plans, fringe benefits and arrangements provided by the Company
to the Executive or peer executives at any time during the 90-day
period immediately before such Effective Date; and
(c) Except as otherwise agreed to by separate agreement
between the Company and the Executive that is more favorable to the
Executive, Sections 3.4, 3.5, and 3.6 shall not apply on such Effective
Date; but to the extent such vesting or payment is not otherwise
required by Section 5.1, Sections 3.4, 3.5 and 3.6, shall apply to the
Executive on the Termination Date (as if such Sections referred to the
"Termination Date" instead of the "Effective Date") if during the
Post-Change Period the Company shall terminate Executive's employment
other than for Cause, or if the Executive shall terminate employment
for Good Reason, or if employment terminates as a result of Disability
or death.
3.2 Position and Duties.
(a) During the Post-Change Period, (1) the Executive's
position (including offices, titles, reporting requirements and
responsibilities), authority and duties shall be at least commensurate
in all material respects with the most significant of those held by,
exercised by, or assigned to the Executive at any time during the
90-day period immediately before the Effective Date and (2) the
Executive's services shall be
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performed at the location where the Executive was employed immediately
before the Effective Date or any other location less than 40 miles from
such former location.
(b) During the Post-Change Period (other than any periods of
vacation, sick leave, disability leave or other family or medical leave
to which the Executive is entitled), the Executive shall devote his or
her full attention and time to the business and affairs of the Company
and, to the extent necessary to discharge the duties assigned to the
Executive in accordance with this Agreement, shall use his or her best
efforts to perform such duties faithfully and efficiently. During the
Post-Change Period, the Executive may (1) serve on corporate, civic or
charitable boards or committees, (2) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (3) manage
personal investments, so long as such activities are consistent with
the Policies of the Company or its Subsidiaries at the Effective Date
and do not significantly interfere with the performance of the
Executive's duties under this Agreement. To the extent that any such
activities have been conducted by the Executive before the Effective
Date and were consistent with the Policies of the Company or its
Subsidiaries at the Effective Date, the continued conduct of such
activities (or activities similar in nature and scope) after the
Effective Date shall not be deemed to interfere with the performance of
the Executive's duties under this Agreement.
3.3 Compensation.
(a) Base Salary. During the Post-Change Period, the Company
shall pay or cause to be paid to the Executive an annual base salary in
cash ("Guaranteed Base Salary"), which shall be paid in a manner
consistent with the Company's payroll practices in effect immediately
before the Effective Date for such Post-Change Period, at a rate at
least equal to the highest rate of annual salary paid or payable to the
Executive by the Company at any time during the 12-month period
immediately before such Effective Date. During the Post-Change Period,
the Guaranteed Base Salary shall be reviewed at least annually and
shall be increased at any time and from time to time as shall be
substantially consistent with increases in base salary awarded to other
peer executives of the Company. Any increase in Guaranteed Base Salary
shall not limit or reduce any other obligation of the Company to the
Executive under this Agreement. After any such increase, the Guaranteed
Base Salary shall not be reduced and the term "Guaranteed Base Salary"
shall thereafter refer to the increased amount.
(b) Guaranteed Bonus.
(i) During the Post-Change Period, the Company shall
pay or cause to be paid to the Executive a bonus (the
"Guaranteed Bonus") for each Performance Period which ends
during the Post-Change Period. "Performance Period" means each
period of time designated in accordance with any bonus
arrangement ("Bonus Plan") which is based upon performance and
approved by the Board or by any committee of the Board. For
purposes of this Section 3.3, a Bonus Plan includes, without
limitation, the Company's Incentive Compensation Plan as in
effect on the date hereof or any similar plan, but does not
include the Company's 1997 or 1999 Long-Term Incentive Plan
(an "LTIP") or any similar plan under
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which equity awards described Section 3.5 are granted, unless
failure to consider the LTIP a Bonus Plan would leave the
Company without any Bonus Plan covering Executive. The
Guaranteed Bonus shall be at least equal to the product of (A)
the greater of (i) the On Plan Percentage (as defined below),
or (ii) the Actual Bonus Percentage (as defined below),
multiplied by (B) the Guaranteed Base Salary.
(ii) For purposes of this Section 3.3(b):
(A) "On Plan Percentage" means the
percentage of Guaranteed Base Salary to which
the Executive would be entitled under the Bonus
Plan(s) for the Performance Period for which the
Guaranteed Bonus is awarded ("Current
Performance Period") if performance achieved
100% of the target performance goals established
pursuant to such Bonus Plan(s); or, if greater,
the percentage of Guaranteed Base Salary to
which Executive would have been entitled under
the Bonus Plan(s) for the Performance Period
ending immediately prior to the Post-Change
Period if performance achieved 100% of the
performance goals established pursuant to such
Bonus Plan(s) for such prior Performance Period.
(B) "Actual Bonus Percentage" means the
percentage of Guaranteed Base Salary for the
Current Performance Period to which the
Executive would be entitled under any Bonus Plan
if the performance were measured by the actual
performance during the Current Performance
Period; provided, however, that for purposes of
determining the Guaranteed Bonus for purposes of
Sections 3.4 and 5.1(b), "Actual Bonus
Percentage" means the percentage of Guaranteed
Base Salary for the Performance Period during
which the Effective Date (for purposes of
Section 3.4) or Termination Date (for purposes
of Section 5.1(b)) occurs to which the Executive
would be entitled if the performance during such
Performance Period were measured by the actual
performance during the portion of such
Performance Period before the Effective Date or
the Termination Date (whichever is applicable),
projected to the last day of such Performance
Period.
(c) Incentive, Savings and Retirement Plans. During the
Post-Change Period and notwithstanding the payment required by Section
3.6, (i) the Executive shall be entitled to continue to participate in
all incentive (including long-term incentives and management stock
plans), savings, deferred compensation, retirement and benefit
restoration Plans provided by the Company and applicable to other peer
executives of the Company, but (ii) in no event shall such Plans
provide the Executive with incentive (including long-term incentives
and management stock benefits), savings, deferred compensation,
retirement and benefit restoration benefits which, in any case, are
less favorable, in the aggregate, than the most favorable of those
provided by the Company to
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the Executive or to peer executives under such Plans as in effect at
any time during the 90-day period immediately before any Effective
Date.
(d) Welfare Benefit Plans. During the Post-Change Period, (i)
the Executive and the Executive's family shall be eligible to
participate in, and receive all benefits under, welfare benefit Plans
(including, without limitation, medical, prescription, dental,
disability, salary continuance, individual life, group life, dependent
life, accidental death and travel accident insurance Plans) provided by
the Company and applicable to other peer executives of the Company and
their families, but (ii) in no event shall such Plans provide benefits
which in any case are less favorable, in the aggregate, than the most
favorable of those provided by the Company to the Executive or to peer
executives under such Plans as in effect at any time during the 90-day
period immediately before any Effective Date.
(e) Fringe Benefits. During the Post-Change Period, (i) the
Executive shall be entitled to fringe benefits (including, without
limitation, any foreign service travel and housing allowances for
Executive and the Executive's family under Plans or Policies of the
Company for foreign service) in accordance with the most favorable
Plans provided by the Company and applicable to other peer executives
of the Company, but (ii) in no event shall such Plans provide fringe
benefits which in any case are less favorable, in the aggregate, than
the most favorable of those provided by the Company to the Executive or
peer executives under such Plans in effect at any time during the
90-day period immediately before any Effective Date.
(f) Expenses. During the Post-Change Period, (i) the Executive
shall be entitled to prompt reimbursement of all reasonable
employment-related expenses incurred by the Executive upon the
Company's receipt of accountings in accordance with the most favorable
Policies applicable to peer executives of the Company, but (ii) in no
event shall such Policies be less favorable, in the aggregate, than the
most favorable of those provided by the Company to the Executive or to
peer executives under such Policies in effect at any time during the
90-day period immediately before any Effective Date.
(g) Office and Support Staff. During the Post-Change Period,
(i) the Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to secretarial and
other assistance in accordance with the most favorable Policies
applicable to peer executives of the Company, but (ii) in no event
shall such Policies be less favorable, in the aggregate, than the most
favorable of those provided by the Company to the Executive or to peer
executives under such Policies in effect at any time during the 90-day
period immediately before any Effective Date.
(h) Vacation. During the Post-Change Period, (i) the Executive
shall be entitled to paid vacation in accordance with the most
favorable Policies applicable to peer executives of the Company, but
(ii) in no event shall such Policies be less favorable, in the
aggregate, than the most favorable of those provided by the Company to
the Executive or to peer executives under such Policies in effect at
any time during the 90-day period immediately before any Effective
Date.
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3.4 Pro-Rata Bonus Payment.
On each Effective Date the Company shall pay to Executive in a single
lump sum in cash the product of (A) the Guaranteed Bonus for the Performance
Period in which falls the Effective Date, multiplied by (B) a fraction, the
numerator of which is the number of days in such Performance Period before the
Effective Date, and the denominator of which is the total number of days in such
Performance Period. The amount of Guaranteed Bonus for such Performance Period
otherwise payable pursuant to Section 3.3(b), or otherwise payable pursuant to
this Section 3.4 by reason of a later Change of Control in the same Performance
Period, shall be reduced by any earlier payment made under this Section 3.4 for
the same Performance Period.
3.5 Equity Awards Vesting.
On the Effective Date, the Executive shall become fully vested in:
(a) any and all outstanding options ("Options") to purchase
common shares of the Company granted to Executive prior to the
Effective Date under any Plan, contract or arrangement for Options,
which Options shall become fully exercisable;
(b) any outstanding shares of restricted common shares of the
Company regardless whether such restrictions are scheduled to lapse
based on service or on performance or both ("Restricted Stock") awarded
to Executive under any Plan, contract or arrangement for Restricted
Stock; which shall become unrestricted and freely transferable; and
(c) any outstanding awards providing for the payment of a
variable number of common shares of the Company dependent on the
achievement of performance goals, or of an amount based on the fair
market value of such shares or the appreciation thereof ("Performance
Shares") awarded to Executive under any Plan, contract or arrangement
for Performance Shares; and there shall be paid out in cash to
Executive within 30 days following the Effective Date of the Change of
Control the value of the Performance Shares to which Executive would
have been entitled if performance achieved 100% of the target
performance goals established for such Performance Shares.
To the extent that for any reason such Options, Restricted Stock and
Performance Shares do not become vested on the Effective Date, the Company shall
pay Executive a cash amount equal to (i) the positive difference, if any,
between the value of the shares of common stock subject to the Options that did
not become vested (or, if greater, the value paid or to be paid in connection
with the Change of Control to a holder of an equal number of shares of common
stock ("Change of Control Value")) and the Option exercise price with respect to
such shares, as of and on the date such Options are forfeited; plus (ii) the
fair market value (determined without regard to any restriction other than a
restriction which by its terms may never lapse) (or, if greater, the Change of
Control Value) of all non-vested forfeited Restricted Stock and Performance
Shares as of and on the date such Restricted Stock or Performance Shares are
forfeited. Nothing in this Section 3.5 shall require the vesting, or payment, of
equity awards granted after such Effective Date unless a new Effective Date has
intervened
3.6 Nonqualified Deferred Compensation.
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On the Effective Date Executive shall become fully vested in and the
Company shall pay to Executive in a single lump sum in cash (1) the value of
Executive's then-accrued benefits, if any, which remain unpaid under any
nonqualified deferred compensation, benefit restoration, excess benefit or other
individual account plan, contract or arrangement for deferred compensation
maintained by the Company under which benefits are calculated by reference to an
individual account (a "Deferral Plan"), and (2) the Present Value of Executive's
then-accrued benefits, if any, which remain unpaid under any nonqualified
supplemental executive retirement plan or other plan, contract or arrangement
for retirement benefits maintained by the Company under which benefits are
calculated by reference to a defined amount payable in connection with or after
retirement or other termination of employment an (a "SERP").
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
(a) During the Post-Change Period, the Company may terminate
the Executive's employment upon the Executive's Disability (as defined
in Section 4.1(b)) by giving the Executive or his legal representative,
as applicable, Notice of Termination accompanied by a certification of
the Executive's Disability by a physician selected by the Company or
its insurers and reasonably acceptable to the Executive or the
Executive's legal representative. The Executive's employment shall
terminate effective on the 30th day (the "Disability Effective Date")
after the Executive's receipt of such Notice of Termination unless,
before the Disability Effective Date, the Executive shall have resumed
the full-time performance of the Executive's duties.
(b) "Disability" means any medically determinable physical or
mental impairment that has lasted for a continuous period of not less
than six months and can be expected to be permanent or of indefinite
duration, and that renders the Executive unable to perform the
essential functions required under this Agreement with or without
reasonable accommodation.
(c) Unless the Company establishes, by clear and convincing
evidence, that Executive has a Disability, any purported termination of
employment for Disability shall be deemed a termination other than for
Disability for all purposes of this Agreement.
4.2 Death. The Executive's employment shall terminate automatically
upon the Executive's death during the Post-Change Period.
4.3 Cause.
(a) During the Post-Change Period, the Company may terminate
the Executive's employment for Cause.
(b) "Cause" means any of the following: Executive's conviction
of a felony or of a crime involving fraud, dishonesty or moral
turpitude; Executive's willful or intentional material breach of this
Agreement that results in financial detriment that is
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material to the Company as a whole; or willful or intentional
misconduct by Executive in the performance of his duties under this
Agreement that results in financial detriment that is material to the
Company as a whole; except that Cause shall not mean:
(i) bad judgment or negligence;
(ii) any act or omission believed by the Executive in good
faith to have been in or not opposed to the interest of the Company
(without intent of the Executive to gain, directly or indirectly, a
profit to which the Executive was not legally entitled);
(iii) any act or omission with respect to which a
determination could properly have been made by the Board that the
Executive met the applicable standard of conduct for indemnification or
reimbursement under the Company's by-laws, any applicable
indemnification agreement, or applicable law, in each case in effect at
the time of such act or omission; or
(iv) any act or omission with respect to which Notice of
Termination is not given within 12 months after the earliest date on
which any member of the Board, not a party to the act or omission, knew
or should have known of such act or omission.
(c) The Company may not during the Post-Change Period terminate
Executive's employment for Cause unless the following procedures are fully
complied with:
(i) no fewer than 45 days prior to the Termination Date, the
Company provides Executive with written notice (the "Notice of
Consideration") of its intent to consider termination of Executive's
employment for Cause, including a detailed description of the specific
reasons which form the basis for such consideration;
(ii) if after providing Notice of Consideration, the Board
may, by the affirmative vote of at least 80% of its members (excluding
for this purpose Executive if he is a member of the Board, and any
other member of the Board reasonably believed by the Board to be
involved in the events issuing the Notice of Consideration), suspend
Executive with pay until a final determination pursuant to this Section
has been made;
(iii) for a period of not less than 30 days after the date
Notice of Consideration is provided, Executive shall have the
opportunity to appear before the Board, with or without legal
representation, at Executive's election, to present arguments and
evidence on his own behalf; and
(iv) following the presentation to the Board as provided in
(3) above or Executive's failure to appear before the Board at a date
and time specified in the Notice of Consideration (which date shall not
be less than 30 days after the date the Notice of Consideration is
provided), Executive may be terminated for Cause
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only if (i) the Board, by the affirmative vote of at least 80% of its
members (excluding Executive if he is a member of the Board, and any
other member of the Board reasonably believed by the Board to be
involved in the events leading the Board to terminate Executive for
Cause), determines that the actions or inactions of Executive specified
in the Notice of Consideration occurred, that such actions or inactions
constitute Cause, and that Executive's employment should accordingly be
terminated for Cause; and (ii) the Board provides Executive with a
written determination (a "Notice of Termination for Cause") setting
forth in specific detail the basis of such Termination of Employment,
which Notice of Termination for Cause shall be consistent with the
reasons set forth in the Notice of Consideration.
Unless the Company establishes, by clear and convincing evidence, both
(x) its full compliance with the substantive and procedural requirements of this
Section prior to a termination of employment for Cause, and (y) that Executive's
action or inaction specified in the Notice of Termination for Cause did occur
and constituted Cause, any purported termination of employment for Cause shall
be deemed a termination without Cause for all purposes of this Agreement.
4.4 Good Reason.
(a) During the Post-Change Period, the Executive may terminate
employment for Good Reason within 12 months following the Executive's
actual knowledge of an act or omission which constitutes Good Reason;
provided, however, that the Executive's failure to terminate within 12
months following Executive's actual knowledge of a particular act or
omission which constitutes Good Reason shall not prevent Executive's
termination for any other act or omission which constitutes Good
Reason.
(b) "Good Reason" means any of the following:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including offices, titles, reporting requirements or
responsibilities), authority or duties as prescribed by
Section 3.2(a)(1), or the Company's requiring the Executive to
be based at any office or location other than the location
described in Section 3.2(a)(2);or any other action by the
Company which results in a diminution or other material
adverse change in such position, authority or duties;
(ii) the failure to pay Guaranteed Base Salary in at
least the amount prescribed by Section 3.2(a);
(iii) the failure to pay Guaranteed Bonus in at least
the amount prescribed by Section 3.3(b); provided, however,
that if the Post-Change Period results solely from a Growth
Transaction; Good Reason under this clause (iii) shall only be
the failure to provide Executive with a bonus opportunity
(including designation of target performance goals and
percentage of Guaranteed Base Salary payable on achievement of
target performance goals) no less favorable to
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Executive than that provided by the Company to Executive for
either of the two most recent Performance Periods beginning
before such Growth Transaction;
(iv) the failure to provide any plan or fringe
benefits or perquisites prescribed by Sections 3.3(c) through
3.3(h), as modified, if the Post-Change Period results solely
from a Growth Transaction, by Section 3.1(b);
(v) any other failure by the Company to comply with
any of the provisions of Article III;
(vi) any other material adverse change to the terms
and conditions of the Executive's employment (whether or not
also described in clauses (i) through (v) above);
(vii) the Board's giving Notice of Consideration
pursuant to Section 4.3(c) (of the intent to consider
terminating Executive for Cause) but failing to terminate
Executive for Cause within a period of 90 days thereafter in
compliance with all substantive and procedural requirements of
Section 4.3,
(viii) any purported termination by the Company of
the Executive's employment other than as expressly permitted
by this Agreement (any such purported termination shall not be
effective for any other purpose under this Agreement);
(ix) a failure by the Company to cause a successor,
prior to or as of the date it becomes a successor, to assume
and agree to perform this Agreement in accordance with the
provisions of Section 11.2 hereof.
Any determination by Executive that any of the foregoing events has
occurred and constitutes "Good Reason" shall be conclusive and binding
for all purposes unless the Company establishes by clear and convincing
evidence that Executive did not have a reasonable basis for such a
determination.
(c) Any termination of employment by the Executive for Good
Reason shall be communicated to the Company by Notice of Termination.
The passage of time not in excess of 12 months after the Executive has
actual knowledge of an act or omission which constitutes Good Reason
prior to delivery of Notice of Termination or a failure by the
Executive to include 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 under this Agreement or preclude the
Executive from asserting such fact or circumstance in enforcing rights
under this Agreement.
ARTICLE V.
OBLIGATIONS OF THE COMPANY UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Company Other Than
for Cause or Disability. If, during the Post-Change Period, the Company shall
terminate Executive's
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employment other than for Cause, Disability, or death or if the Executive shall
terminate employment for Good Reason, the Company shall pay the Executive within
five (5) days of the Termination Date (or if earlier within five (5) days of the
last day Executive performed services for the Company as an Employee), in
addition to all vested rights arising from the Executive's employment as
specified in Article III, a cash amount equal to the sum of the amounts
described in (a) through (g) below and the additional benefits described in (h)
through (i) below:
(a) The Guaranteed Base Salary, any accrued vacation pay and
business expenses incurred through the Termination Date, to the extent
not previously paid to the Executive by the Company.
(b) The difference between (1) the product of (A) the
Guaranteed Bonus, multiplied by (B) a fraction, the numerator of which
is the number of days in the Termination Performance Period which
elapsed before the Termination Date, and the denominator of which is
the total number of days in the Termination Performance Period, and (2)
the amount of any Guaranteed Bonus previously paid to the Executive by
the Company with respect to the Termination Performance Period.
(c) The value of Executive's then-accrued benefits under any
Deferral Plan plus the present value of Executive's then-accrued
benefits under any SERP, determined without disregarding service and
compensation before any Effective Date but then reduced by the amount,
if any, previously paid to the Executive by the Company pursuant to
Section 3.6.
(d) An amount equal to the product of (1) three (3.0),
multiplied by (2) the sum of (A) the Guaranteed Base Salary and (B) the
Guaranteed Bonus.
(e) An amount equal to the sum of the value of the unvested
portion of the Executive's accounts or accrued benefits under any
qualified plan maintained by the Company as of the Termination Date.
(f) The difference between (1) the amount that would be
determined under Section 5.1(c) above if such amount were calculated
(to the extent applicable in determining such amount) (A) as though the
Executive continued to accrue benefits and be credited with service
under the SERP for a period of three years after the Termination Date,
(B) as though the Executive received compensation during each year of
such three-year period equal to the sum of the Guaranteed Base Salary
and the highest Guaranteed Bonus paid (or payable) to the Executive in
the three calendar years preceding the Termination Date, (C) as though
the Executive were three (3) years older than his age at the
Termination Date, and (D) without disregarding service and compensation
before the Termination Date; reduced by (2) the amount (if any)
previously or simultaneously paid by the Company to the Executive
pursuant to Sections 3.6 and 5.1(c).
(g) In addition to the foregoing amounts, the Company shall
pay on behalf of Executive all fees and costs charged by the
outplacement firm selected by the Executive to provide outplacement
services or at the election of the Executive, an immediate cash
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payment equal to the fees and expenses such outplacement firm would
charge but not in excess of 20% of the Guaranteed Base Salary.
(h) In addition to the foregoing payments, until the third
annual anniversary of the Termination Date or such later date as any
Plan of the Company may specify, the Company shall continue to provide
to the Executive and the Executive's family welfare benefits
(including, without limitation, medical, prescription, dental,
disability, salary continuance, individual life, group life, accidental
death and travel accident insurance plans and programs) which are at
least as favorable as the most favorable Plans of the Company
applicable to other peer executives and their families as of the
Termination Date, but which are in no event less favorable than the
most favorable Plans of the Company applicable to other peer executives
and their families during the 90-day period immediately before the
Effective Date; and the cost of such welfare benefits to Executive
shall not exceed the cost of such benefits to the Executive immediately
before the Termination Date or, if less, the Effective Date.
(i) Beginning on the later of the third annual anniversary of
the Termination Date or the date Executive attains age 50, and
continuing until the death of the last to die of Executive and his or
her spouse, the Company shall provide to the Executive and to
Executive's family medical benefits which (1) until Executive attains
age sixty-five (65) are at least as favorable as the most favorable
medical Plans of the Company applicable to actively employed peer
executives and that covered any active employee of the Company as of
the Effective Date, and (2) from and after the date Executive attains
age 65, are at least as favorable as the most favorable medical Plans
of the Company applicable to eligible retired peer executives and that
covered any retired employee as of the Effective Date; and the cost to
Executive of such medical benefits for the period described in clause
(1) shall not exceed the cost of such benefits to Executive immediately
before the Termination Date or, if less, the Effective Date, and the
cost to Executive of such medical benefits for the period described in
clause (2) shall not exceed the cost of such benefits to any similarly
situated eligible retiree of the Company immediately before the
Termination Date or, if less, the Effective Date.
The Executive's rights under this Section 5.1 shall be in addition to, and not
in lieu of, any post-termination continuation coverage or conversion rights the
Executive may have pursuant to applicable law, including without limitation
continuation coverage required by Section 4980 of the Code or Part 6 of Title I
of the Employee Retirement Income Security Act of 1974, as amended, for which
purpose the date of the qualifying event shall not be earlier than the date
specified in the first sentence of Section 5.1(i). However, if the Executive is
covered under a medical, life, or disability insurance plan provided by a
subsequent employer at equal or lesser cost to Executive than the cost to
Executive of coverage under the corresponding Company plan required by Sections
5.1(i), then the benefits under the corresponding Company plan required by
Sections 5.1(i) shall be secondary to the benefits under the subsequent
employer's medical, life, or disability insurance plan.
5.2 If by the Company for Cause. If the Company terminates the
Executive's employment for Cause during the Post-Change Period pursuant to the
procedures set forth in Section 4.3, this Agreement shall terminate without
further obligation by the Company to the
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Executive, other than the obligation immediately to pay the Executive in cash
the Executive's Guaranteed Base Salary through the Termination Date, plus the
amount of any compensation previously deferred by the Executive, plus any
accrued vacation pay and business expenses incurred through the Termination
Date, in each case to the extent not previously paid or reimbursed.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good Reason,
Disability or death, this Agreement shall terminate without further obligations
by the Company, other than the obligation immediately to pay the Executive in
cash all amounts specified in paragraphs (a), (b) and (c) of Section 5.1 (such
amounts collectively, the "Accrued Obligations").
5.4 If by the Company for Disability. If the Company terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than:
(a) the Company's obligation immediately to pay the Executive
in cash all Accrued Obligations, and
(b) the Executive's right after the Disability Effective Date
to receive disability and other benefits at least equal to the greater
of (i) those provided under the most favorable disability Plans
applicable to disabled peer executives of the Company in effect
immediately before the Termination Date or (ii) those provided under
the most favorable disability Plans of the Company in effect at any
time during the 90-day period immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by
reason of the Executive's death during the Post-Change Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the obligation immediately to
pay the Executive's estate or beneficiary in cash all Accrued Obligations.
Despite anything in this Agreement to the contrary, the Executive's family shall
be entitled to receive benefits at least equal to the most favorable benefits
provided by the Company to the surviving families of peer executives of the
Company under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive under such Plans in effect at
any time during the 90-day period immediately before the Effective Date.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are
made to the Executive pursuant to Section 5.1, the Executive hereby waives the
right to receive severance payments under any other Plan or agreement of or with
the Company.
6.2 Other Rights. Except as provided in Section 6.1, this Agreement
shall not prevent or limit the Executive's continuing or future participation in
any benefit, bonus, incentive or other Plans provided by the Company or any of
its Subsidiaries and for which the Executive may
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qualify, nor shall this Agreement limit or otherwise affect such rights as the
Executive may have under any other agreements with the Company or any of its
Subsidiaries. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any Plan of the Company or any of its
Subsidiaries and any other payment or benefit required by law at or after the
Termination Date shall be payable in accordance with such Plan or applicable law
except as expressly modified by this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Company's independent auditors, which determinations shall be
certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that any benefit received or deemed
received by the Executive from the Company pursuant to this Agreement or
otherwise (collectively, the "Payments") is or will become subject to any excise
tax under Section 4999 of the Code or any similar tax payable under any United
States federal, state, local or other law (such excise tax and all such similar
taxes collectively, "Excise Taxes"), then the Company shall, immediately after
such determination, pay the Executive an amount (the "Gross-up Payment") equal
to the product of
(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the Excise
Taxes and any federal, state, local or other income or excise taxes or other
taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Company may at any time request the Company's
independent auditors to prepare and deliver a Certificate to the Executive. The
Company shall, in addition to complying with Section 7.2, cause all
determinations and certifications under the Article to be made as soon as
reasonably possible and in adequate time to permit the Executive to prepare and
file the Executive's individual tax returns on a timely basis.
7.2 Determination by the Executive.
(a) If the Company or its independent auditors shall fail to
deliver a Certificate to the Executive (and to pay to the Executive the
amount of the Gross-up Payment, if any) within 14 days after receipt
from the Executive of a written request for a Certificate, or if at any
time following receipt of a Certificate the Executive disputes the
amount of the Gross-up Payment set forth therein, the Executive may
elect to demand the payment of the amount which the Executive, in
accordance with an Executive Counsel Opinion), (as defined in Section
7.5), determines to be the Gross-up Payment. Any such demand by the
Executive shall be made by delivery to the Company of a written notice
which specifies the Gross-up Payment determined by the Executive and an
Executive
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Counsel Opinion regarding such Gross-up Payment (such written notice
and opinion collectively, the "Executive's Determination"). Within 14
days after delivery of the Executive's Determination to the Company,
the Company shall either (1) pay the Executive the Gross-up Payment set
forth in the Executive's Determination (less the portion of such
amount, if any, previously paid to the Executive by the Company) or (2)
deliver to the Executive a Certificate specifying the Gross-up Payment
determined by the Company's independent auditors, together with a
Company Counsel Opinion (as defined in Section 7.5), and pay the
Executive the Gross-up Payment specified in such Certificate. If for
any reason the Company fails to comply with clause (2) of the preceding
sentence, the Gross-up Payment specified in the Executive's
Determination shall be controlling for all purposes.
(b) If the Executive does not make a request for, and the
Company does not deliver to the Executive, a Certificate, the Company
shall, for purposes of Section 7.3, be deemed to have determined that
no Gross-up Payment is due.
7.3 Additional Gross-up Amounts. If the amount of Excise Taxes payable
by the Executive with respect to all Payments is determined (pursuant to the
subsequently-enacted provisions of the Code, final regulations or published
rulings of the IRS, final judgment of a court of competent jurisdiction or the
Company's independent auditors) to be greater than the amount previously paid by
the Company to the Executive pursuant to Section 7.1 or 7.2, as applicable, then
the Company shall pay the Executive an amount (which shall also be deemed a
Gross-up Payment) equal to the product of:
(a) the sum of (i) such additional Excise Taxes and (ii) any
interest, fines, penalties, expenses or other costs incurred by the
Executive as a result of having taken a position in accordance with a
determination made pursuant to Section 7.1,
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal the quotient
(greater than one (1.0)) of one (1.0) divided by one (1.0) minus the sum,
expressed as a decimal fraction, of the rates of all federal, state, local and
other income and other taxes and any Excise Taxes applicable to the Gross-up
Payment; provided that, if such sum exceeds 0.75, it shall be deemed equal to
0.75 for purposes of this computation. (If different rates of tax are applicable
to various portions of a Gross-up Payment, the weighted average of such rates
shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal
opinion of nationally recognized executive compensation counsel who is counsel
to the Executive that there is a reasonable basis to support a conclusion that
the Gross-up Payment determined by the Executive has been calculated in accord
with this Article and applicable law. "Company Counsel Opinion" means a legal
opinion of nationally recognized executive compensation counsel who is counsel
to the Company that (a) there is a reasonable basis to support a conclusion that
the Gross-up Payment set forth of the Certificate of Company's independent
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auditors has been calculated in accord with this Article and applicable law, and
(b) there is no reasonable basis for the calculation of the Gross-up Payment
determined by the Executive.
7.6 Amount Increased or Contested. The Executive shall notify the
Company in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Company of a Gross-up Payment. Such
notice shall include the nature of such claim and the date on which such claim
is due to be paid. The Executive shall give such notice as soon as practicable,
but no later than 10 business days, after the Executive first obtains actual
knowledge of such claim; provided, however, that any failure to give or delay in
giving such notice shall affect the Company's obligations under this Article
only if and to the extent that such failure results in actual prejudice to the
Company. The Executive shall not pay such claim less than 30 days after the
Executive gives such notice to the Company (or, if sooner, the date on which
payment of such claim is due). If the Company notifies the Executive in writing
before the expiration of such period that it desires to contest such claim, the
Executive shall:
(a) give the Company any information that it reasonably
requests relating to such claim,
(b) take such action in connection with contesting such claim
as the Company reasonably requests in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(c) cooperate with the Company in good faith to contest such
claim, and
(d) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax (to the extent not previously paid by the
Company to the Executive) or income tax, including related interest and
penalties, imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing, the Company shall control all
proceedings in connection with such contest and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify the Executive, on an after-tax basis, for any Excise Tax or income
tax, including related interest or penalties, imposed with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. The Company's control of the contest shall be
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limited to issues with respect to which a Gross-up Payment would be payable. The
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7.6, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7.6) promptly pay
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 7.6, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such determination before the expiration of 30
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-up Payment required to be paid. Any contest
of a denial of refund shall be controlled by Section 7.6.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
(a) If the Executive incurs legal, accounting and other fees
or other expenses in a good faith effort to obtain benefits under this
Agreement (including, without limitation, the fees and other expenses
of the Executive's legal counsel, any expert witness fees and expenses,
and accounting and other fees and expenses, including legal and
accounting fees and expenses in connection with the delivery of the
Executive Counsel Opinion referred to in Article VII), regardless of
whether the Executive ultimately prevails, the Company shall reimburse
the Executive on a monthly basis upon the written request for such fees
and expenses to the extent not previously reimbursed under the
Company's officers and directors liability insurance policy, if any.
Simultaneously with each such payment Company shall pay Executive an
amount such that after payment of incremental United States federal,
state and local income, excise and other taxes payable by Executive
("Taxes") with respect to such tax reimbursement, there remains a
balance sufficient to pay the Taxes on the reimbursement of such fees
and expenses. The existence of any controlling case or regulatory law
which is directly inconsistent with the position taken by the Executive
shall be evidence that the Executive did not act in good faith.
Executive's payment of such fees and expenses shall be a conclusive
determination with respect to the Company that such fees and expenses
are reasonable.
(b) Reimbursement of legal fees and expenses shall be made
monthly upon the written submission of a request for reimbursement
together with evidence that such fees and expenses are due and payable
or were paid by the Executive. If the Company shall have reimbursed the
Executive for legal fees and expenses and it is later determined
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that the Executive was not acting in good faith, all amounts paid on
behalf of, or reimbursed to, the Executive shall be promptly refunded
to the Company.
(c) To secure its obligations under this Section 8.1 the
Company shall procure and maintain in force during the Agreement Term
and thereafter for one (1) year or if longer until the termination (by
final judgment and after all rights of appeal have been exhausted or
waived) of any litigation involving a good faith effort of an Executive
to obtain benefits under this Agreement, a letter of credit and an
escrow in favor of Executive (together with other executives similarly
situated). The letter of credit shall be issued by a bank or trust
company organized under the laws of the United States or Canada or a
state or province thereof and having a combined capital and surplus of
not less than one hundred million dollars ($100,000,000), shall be in
the aggregate amount of five hundred thousand dollars ($500,000) prior
to July 1, 2001, and in the aggregate amount of two million dollars
($2,000,000) on and after July 1, 2001, and shall be substantially in
the form of that attached (with its attached Annexes and Exhibits) to
this Agreement as Exhibit A. The escrow shall be maintained in the
state of Illinois under an escrow agreement with a bank or trust
company organized under the laws of the United States or Canada or a
state or province thereof and having a combined capital and surplus of
not less than one hundred million dollars ($100,000,000), and shall be
substantially in the form of that attached (with its attached Exhibits)
to this Agreement as Exhibit B.
8.2 Interest. If the Company does not pay any amount due to the
Executive under this Agreement within three days after such amount became due
and owing, interest shall accrue on such amount from the date it became due and
owing until the date of payment at a annual rate equal to two percent (2.0%)
above the base commercial lending rate announced by the Company's principal
revolving credit lender in effect from time to time during the period of such
nonpayment; or, if the Company does not have a principal revolving credit
lender, then at two percent (2.0%) above the prime rate of interest in effect
from time to time during the period of such nonpayment, as reported from time to
time in the Wall Street Journal; but in no case greater than the maximum rate of
interest permitted by applicable law.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off or Defenses by Company. The Executive's right to receive
when due the payments and other benefits provided for under this Agreement is
absolute, unconditional and shall not be subject to any set-off, counterclaim or
legal or equitable defense. The exclusive method for the Company to avoid
payments to the Executive under this Agreement, to the extent specified in this
Agreement, is to terminate Executive's employment for Cause pursuant to Sections
4.3 and 5.2 of this Agreement. Time is of the essence in the performance by the
Company of its obligations under this Agreement. Any claim which the Company may
have against the Executive, whether for a breach of this Agreement or otherwise,
shall be brought in a separate action or proceeding and not as part of any
action or proceeding brought by the Executive to enforce any rights against the
Company under this Agreement.
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9.2 No Mitigation. The Executive shall not have any duty to mitigate
the amounts payable by the Company under this Agreement by seeking new
employment following termination. Except as specifically otherwise provided in
this Agreement, all amounts payable pursuant to this Agreement shall be paid
without reduction regardless of any amounts of salary, compensation or other
amounts which may be paid or payable to the Executive as the result of the
Executive's employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NONCOMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of
the Company and its subsidiaries to maintain as secret and confidential all
valuable and unique information and techniques acquired, developed or used by
the Company and its Subsidiaries relating to their business, operations,
employees and customers, which gives the Company and its subsidiaries a
competitive advantage in the construction and engineering industry and other
businesses in which the Company and its subsidiaries are engaged ("Confidential
Information"). Executive recognizes that all such Confidential Information is
the sole and exclusive property of the Company and its Subsidiaries, and that
disclosure of Confidential Information would cause damage to the Company and its
Subsidiaries. Executive agrees that, except as required by the duties of his
employment with the Company and/or its Subsidiaries and except in connection
with enforcing the Executive's rights under this Agreement or if compelled by a
court or governmental agency, he will not, without the consent of the Company,
disseminate or otherwise disclose any Confidential Information obtained during
his employment with the Company and/or its Subsidiaries for so long as such
information is valuable and unique.
10.2 Noncompetition/Nonsolicitation.
(a) Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business
as defined in Section 10.2(d).
(b) Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form
of equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose
stock is listed on a national securities exchange or actively traded in
the over-the-counter market; provided that (1) such investment does not
give Executive the right or ability to control or influence the policy
decisions of any Prohibited Business, and (2) such investment does not
create a conflict of interest between Executive's duties hereunder and
Executive's interest in such investment.
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(c) Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
Subsidiaries or (2) interfere with the Company's or any of its
Subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its Subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after
the date of Executive's termination of employment), was an employee,
customer, vendor or supplier of, or maintained a business relationship
with, any business of the Company and/or its Subsidiaries which was
conducted at any time during the period commencing one year prior to
the termination of employment.
(d) For the purpose of this Section 10.2, "Prohibited
Business" shall be defined as any construction and engineering business
specializing in the engineering and design, materials procurement,
fabrication, erection, repair and modification of steel tanks and other
steel plate structures and associated systems and any branch, office or
operation thereof, which is a direct and material competitor of the
Company wherever the Company does business, including the Netherlands,
the United States and any other country.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing, the Company
shall not be precluded from pursuing any and all remedies it may have at law or
in equity for breach of such obligations; provided, however, that such breach
shall not in any manner or degree whatsoever limit, reduce or otherwise affect
the obligations of the Company under this Agreement, and in no event shall an
asserted breach of the Executive's obligations under this Article X constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. 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.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement.
Any successor to the business and/or assets of the Company which assumes and
agrees to perform this Agreement by operation of law, contract, or otherwise
shall be jointly and severally liable with the Company under this Agreement.
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11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid as soon as administratively practicable in a lump sum to the
beneficiary designated in writing by the Executive, or if none is so designated,
to the Executive's estate.
11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other
portions of this Agreement are declared by any court or governmental authority
to be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
11.6 Amendments. Except as provided in Section 2.2 hereof, this
Agreement shall not be altered, amended or modified except by written instrument
executed by the Company and Executive.
11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Timothy J. Wiggins
2205 Hanford Lane
Aurora, Illinois 60504
If to the Company (including any or all of CBICNV, CBIC or
CBICD):
Chicago Bridge & Iron Company
1501 North Division Street
Plainfield, Illinois 60544
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed
in accordance with the laws of the State of Illinois, without regard to its
choice of law principles.
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11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
11.11 Tax Withholding. The Company may withhold from any amounts
payable under this Agreement any federal, state or local taxes that are required
to be withheld pursuant to any applicable law or regulation.
11.12 Joint and Several Obligations. The obligations of the Company
under this Agreement are joint and several obligations of CBICNV, CBIC and
CBICD; provided, however, that each of CBICNV, CBIC and CBICD may agree between
themselves but without adversely affecting the rights of the Executive which of
them shall provide any particular payment or benefit under this Agreement.
11.13 No Waiver. The Executive's failure to insist upon strict
compliance with any provision of this Agreement shall not be deemed a waiver of
such provision or any other provision of this Agreement. A waiver of any
provision of this Agreement shall not be deemed a waiver of any other provision,
and any waiver of any default in any such provision shall not be deemed a waiver
of any later default thereof or of any other provision.
11.14 Prior Agreement. The Change of Control Severance Agreement dated
March 4, 1999, between CBIC and the Executive is hereby terminated effective on
the date of this Agreement.
11.15 Entire Agreement. This Agreement contains the entire
understanding of the Company and the Executive with respect to its subject
matter and supercedes any prior change of control severance agreement and any
Change of Control severance benefit provisions in any prior employment agreement
between the Company and the Executive.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
EXECUTIVE
/s/ Timothy J. Wiggins
----------------------------------
Timothy J. Wiggins
CHICAGO BRIDGE & IRON COMPANY N.V.
by: Chicago Bridge & Iron Company
B.V., its sole Managing Director
By: /s/ Gerald M. Glenn
------------------------------
Title: Managing Director
---------------------------
CHICAGO BRIDGE & IRON COMPANY
By: /s/ Robert B. Jordan
------------------------------
Title:
---------------------------
CHICAGO BRIDGE & IRON COMPANY
(DELAWARE)
By: /s/ Timothy J. Wiggins
------------------------------
Title:
---------------------------
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
157
TABLE OF CONTENTS
Article I. PURPOSES..........................................................1
Article II. CERTAIN DEFINITIONS...............................................1
2.1 "Accrued Obligations".............................................1
2.2 "Agreement Term"..................................................1
2.3 "Affiliate".......................................................2
2.4 "Article".........................................................2
2.5 "Beneficial Owner"................................................2
2.6 "Board"...........................................................2
2.7 "Cause"...........................................................2
2.8 "Change of Control"...............................................2
2.9 "Code"............................................................3
2.10 "Deferral Plan"...................................................3
2.11 "Disability"......................................................4
2.12 "Effective Date"..................................................4
2.13 "Good Reason".....................................................4
2.14 "Gross-up Payment"................................................4
2.15 "Growth Transaction"..............................................4
2.16 "Imminent Control Change Date"....................................4
2.17 "IRS".............................................................4
2.18 "1934 Act"........................................................4
2.19 "Notice of Termination"...........................................4
2.20 "Plans"...........................................................5
2.21 "Policies" .......................................................5
2.22 "Post-Change Period"..............................................5
2.23 "Present Value"...................................................5
2.24 "SEC".............................................................5
2.25 "Section".........................................................5
2.26 "SERP"............................................................5
2.27 "Shareholder Agreement"...........................................5
2.28 "Subsidiary"......................................................5
2.29 "Termination Date"................................................5
2.30 "Transaction Owner"...............................................6
2.31 "Voting Securities"...............................................6
Article III. POST-CHANGE PERIOD PROTECTIONS...................................6
3.1 General...........................................................6
3.2 Position and Duties...............................................6
3.3 Compensation......................................................7
3.4 Pro-Rata Bonus Payment............................................9
3.5 Equity Awards Vesting............................................10
3.6 Nonqualified Deferred Compensation...............................10
Article IV. TERMINATION OF EMPLOYMENT........................................11
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
4.1 Disability........................................................11
4.2 Death.............................................................11
4.3 Cause.............................................................11
4.4 Good Reason.......................................................13
Article V. OBLIGATIONS OF THE COMPANY UPON TERMINATION......................14
5.1 If by the Executive for Good Reason or by the Company
Other Than for Cause or Disability................................14
5.2 If by the Company for Cause.......................................16
5.3 If by the Executive Other Than for Good Reason....................17
5.4 If by the Company for Disability..................................17
5.5 If upon Death.....................................................17
Article VI. NON-EXCLUSIVITY OF RIGHTS.......................................17
6.1 Waiver of Other Severance Rights..................................17
6.2 Other Rights......................................................17
Article VII. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.....................18
7.1 Gross-up for Certain Taxes........................................18
7.2 Determination by the Executive....................................18
7.3 Additional Gross-up Amounts.......................................19
7.4 Gross-up Multiple.................................................19
7.5 Opinion of Counsel................................................19
7.6 Amount Increased or Contested.....................................20
7.7 Refunds...........................................................21
Article VIII. EXPENSES AND INTEREST.........................................21
8.1 Legal Fees and Other Expenses.....................................21
8.2 Interest..........................................................22
Article IX. NO SET-OFF OR MITIGATION........................................22
9.1 No Set-off or Defenses by Company.................................22
9.2 No Mitigation.....................................................22
Article X. CONFIDENTIALITY AND NONCOMPETITION...............................23
10.1 Confidentiality...................................................23
10.2 Noncompetition/Nonsolicitation....................................23
10.3 Remedy............................................................24
Article XI. MISCELLANEOUS...................................................24
11.1 No Assignability..................................................24
11.2 Successors........................................................24
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
11.3 Payments to Beneficiary...........................................24
11.4 Non-alienation of Benefits........................................25
11.5 Severability......................................................25
11.6 Amendments........................................................25
11.7 Notices...........................................................25
11.8 Counterparts......................................................25
11.9 Governing Law.....................................................25
11.10 Captions..........................................................25
11.11 Tax Withholding...................................................26
11.12 Joint and Several Obligations.....................................26
11.13 No Waiver.........................................................26
11.14 Prior Agreement...................................................26
11.15 Entire Agreement..................................................26
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CHICAGO BRIDGE & IRON COMPANY
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of October 13, 2000 is made among CHICAGO
BRIDGE & IRON COMPANY N.V. ("CBICNV"), a Netherlands corporation, CHICAGO BRIDGE
& IRON COMPANY, a Delaware corporation ("CBIC"), CHICAGO BRIDGE & IRON COMPANY
(DELAWARE), a Delaware corporation ("CBICD" and, together with CBICNV and CBIC,
the "Company"), each having its principal place of business in Plainfield,
Illinois, and Stephen M. Duffy (the "Executive"), a resident of Illinois.
ARTICLE I.
PURPOSES
The Supervisory Board of CBICNV has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will
have the continued service of the Executive, despite the possibility or
occurrence of a change of control of the Company. The Board believes it is
imperative to reduce the distraction of the Executive that would result from the
personal uncertainties caused by a pending or threatened change of control, to
encourage the Executive's full attention and dedication to the Company, and to
provide the Executive with compensation and benefits arrangements upon a change
of control which ensure that the expectations of the Executive will be satisfied
and are competitive with those of similarly-situated corporations. This
Agreement is intended to accomplish these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" has the meaning defined for that term in
Section 5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is thirty-six (36) months following the
date of this Agreement ("Expiration Date"); provided, however, that the
Agreement Term shall be extended as follows: (a) if neither the Company nor the
Executive gives written notice to the other pursuant to Section 11.7 that this
Agreement shall not be renewed ("Notice of Nonrenewal") within two years from
the date of this Agreement, the Agreement Term shall be extended to an
Expiration Date which shall be the first annual anniversary of the date a Notice
of Nonrenewal is given; (b) if an Imminent Control Change Date occurs before the
Expiration Date (as it may be extended under clause (a) above), then no Notice
of Nonrenewal shall thereafter be effective and the Agreement Term shall
automatically extend to an Expiration Date which is twelve (12) months after the
Imminent Change of Control Date, as further extended under the terms of this
clause should another Imminent Change of Control Date occur prior to the
Expiration Date as from time to time so extended, and (c) if a Change of Control
occurs before the Expiration Date (as extended
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under clause (a) or (b) above or this clause (c)), the Expiration Date shall
automatically be extended to the last day of the Post-Change Period as the
Post-Change Period may be extended as provided in Section 2.22.
2.3 "Affiliate" means an "affiliate" or "associate" as those terms are
defined in Rule 12b-2 under the 1934 Act.
2.4 "Article" means an article of this Agreement.
2.5 "Beneficial Owner" means such term as defined in Rule 13d-3 of the
SEC under the 1934 Act.
2.6 "Board" means the Supervisory Board of Chicago Bridge & Iron
Company N.V.
2.7 "Cause" has the meaning defined for that term in Section 4.3(b).
2.8 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
(a) any person (as such term is used in Rule 13d-5 of the SEC
under the 1934 Act) or group (as such term is defined in Section 13(d)
of the 1934 Act), other than a Subsidiary or any employee benefit plan
(or any related trust) of the Company or a Subsidiary, becomes the
Beneficial Owner of 25% or more of the common shares of any of CBICNV,
CBIC or CBICD or of other Voting Securities representing 25% or more of
the combined voting power of all Voting Securities of any of CBICNV,
CBIC or CBICD; provided, however, that (i) no Change of Control shall
be deemed to have occurred solely by reason of any such acquisition by
a corporation with respect to which, after such acquisition, more than
75% of both the common shares or common stock of such corporation and
the combined voting power of the Voting Securities of such corporation
are then beneficially owned, directly or indirectly, by the persons who
were the Beneficial Owners of the common shares and other Voting
Securities of CBICNV, CBIC or CBICD immediately before such
acquisition, in substantially the same proportion as their ownership of
the common shares and other Voting Securities of CBICNV, CBIC or CBICD,
as the case may be, immediately before such acquisition; and (ii) once
a Change of Control occurs under this subsection (a), the occurrence of
the next Change of Control (if any) under this subsection (a) shall be
determined by reference to a person or group other than the person or
group whose acquisition of Beneficial Ownership created such prior
Change of Control unless the original person or group has in the
meantime ceased to own 25% or more of the common shares of all of
CBICNV, CBIC or CBICD or other Voting Securities representing 25% or
more of the combined voting power of all Voting Securities of all of
CBICNV, CBIC or CBICD; or
(b) individuals who, as of the date of this Agreement or as of any
Effective Date thereafter, are Supervisory Directors of CBICNV (the
"Incumbent Directors") cease for any reason to constitute at least 50%
of the members of the Board; provided, however, that (i) any individual
who becomes a Supervisory Director after the Effective Date whose
binding nomination for election to the Board by the general meeting of
shareholders was approved by a vote or written consent of at least 75%
of the
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Supervisory Directors who are then Incumbent Directors shall be
considered an Incumbent Director, but excluding, for this purpose, any
such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election
of the directors of the Company (as such terms are used in Rule 14a-11
of the SEC under the 1934 Act); and (ii) once a Change of Control
occurs under this subsection (b), the occurrence of the next Change of
Control (if any) under this subsection (b) shall be determined by
reference to the individuals who were Incumbent Directors immediately
after the Effective Date of such prior Change of Control; or
(c) approval by the Board, or by the shareholders of CBICNV, CBIC
or CBICD, of any of the following:
(i) a merger, reorganization or consolidation of
CBICNV, CBIC or CBICD ("Merger"), other than a Merger after which
the individuals and entities who were the respective beneficial
owners of the common shares and other Voting Securities of CBICNV,
CBIC or CBICD (as the case may be) immediately before such Merger
beneficially own, directly or indirectly, more than 75% of,
respectively, the common shares or common stock and the combined
voting power of the Voting Securities of the corporation resulting
from such Merger, in substantially the same proportion as their
ownership of the common shares or common stock and other Voting
Securities of CBICNV, CBIC or CBICD (as the case may be)
immediately before such Merger, or
(ii) a sale or other disposition by any of CBICNV, CBIC
or CBICD of all or substantially all of the assets owned by it, or
(iii) any transaction as a result of which CBICNV would
not thereafter directly or indirectly own beneficially at least
75% of the common stock of CBIC or as a result of which CBIC would
not thereafter directly or indirectly own beneficially at least
75% of the common stock of CBICD, unless after either such
transaction CBICNV continues to own directly or indirectly
substantially all of the pre-transaction assets of both CBIC and
CBICD.
(d) if a Growth Transaction previously occurred, any Transaction
Owner individually, or Transaction Owners collectively:
(i) materially breach(es) any provision of any
shareholder agreement to which CBICNV and such Transaction
Owner(s) are parties that addresses the governance of CBICNV
following the Growth Transaction; or
(ii) become(s) the Beneficial Owner of more than 66.5%
of the common shares of any of CBICNV, CBIC or CBICD or of other
Voting Securities representing more than 66.5% of the combined
voting power of all Voting Securities of any of CBICNV, CBIC or
CBICD.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Deferral Plan" has the meaning defined for that term in Section
3.6.
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2.11 "Disability" has the meaning defined for that term in Section
4.1(b).
2.12 "Effective Date" means each date on which a Change of Control
occurs during the Agreement Term; provided, however, that if the Company
terminates the Executive's employment before the date of a Change of Control,
and if the Executive reasonably demonstrates that such termination of employment
(a) was at the request of a third party who had taken steps reasonably
calculated to effect the Change of Control or (b) otherwise arose in connection
with or anticipation of the Change of Control, then "Effective Date" shall mean
the date immediately before the date of such termination of employment.
2.13 "Good Reason" has the meaning defined for that term in Section
4.4(b).
2.14 "Gross-up Payment" has the meaning defined for that term in
Section 7.1.
2.15 "Growth Transaction" means (i) the acquisition by Wedge Group
Incorporated ("WGI"), a Delaware corporation, First Reserve Fund VIII, L.P.
("FRF"), a Delaware limited partnership, or Pitt-Des Moines, Inc. ("PDM"), a
Pennsylvania corporation, or their Affiliates, of common shares or other Voting
Securities of CBICNV as contemplated by an agreement with CBICNV for the
acquisition by CBICNV or an Affiliate of Howe-Baker International, Inc. from WGI
(the "HBI Transaction") or for the acquisition of the PDM Engineered
Construction Division and Water Division from PDM (the "PDM Transaction"); (ii)
the acquisition by a person (other than by public offering) of common shares or
other Voting Securities of CBICNV from CBICNV as part of an arrangement for
financing the HBI Transaction or the PDM Transaction; (iii) the acquisition by a
person of common shares or other Voting Securities of CBICNV from a previous
Transaction Owner if the person acquiring such common shares or other Voting
Securities is or becomes a party to a Shareholder Agreement with CBICNV that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner; or (iv) a transfer of common shares or other
Voting Securities of CBICNV from one Transaction Owner to another Transaction
Owner if the acquiring Transaction Owner is subject with respect to such shares
or other Voting Securities to either a preexisting Shareholder Agreement between
CBICNV and the acquiring Transaction Owner or a Shareholder Agreement that is
substantially similar to the Shareholder Agreement, if any, between CBICNV and
the selling Transaction Owner. However, a "Growth Transaction" will not include
any event described in Section 2.8(d).
2.16 "Imminent Control Change Date" means any date on which occurs (a)
a presentation to the Company's shareholders generally or any of the Company's
directors or executive officers of a proposal or offer for a Change of Control,
or (b) the public announcement (whether by advertisement, press release, press
interview, public statement, SEC filing or otherwise) of a proposal or offer for
a Change of Control, or (c) such proposal or offer remains effective and
unrevoked.
2.17 "IRS" means the Internal Revenue Service.
2.18 "1934 Act" means the Securities Exchange Act of 1934, as amended.
2.19 "Notice of Termination" means a written notice given in accordance
with Section 11.7 which sets forth (a) the specific termination provision in
this Agreement relied upon
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by the party giving such notice, (b) in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under such termination provision and (c) if the Termination Date is
other than the date of receipt of such Notice of Termination, the Termination
Date.
2.20 "Plans" means plans, programs, policies or practices of the
Company or any of its Subsidiaries.
2.21 "Policies" means policies, practices or procedures of the Company
or any of its Subsidiaries.
2.22 "Post-Change Period" means the period commencing on each Effective
Date and ending on the third annual anniversary of such Effective Date. If a new
Change of Control creates a new Effective Date during any current Post-Change
Period, the Post-Change Period shall be extended to the third annual anniversary
of such new Effective Date; and shall be further extended upon each new
Effective Date during the Post-Change Period as extended.
2.23 "Present Value" means the present value, determined using (a) the
actuarial assumptions published by the Pension Benefit Guaranty Corporation
("PBGC") for determining immediate annuity values, as in effect on the first day
of the calendar year in which any payment of present value is required, or (b)
if no such actuarial assumptions are published by the PBGC, using the mortality
assumptions of the UP-84 group mortality table and an interest rate assumption
which is the lesser of (i) 75% of the current 30-year Treasury bond rate or (ii)
the current 30-year Treasury bond rate minus 150 basis points.
2.24 "SEC" means the Securities and Exchange Commission.
2.25 "Section" means, unless the context otherwise requires, a section
of this Agreement.
2.26 "SERP" has the meaning defined for that term in Section 3.6.
2.27 "Shareholder Agreement" means an agreement between CBICNV and a
person that limits the ability of such person and its Affiliates to obtain and
exercise control over the management and policies of the CBICNV.
2.28 "Subsidiary" means a corporation as defined in Section 424(f) of
the Code (with the Company being treated as the employer corporation for
purposes of this definition) and any partnership or limited liability company in
which the Company or any Subsidiary has a direct or indirect interest (whether
in the form of voting power or participation in profits or capital contribution)
of 50% or more.
2.29 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company terminates the Executive's employment
other than for Cause or Disability, then the Termination Date shall be the date
of receipt of such Notice of Termination and (b) if the Executive's employment
is terminated by reason of death or Disability, then the Termination Date shall
be the date of death
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of the Executive or the Disability Effective Date (as defined in Section
4.1(a)), as the case may be.
2.30 "Transaction Owner" means a person who acquires common shares or
other Voting Securities of CBICNV in a Growth Transaction, or any Affiliate of
such person.
2.31 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 General. On the Effective Date and during the Post-Change Period
thereafter the Company shall make the payments, provide the benefits and fulfill
the other obligations required by this Article III. However, if, such Effective
Date and Post-Change Period result solely from a Growth Transaction:
(a) Section 3.3(b) shall not apply except for purposes of
determining the obligations of the Company on termination pursuant to
Section 5.1, and to the extent provided in Section 4.4(b)(iii) and as
modified thereby, in determining the existence of Good Reason;
(b) clause (ii) of each of Sections 3.3(c) through 3.3(h) shall
not apply except for purposes of determining the obligations of the
Company on termination pursuant to Section 5.1; but the aggregate value
to the Executive of all Plans, fringe benefits and arrangements
described in Sections 3.3(c) through 3.3(h) shall not be less
favorable, in the aggregate, than the aggregate value to the Executive
of such Plans, fringe benefits and arrangements provided by the Company
to the Executive or peer executives at any time during the 90-day
period immediately before such Effective Date; and
(c) Sections 3.4, 3.5, and 3.6 shall not apply on such Effective
Date; but to the extent such vesting or payment is not otherwise
required by Section 5.1, Sections 3.4, 3.5 and 3.6, shall apply to the
Executive on the Termination Date (as if such Sections referred to the
"Termination Date" instead of the "Effective Date") if during the
Post-Change Period the Company shall terminate Executive's employment
other than for Cause, or if the Executive shall terminate employment
for Good Reason, or if employment terminates as a result of Disability
or death.
3.2 Position and Duties.
(a) During the Post-Change Period, (1) the Executive's position
(including offices, titles, reporting requirements and
responsibilities), authority and duties shall be at least commensurate
in all material respects with the most significant of those held by,
exercised by, or assigned to the Executive at any time during the
90-day period immediately before the Effective Date and (2) the
Executive's services shall be performed at the location where the
Executive was employed immediately before the Effective Date or any
other location less than 40 miles from such former location.
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(b) During the Post-Change Period (other than any periods of
vacation, sick leave, disability leave or other family or medical leave
to which the Executive is entitled), the Executive shall devote his or
her full attention and time to the business and affairs of the Company
and, to the extent necessary to discharge the duties assigned to the
Executive in accordance with this Agreement, shall use his or her best
efforts to perform such duties faithfully and efficiently. During the
Post-Change Period, the Executive may (1) serve on corporate, civic or
charitable boards or committees, (2) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (3) manage
personal investments, so long as such activities are consistent with
the Policies of the Company or its Subsidiaries at the Effective Date
and do not significantly interfere with the performance of the
Executive's duties under this Agreement. To the extent that any such
activities have been conducted by the Executive before the Effective
Date and were consistent with the Policies of the Company or its
Subsidiaries at the Effective Date, the continued conduct of such
activities (or activities similar in nature and scope) after the
Effective Date shall not be deemed to interfere with the performance of
the Executive's duties under this Agreement.
3.3 Compensation.
(a) Base Salary. During the Post-Change Period, the Company shall
pay or cause to be paid to the Executive an annual base salary in cash
("Guaranteed Base Salary"), which shall be paid in a manner consistent
with the Company's payroll practices in effect immediately before the
Effective Date for such Post-Change Period, at a rate at least equal to
the highest rate of annual salary paid or payable to the Executive by
the Company at any time during the 12-month period immediately before
such Effective Date. During the Post-Change Period, the Guaranteed Base
Salary shall be reviewed at least annually and shall be increased at
any time and from time to time as shall be substantially consistent
with increases in base salary awarded to other peer executives of the
Company. Any increase in Guaranteed Base Salary shall not limit or
reduce any other obligation of the Company to the Executive under this
Agreement. After any such increase, the Guaranteed Base Salary shall
not be reduced and the term "Guaranteed Base Salary" shall thereafter
refer to the increased amount.
(b) Guaranteed Bonus.
(i) During the Post-Change Period, the Company shall
pay or cause to be paid to the Executive a bonus (the "Guaranteed
Bonus") for each Performance Period which ends during the
Post-Change Period. "Performance Period" means each period of time
designated in accordance with any bonus arrangement ("Bonus Plan")
which is based upon performance and approved by the Board or by
any committee of the Board. For purposes of this Section 3.3, a
Bonus Plan includes, without limitation, the Company's Incentive
Compensation Plan as in effect on the date hereof or any similar
plan, but does not include the Company's 1997 or 1999 Long-Term
Incentive Plan (an "LTIP") or any similar plan under which equity
awards described Section 3.5 are granted, unless failure to
consider the LTIP a Bonus Plan would leave the Company without any
Bonus Plan covering Executive. The Guaranteed Bonus shall be at
least equal to the product
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of (A) the greater of (i) the On Plan Percentage (as defined
below), or (ii) the Actual Bonus Percentage (as defined below),
multiplied by (B) the Guaranteed Base Salary.
(ii) For purposes of this Section 3.3(b):
(A)"On Plan Percentage" means the percentage
of Guaranteed Base Salary to which the Executive would
be entitled under the Bonus Plan(s) for the
Performance Period for which the Guaranteed Bonus is
awarded ("Current Performance Period") if performance
achieved 100% of the target performance goals
established pursuant to such Bonus Plan(s); or, if
greater, the percentage of Guaranteed Base Salary to
which Executive would have been entitled under the
Bonus Plan(s) for the Performance Period ending
immediately prior to the Post-Change Period if
performance achieved 100% of the performance goals
established pursuant to such Bonus Plan(s) for such
prior Performance Period.
(B) "Actual Bonus Percentage" means the
percentage of Guaranteed Base Salary for the Current
Performance Period to which the Executive would be
entitled under any Bonus Plan if the performance were
measured by the actual performance during the Current
Performance Period; provided, however, that for
purposes of determining the Guaranteed Bonus for
purposes of Sections 3.4 and 5.1(b), "Actual Bonus
Percentage" means the percentage of Guaranteed Base
Salary for the Performance Period during which the
Effective Date (for purposes of Section 3.4) or
Termination Date (for purposes of Section 5.1(b))
occurs to which the Executive would be entitled if the
performance during such Performance Period were
measured by the actual performance during the portion
of such Performance Period before the Effective Date
or the Termination Date (whichever is applicable),
projected to the last day of such Performance Period.
(c) Incentive, Savings and Retirement Plans. During the
Post-Change Period and notwithstanding the payment required by Section
3.6, (i) the Executive shall be entitled to continue to participate in
all incentive (including long-term incentives and management stock
plans), savings, deferred compensation, retirement and benefit
restoration Plans provided by the Company and applicable to other peer
executives of the Company, but (ii) in no event shall such Plans
provide the Executive with incentive (including long-term incentives
and management stock benefits), savings, deferred compensation,
retirement and benefit restoration benefits which, in any case, are
less favorable, in the aggregate, than the most favorable of those
provided by the Company to the Executive or to peer executives under
such Plans as in effect at any time during the 90-day period
immediately before any Effective Date.
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(d) Welfare Benefit Plans. During the Post-Change Period, (i) the
Executive and the Executive's family shall be eligible to participate
in, and receive all benefits under, welfare benefit Plans (including,
without limitation, medical, prescription, dental, disability, salary
continuance, individual life, group life, dependent life, accidental
death and travel accident insurance Plans) provided by the Company and
applicable to other peer executives of the Company and their families,
but (ii) in no event shall such Plans provide benefits which in any
case are less favorable, in the aggregate, than the most favorable of
those provided by the Company to the Executive or to peer executives
under such Plans as in effect at any time during the 90-day period
immediately before any Effective Date.
(e) Fringe Benefits. During the Post-Change Period, (i) the
Executive shall be entitled to fringe benefits (including, without
limitation, any foreign service travel and housing allowances for
Executive and the Executive's family under Plans or Policies of the
Company for foreign service) in accordance with the most favorable
Plans provided by the Company and applicable to other peer executives
of the Company, but (ii) in no event shall such Plans provide fringe
benefits which in any case are less favorable, in the aggregate, than
the most favorable of those provided by the Company to the Executive or
peer executives under such Plans in effect at any time during the
90-day period immediately before any Effective Date.
(f) Expenses. During the Post-Change Period, (i) the Executive
shall be entitled to prompt reimbursement of all reasonable
employment-related expenses incurred by the Executive upon the
Company's receipt of accountings in accordance with the most favorable
Policies applicable to peer executives of the Company, but (ii) in no
event shall such Policies be less favorable, in the aggregate, than the
most favorable of those provided by the Company to the Executive or to
peer executives under such Policies in effect at any time during the
90-day period immediately before any Effective Date.
(g) Office and Support Staff. During the Post-Change Period, (i)
the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to secretarial and other
assistance in accordance with the most favorable Policies applicable to
peer executives of the Company, but (ii) in no event shall such
Policies be less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive or to peer executives
under such Policies in effect at any time during the 90-day period
immediately before any Effective Date.
(h) Vacation. During the Post-Change Period, (i) the Executive
shall be entitled to paid vacation in accordance with the most
favorable Policies applicable to peer executives of the Company, but
(ii) in no event shall such Policies be less favorable, in the
aggregate, than the most favorable of those provided by the Company to
the Executive or to peer executives under such Policies in effect at
any time during the 90-day period immediately before any Effective
Date.
3.4 Pro-Rata Bonus Payment.
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On each Effective Date the Company shall pay to Executive in a single
lump sum in cash the product of (A) the Guaranteed Bonus for the Performance
Period in which falls the Effective Date, multiplied by (B) a fraction, the
numerator of which is the number of days in such Performance Period before the
Effective Date, and the denominator of which is the total number of days in such
Performance Period. The amount of Guaranteed Bonus for such Performance Period
otherwise payable pursuant to Section 3.3(b), or otherwise payable pursuant to
this Section 3.4 by reason of a later Change of Control in the same Performance
Period, shall be reduced by any earlier payment made under this Section 3.4 for
the same Performance Period.
3.5 Equity Awards Vesting.
On the Effective Date, the Executive shall become fully vested in:
(a) any and all outstanding options ("Options") to purchase common
shares of the Company granted to Executive prior to the Effective Date
under any Plan, contract or arrangement for Options, which Options
shall become fully exercisable;
(b) any outstanding shares of restricted common shares of the
Company regardless whether such restrictions are scheduled to lapse
based on service or on performance or both ("Restricted Stock") awarded
to Executive under any Plan, contract or arrangement for Restricted
Stock; which shall become unrestricted and freely transferable; and
(c) any outstanding awards providing for the payment of a variable
number of common shares of the Company dependent on the achievement of
performance goals, or of an amount based on the fair market value of
such shares or the appreciation thereof ("Performance Shares") awarded
to Executive under any Plan, contract or arrangement for Performance
Shares; and there shall be paid out in cash to Executive within 30 days
following the Effective Date of the Change of Control the value of the
Performance Shares to which Executive would have been entitled if
performance achieved 100% of the target performance goals established
for such Performance Shares.
To the extent that for any reason such Options, Restricted Stock and
Performance Shares do not become vested on the Effective Date, the Company shall
pay Executive a cash amount equal to (i) the positive difference, if any,
between the value of the shares of common stock subject to the Options that did
not become vested (or, if greater, the value paid or to be paid in connection
with the Change of Control to a holder of an equal number of shares of common
stock ("Change of Control Value")) and the Option exercise price with respect to
such shares, as of and on the date such Options are forfeited; plus (ii) the
fair market value (determined without regard to any restriction other than a
restriction which by its terms may never lapse) (or, if greater, the Change of
Control Value) of all non-vested forfeited Restricted Stock and Performance
Shares as of and on the date such Restricted Stock or Performance Shares are
forfeited. Nothing in this Section 3.5 shall require the vesting, or payment, of
equity awards granted after such Effective Date unless a new Effective Date has
intervened
3.6 Nonqualified Deferred Compensation.
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On the Effective Date Executive shall become fully vested in and the
Company shall pay to Executive in a single lump sum in cash (1) the value of
Executive's then-accrued benefits, if any, which remain unpaid under any
nonqualified deferred compensation, benefit restoration, excess benefit or other
individual account plan, contract or arrangement for deferred compensation
maintained by the Company under which benefits are calculated by reference to an
individual account (a "Deferral Plan"), and (2) the Present Value of Executive's
then-accrued benefits, if any, which remain unpaid under any nonqualified
supplemental executive retirement plan or other plan, contract or arrangement
for retirement benefits maintained by the Company under which benefits are
calculated by reference to a defined amount payable in connection with or after
retirement or other termination of employment an (a "SERP").
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability.
(a) During the Post-Change Period, the Company may terminate the
Executive's employment upon the Executive's Disability (as defined in
Section 4.1(b)) by giving the Executive or his legal representative, as
applicable, Notice of Termination accompanied by a certification of the
Executive's Disability by a physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the Executive's
legal representative. The Executive's employment shall terminate
effective on the 30th day (the "Disability Effective Date") after the
Executive's receipt of such Notice of Termination unless, before the
Disability Effective Date, the Executive shall have resumed the
full-time performance of the Executive's duties.
(b) "Disability" means any medically determinable physical or
mental impairment that has lasted for a continuous period of not less
than six months and can be expected to be permanent or of indefinite
duration, and that renders the Executive unable to perform the
essential functions required under this Agreement with or without
reasonable accommodation.
(c) Unless the Company establishes, by clear and convincing
evidence, that Executive has a Disability, any purported termination of
employment for Disability shall be deemed a termination other than for
Disability for all purposes of this Agreement.
4.2 Death. The Executive's employment shall terminate automatically
upon the Executive's death during the Post-Change Period.
4.3 Cause.
(a) During the Post-Change Period, the Company may terminate the
Executive's employment for Cause.
(b) "Cause" means any of the following: Executive's conviction of
a felony or of a crime involving fraud, dishonesty or moral turpitude;
Executive's willful or intentional material breach of this Agreement
that results in financial detriment that is material to the
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Company as a whole; or willful or intentional misconduct by Executive
in the performance of his duties under this Agreement that results in
financial detriment that is material to the Company as a whole; except
that Cause shall not mean:
(i) bad judgment or negligence;
(ii) any act or omission believed by the Executive in
good faith to have been in or not opposed to the interest of the
Company (without intent of the Executive to gain, directly or
indirectly, a profit to which the Executive was not legally
entitled);
(iii) any act or omission with respect to which a
determination could properly have been made by the Board that the
Executive met the applicable standard of conduct for
indemnification or reimbursement under the Company's by-laws, any
applicable indemnification agreement, or applicable law, in each
case in effect at the time of such act or omission; or
(iv) any act or omission with respect to which Notice of
Termination is not given within 12 months after the earliest date
on which any member of the Board, not a party to the act or
omission, knew or should have known of such act or omission.
(c) The Company may not during the Post-Change Period terminate
Executive's employment for Cause unless the following procedures are
fully complied with:
(i) no fewer than 45 days prior to the Termination
Date, the Company provides Executive with written notice (the
"Notice of Consideration") of its intent to consider termination
of Executive's employment for Cause, including a detailed
description of the specific reasons which form the basis for such
consideration;
(ii) if after providing Notice of Consideration, the
Board may, by the affirmative vote of at least 80% of its members
(excluding for this purpose Executive if he is a member of the
Board, and any other member of the Board reasonably believed by
the Board to be involved in the events issuing the Notice of
Consideration), suspend Executive with pay until a final
determination pursuant to this Section has been made;
(iii) for a period of not less than 30 days after the
date Notice of Consideration is provided, Executive shall have the
opportunity to appear before the Board, with or without legal
representation, at Executive's election, to present arguments and
evidence on his own behalf; and
(iv) following the presentation to the Board as provided
in (3) above or Executive's failure to appear before the Board at
a date and time specified in the Notice of Consideration (which
date shall not be less than 30 days after the date the Notice of
Consideration is provided), Executive may be terminated for Cause
only if (i) the Board, by the affirmative vote of at least 80% of
its members
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(excluding Executive if he is a member of the Board, and any other
member of the Board reasonably believed by the Board to be
involved in the events leading the Board to terminate Executive
for Cause), determines that the actions or inactions of Executive
specified in the Notice of Consideration occurred, that such
actions or inactions constitute Cause, and that Executive's
employment should accordingly be terminated for Cause; and (ii)
the Board provides Executive with a written determination (a
"Notice of Termination for Cause") setting forth in specific
detail the basis of such Termination of Employment, which Notice
of Termination for Cause shall be consistent with the reasons set
forth in the Notice of Consideration.
Unless the Company establishes, by clear and convincing evidence, both
(x) its full compliance with the substantive and procedural requirements of this
Section prior to a termination of employment for Cause, and (y) that Executive's
action or inaction specified in the Notice of Termination for Cause did occur
and constituted Cause, any purported termination of employment for Cause shall
be deemed a termination without Cause for all purposes of this Agreement.
4.4 Good Reason.
(a) During the Post-Change Period, the Executive may terminate
employment for Good Reason within 12 months following the Executive's
actual knowledge of an act or omission which constitutes Good Reason;
provided, however, that the Executive's failure to terminate within 12
months following Executive's actual knowledge of a particular act or
omission which constitutes Good Reason shall not prevent Executive's
termination for any other act or omission which constitutes Good
Reason.
(b) "Good Reason" means any of the following:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including offices, titles, reporting requirements or
responsibilities), authority or duties as prescribed by Section
3.2(a)(1), or the Company's requiring the Executive to be based at
any office or location other than the location described in
Section 3.2(a)(2);or any other action by the Company which results
in a diminution or other material adverse change in such position,
authority or duties;
(ii) the failure to pay Guaranteed Base Salary in at
least the amount prescribed by Section 3.2(a);
(iii) the failure to pay Guaranteed Bonus in at least the
amount prescribed by Section 3.3(b); provided, however, that if
the Post-Change Period results solely from a Growth Transaction;
Good Reason under this clause (iii) shall only be the failure to
provide Executive with a bonus opportunity (including designation
of target performance goals and percentage of Guaranteed Base
Salary payable on achievement of target performance goals) no less
favorable to
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Executive than that provided by the Company to Executive for
either of the two most recent Performance Periods beginning before
such Growth Transaction;
(iv) the failure to provide any plan or fringe benefits
or perquisites prescribed by Sections 3.3(c) through 3.3(h), as
modified, if the Post-Change Period results solely from a Growth
Transaction, by Section 3.1(b);
(v) any other failure by the Company to comply with any
of the provisions of Article III;
(vi) any other material adverse change to the terms and
conditions of the Executive's employment (whether or not also
described in clauses (i) through (v) above);
(vii) the Board's giving Notice of Consideration pursuant
to Section 4.3(c) (of the intent to consider terminating Executive
for Cause) but failing to terminate Executive for Cause within a
period of 90 days thereafter in compliance with all substantive
and procedural requirements of Section 4.3,
(viii) any purported termination by the Company of the
Executive's employment other than as expressly permitted by this
Agreement (any such purported termination shall not be effective
for any other purpose under this Agreement);
(ix) a failure by the Company to cause a successor,
prior to or as of the date it becomes a successor, to assume and
agree to perform this Agreement in accordance with the provisions
of Section 11.2 hereof.
Any determination by Executive that any of the foregoing events has
occurred and constitutes "Good Reason" shall be conclusive and binding
for all purposes unless the Company establishes by clear and convincing
evidence that Executive did not have a reasonable basis for such a
determination.
(c) Any termination of employment by the Executive for Good Reason
shall be communicated to the Company by Notice of Termination. The
passage of time not in excess of 12 months after the Executive has
actual knowledge of an act or omission which constitutes Good Reason
prior to delivery of Notice of Termination or a failure by the
Executive to include 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 under this Agreement or preclude the
Executive from asserting such fact or circumstance in enforcing rights
under this Agreement.
ARTICLE V.
OBLIGATIONS OF THE COMPANY UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Company Other Than
for Cause or Disability. If, during the Post-Change Period, the Company shall
terminate Executive's
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employment other than for Cause, Disability, or death or if the Executive shall
terminate employment for Good Reason, the Company shall pay the Executive within
five (5) days of the Termination Date (or if earlier within five (5) days of the
last day Executive performed services for the Company as an Employee), in
addition to all vested rights arising from the Executive's employment as
specified in Article III, a cash amount equal to the sum of the amounts
described in (a) through (g) below and the additional benefits described in (h)
through (i) below:
(a) The Guaranteed Base Salary, any accrued vacation pay and
business expenses incurred through the Termination Date, to the extent
not previously paid to the Executive by the Company.
(b) The difference between (1) the product of (A) the Guaranteed
Bonus, multiplied by (B) a fraction, the numerator of which is the
number of days in the Termination Performance Period which elapsed
before the Termination Date, and the denominator of which is the total
number of days in the Termination Performance Period, and (2) the
amount of any Guaranteed Bonus previously paid to the Executive by the
Company with respect to the Termination Performance Period.
(c) The value of Executive's then-accrued benefits under any
Deferral Plan plus the present value of Executive's then-accrued
benefits under any SERP, determined without disregarding service and
compensation before any Effective Date but then reduced by the amount,
if any, previously paid to the Executive by the Company pursuant to
Section 3.6.
(d) An amount equal to the product of (1) three (3.0), multiplied
by (2) the sum of (A) the Guaranteed Base Salary and (B) the Guaranteed
Bonus.
(e) An amount equal to the sum of the value of the unvested
portion of the Executive's accounts or accrued benefits under any
qualified plan maintained by the Company as of the Termination Date.
(f) The difference between (1) the amount that would be determined
under Section 5.1(c) above if such amount were calculated (to the
extent applicable in determining such amount) (A) as though the
Executive continued to accrue benefits and be credited with service
under the SERP for a period of three years after the Termination Date,
(B) as though the Executive received compensation during each year of
such three-year period equal to the sum of the Guaranteed Base Salary
and the highest Guaranteed Bonus paid (or payable) to the Executive in
the three calendar years preceding the Termination Date, (C) as though
the Executive were three (3) years older than his age at the
Termination Date, and (D) without disregarding service and compensation
before the Termination Date; reduced by (2) the amount (if any)
previously or simultaneously paid by the Company to the Executive
pursuant to Sections 3.6 and 5.1(c).
(g) In addition to the foregoing amounts, the Company shall pay on
behalf of Executive all fees and costs charged by the outplacement firm
selected by the Executive to provide outplacement services or at the
election of the Executive, an immediate cash
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payment equal to the fees and expenses such outplacement firm would charge but
not in excess of 20% of the Guaranteed Base Salary.
(h) In addition to the foregoing payments, until the third annual
anniversary of the Termination Date or such later date as any Plan of
the Company may specify, the Company shall continue to provide to the
Executive and the Executive's family welfare benefits (including,
without limitation, medical, prescription, dental, disability, salary
continuance, individual life, group life, accidental death and travel
accident insurance plans and programs) which are at least as favorable
as the most favorable Plans of the Company applicable to other peer
executives and their families as of the Termination Date, but which are
in no event less favorable than the most favorable Plans of the Company
applicable to other peer executives and their families during the
90-day period immediately before the Effective Date; and the cost of
such welfare benefits to Executive shall not exceed the cost of such
benefits to the Executive immediately before the Termination Date or,
if less, the Effective Date.
(i) Beginning on the later of the third annual anniversary of the
Termination Date or the date Executive attains age 50, and continuing
until the death of the last to die of Executive and his or her spouse,
the Company shall provide to the Executive and to Executive's family
medical benefits which (1) until Executive attains age sixty-five (65)
are at least as favorable as the most favorable medical Plans of the
Company applicable to actively employed peer executives and that
covered any active employee of the Company as of the Effective Date,
and (2) from and after the date Executive attains age 65, are at least
as favorable as the most favorable medical Plans of the Company
applicable to eligible retired peer executives and that covered any
retired employee as of the Effective Date; and the cost to Executive of
such medical benefits for the period described in clause (1) shall not
exceed the cost of such benefits to Executive immediately before the
Termination Date or, if less, the Effective Date, and the cost to
Executive of such medical benefits for the period described in clause
(2) shall not exceed the cost of such benefits to any similarly
situated eligible retiree of the Company immediately before the
Termination Date or, if less, the Effective Date.
The Executive's rights under this Section 5.1 shall be in addition to, and not
in lieu of, any post-termination continuation coverage or conversion rights the
Executive may have pursuant to applicable law, including without limitation
continuation coverage required by Section 4980 of the Code or Part 6 of Title I
of the Employee Retirement Income Security Act of 1974, as amended, for which
purpose the date of the qualifying event shall not be earlier than the date
specified in the first sentence of Section 5.1(i). However, if the Executive is
covered under a medical, life, or disability insurance plan provided by a
subsequent employer at equal or lesser cost to Executive than the cost to
Executive of coverage under the corresponding Company plan required by Sections
5.1(i), then the benefits under the corresponding Company plan required by
Sections 5.1(i) shall be secondary to the benefits under the subsequent
employer's medical, life, or disability insurance plan.
5.2 If by the Company for Cause. If the Company terminates the
Executive's employment for Cause during the Post-Change Period pursuant to the
procedures set forth in Section 4.3, this Agreement shall terminate without
further obligation by the Company to the
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Executive, other than the obligation immediately to pay the Executive in cash
the Executive's Guaranteed Base Salary through the Termination Date, plus the
amount of any compensation previously deferred by the Executive, plus any
accrued vacation pay and business expenses incurred through the Termination
Date, in each case to the extent not previously paid or reimbursed.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good Reason,
Disability or death, this Agreement shall terminate without further obligations
by the Company, other than the obligation immediately to pay the Executive in
cash all amounts specified in paragraphs (a), (b) and (c) of Section 5.1 (such
amounts collectively, the "Accrued Obligations").
5.4 If by the Company for Disability. If the Company terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than:
(a) the Company's obligation immediately to pay the Executive in
cash all Accrued Obligations, and
(b) the Executive's right after the Disability Effective Date to
receive disability and other benefits at least equal to the greater of
(i) those provided under the most favorable disability Plans applicable
to disabled peer executives of the Company in effect immediately before
the Termination Date or (ii) those provided under the most favorable
disability Plans of the Company in effect at any time during the 90-day
period immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by
reason of the Executive's death during the Post-Change Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than the obligation immediately to
pay the Executive's estate or beneficiary in cash all Accrued Obligations.
Despite anything in this Agreement to the contrary, the Executive's family shall
be entitled to receive benefits at least equal to the most favorable benefits
provided by the Company to the surviving families of peer executives of the
Company under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive under such Plans in effect at
any time during the 90-day period immediately before the Effective Date.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments are
made to the Executive pursuant to Section 5.1, the Executive hereby waives the
right to receive severance payments under any other Plan or agreement of or with
the Company.
6.2 Other Rights. Except as provided in Section 6.1, this Agreement
shall not prevent or limit the Executive's continuing or future participation in
any benefit, bonus, incentive or other Plans provided by the Company or any of
its Subsidiaries and for which the Executive may
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qualify, nor shall this Agreement limit or otherwise affect such rights as the
Executive may have under any other agreements with the Company or any of its
Subsidiaries. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any Plan of the Company or any of its
Subsidiaries and any other payment or benefit required by law at or after the
Termination Date shall be payable in accordance with such Plan or applicable law
except as expressly modified by this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Company's independent auditors, which determinations shall be
certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that any benefit received or deemed
received by the Executive from the Company pursuant to this Agreement or
otherwise (collectively, the "Payments") is or will become subject to any excise
tax under Section 4999 of the Code or any similar tax payable under any United
States federal, state, local or other law (such excise tax and all such similar
taxes collectively, "Excise Taxes"), then the Company shall, immediately after
such determination, pay the Executive an amount (the "Gross-up Payment") equal
to the product of
(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the Excise
Taxes and any federal, state, local or other income or excise taxes or other
taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Company may at any time request the Company's
independent auditors to prepare and deliver a Certificate to the Executive. The
Company shall, in addition to complying with Section 7.2, cause all
determinations and certifications under the Article to be made as soon as
reasonably possible and in adequate time to permit the Executive to prepare and
file the Executive's individual tax returns on a timely basis.
7.2 Determination by the Executive.
(a) If the Company or its independent auditors shall fail to
deliver a Certificate to the Executive (and to pay to the Executive the
amount of the Gross-up Payment, if any) within 14 days after receipt
from the Executive of a written request for a Certificate, or if at any
time following receipt of a Certificate the Executive disputes the
amount of the Gross-up Payment set forth therein, the Executive may
elect to demand the payment of the amount which the Executive, in
accordance with an Executive Counsel Opinion), (as defined in Section
7.5), determines to be the Gross-up Payment. Any such demand by the
Executive shall be made by delivery to the Company of a written notice
which specifies the Gross-up Payment determined by the Executive and an
Executive Counsel
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Opinion regarding such Gross-up Payment (such written notice and
opinion collectively, the "Executive's Determination"). Within 14 days
after delivery of the Executive's Determination to the Company, the
Company shall either (1) pay the Executive the Gross-up Payment set
forth in the Executive's Determination (less the portion of such
amount, if any, previously paid to the Executive by the Company) or (2)
deliver to the Executive a Certificate specifying the Gross-up Payment
determined by the Company's independent auditors, together with a
Company Counsel Opinion (as defined in Section 7.5), and pay the
Executive the Gross-up Payment specified in such Certificate. If for
any reason the Company fails to comply with clause (2) of the preceding
sentence, the Gross-up Payment specified in the Executive's
Determination shall be controlling for all purposes.
(b) If the Executive does not make a request for, and the Company
does not deliver to the Executive, a Certificate, the Company shall,
for purposes of Section 7.3, be deemed to have determined that no
Gross-up Payment is due.
7.3 Additional Gross-up Amounts. If the amount of Excise Taxes payable
by the Executive with respect to all Payments is determined (pursuant to the
subsequently-enacted provisions of the Code, final regulations or published
rulings of the IRS, final judgment of a court of competent jurisdiction or the
Company's independent auditors) to be greater than the amount previously paid by
the Company to the Executive pursuant to Section 7.1 or 7.2, as applicable, then
the Company shall pay the Executive an amount (which shall also be deemed a
Gross-up Payment) equal to the product of:
(a) the sum of (i) such additional Excise Taxes and (ii) any
interest, fines, penalties, expenses or other costs incurred by the
Executive as a result of having taken a position in accordance with a
determination made pursuant to Section 7.1,
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal the quotient
(greater than one (1.0)) of one (1.0) divided by one (1.0) minus the sum,
expressed as a decimal fraction, of the rates of all federal, state, local and
other income and other taxes and any Excise Taxes applicable to the Gross-up
Payment; provided that, if such sum exceeds 0.75, it shall be deemed equal to
0.75 for purposes of this computation. (If different rates of tax are applicable
to various portions of a Gross-up Payment, the weighted average of such rates
shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal
opinion of nationally recognized executive compensation counsel who is counsel
to the Executive that there is a reasonable basis to support a conclusion that
the Gross-up Payment determined by the Executive has been calculated in accord
with this Article and applicable law. "Company Counsel Opinion" means a legal
opinion of nationally recognized executive compensation counsel who is counsel
to the Company that (a) there is a reasonable basis to support a conclusion that
the Gross-up Payment set forth of the Certificate of Company's independent
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auditors has been calculated in accord with this Article and applicable law, and
(b) there is no reasonable basis for the calculation of the Gross-up Payment
determined by the Executive.
7.6 Amount Increased or Contested. The Executive shall notify the
Company in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Company of a Gross-up Payment. Such
notice shall include the nature of such claim and the date on which such claim
is due to be paid. The Executive shall give such notice as soon as practicable,
but no later than 10 business days, after the Executive first obtains actual
knowledge of such claim; provided, however, that any failure to give or delay in
giving such notice shall affect the Company's obligations under this Article
only if and to the extent that such failure results in actual prejudice to the
Company. The Executive shall not pay such claim less than 30 days after the
Executive gives such notice to the Company (or, if sooner, the date on which
payment of such claim is due). If the Company notifies the Executive in writing
before the expiration of such period that it desires to contest such claim, the
Executive shall:
(a) give the Company any information that it reasonably requests
relating to such claim,
(b) take such action in connection with contesting such claim as
the Company reasonably requests in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(c) cooperate with the Company in good faith to contest such
claim, and
(d) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax (to the extent not previously paid by the
Company to the Executive) or income tax, including related interest and
penalties, imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing, the Company shall control all
proceedings in connection with such contest and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify the Executive, on an after-tax basis, for any Excise Tax or income
tax, including related interest or penalties, imposed with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a Gross-up Payment would be payable. The Executive
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shall be entitled to settle or contest, as the case may be, any other issue
raised by the IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7.6, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7.6) promptly pay
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 7.6, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such determination before the expiration of 30
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-up Payment required to be paid. Any contest
of a denial of refund shall be controlled by Section 7.6.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
(a) If the Executive incurs legal, accounting and other fees or
other expenses in a good faith effort to obtain benefits under this
Agreement (including, without limitation, the fees and other expenses
of the Executive's legal counsel, any expert witness fees and expenses,
and accounting and other fees and expenses, including legal and
accounting fees and expenses in connection with the delivery of the
Executive Counsel Opinion referred to in Article VII), regardless of
whether the Executive ultimately prevails, the Company shall reimburse
the Executive on a monthly basis upon the written request for such fees
and expenses to the extent not previously reimbursed under the
Company's officers and directors liability insurance policy, if any.
Simultaneously with each such payment Company shall pay Executive an
amount such that after payment of incremental United States federal,
state and local income, excise and other taxes payable by Executive
("Taxes") with respect to such tax reimbursement, there remains a
balance sufficient to pay the Taxes on the reimbursement of such fees
and expenses. The existence of any controlling case or regulatory law
which is directly inconsistent with the position taken by the Executive
shall be evidence that the Executive did not act in good faith.
Executive's payment of such fees and expenses shall be a conclusive
determination with respect to the Company that such fees and expenses
are reasonable.
(b) Reimbursement of legal fees and expenses shall be made monthly
upon the written submission of a request for reimbursement together
with evidence that such fees and expenses are due and payable or were
paid by the Executive. If the Company shall have reimbursed the
Executive for legal fees and expenses and it is later determined that
the Executive was not acting in good faith, all amounts paid on behalf
of, or reimbursed to, the Executive shall be promptly refunded to the
Company.
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(c) To secure its obligations under this Section 8.1 the Company
shall procure and maintain in force during the Agreement Term and
thereafter for one (1) year or if longer until the termination (by
final judgment and after all rights of appeal have been exhausted or
waived) of any litigation involving a good faith effort of an Executive
to obtain benefits under this Agreement, a letter of credit and an
escrow in favor of Executive (together with other executives similarly
situated). The letter of credit shall be issued by a bank or trust
company organized under the laws of the United States or Canada or a
state or province thereof and having a combined capital and surplus of
not less than one hundred million dollars ($100,000,000), shall be in
the aggregate amount of five hundred thousand dollars ($500,000) prior
to July 1, 2001, and in the aggregate amount of two million dollars
$2,000,000) on and after July 1, 2001, and shall be substantially in
the form of that attached (with its attached Annexes and Exhibits) to
this Agreement as Exhibit A. The escrow shall be maintained in the
state of Illinois under an escrow agreement with a bank or trust
company organized under the laws of the United States or Canada or a
state or province thereof and having a combined capital and surplus of
not less than one hundred million dollars ($100,000,000), and shall be
substantially in the form of that attached (with its attached Exhibits)
to this Agreement as Exhibit B.
8.2 Interest. If the Company does not pay any amount due to the
Executive under this Agreement within three days after such amount became due
and owing, interest shall accrue on such amount from the date it became due and
owing until the date of payment at a annual rate equal to two percent (2.0%)
above the base commercial lending rate announced by the Company's principal
revolving credit lender in effect from time to time during the period of such
nonpayment; or, if the Company does not have a principal revolving credit
lender, then at two percent (2.0%) above the prime rate of interest in effect
from time to time during the period of such nonpayment, as reported from time to
time in the Wall Street Journal; but in no case greater than the maximum rate of
interest permitted by applicable law.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off or Defenses by Company. The Executive's right to
receive when due the payments and other benefits provided for under this
Agreement is absolute, unconditional and shall not be subject to any set-off,
counterclaim or legal or equitable defense. The exclusive method for the Company
to avoid payments to the Executive under this Agreement, to the extent specified
in this Agreement, is to terminate Executive's employment for Cause pursuant to
Sections 4.3 and 5.2 of this Agreement. Time is of the essence in the
performance by the Company of its obligations under this Agreement. Any claim
which the Company may have against the Executive, whether for a breach of this
Agreement or otherwise, shall be brought in a separate action or proceeding and
not as part of any action or proceeding brought by the Executive to enforce any
rights against the Company under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate
the amounts payable by the Company under this Agreement by seeking new
employment following termination. Except as specifically otherwise provided in
this Agreement, all amounts payable pursuant to this Agreement shall be paid
without reduction regardless of any amounts of salary,
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compensation or other amounts which may be paid or payable to the Executive as
the result of the Executive's employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NONCOMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of
the Company and its subsidiaries to maintain as secret and confidential all
valuable and unique information and techniques acquired, developed or used by
the Company and its Subsidiaries relating to their business, operations,
employees and customers, which gives the Company and its subsidiaries a
competitive advantage in the construction and engineering industry and other
businesses in which the Company and its subsidiaries are engaged ("Confidential
Information"). Executive recognizes that all such Confidential Information is
the sole and exclusive property of the Company and its Subsidiaries, and that
disclosure of Confidential Information would cause damage to the Company and its
Subsidiaries. Executive agrees that, except as required by the duties of his
employment with the Company and/or its Subsidiaries and except in connection
with enforcing the Executive's rights under this Agreement or if compelled by a
court or governmental agency, he will not, without the consent of the Company,
disseminate or otherwise disclose any Confidential Information obtained during
his employment with the Company and/or its Subsidiaries for so long as such
information is valuable and unique.
10.2 Noncompetition/Nonsolicitation.
(a) Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive will not at any time directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business
as defined in Section 10.2(d).
(b) Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive shall not make any financial investment, whether in the form
of equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 10.2(b) shall, however,
restrict Executive from making any investment in any company whose
stock is listed on a national securities exchange or actively traded in
the over-the-counter market; provided that (1) such investment does not
give Executive the right or ability to control or influence the policy
decisions of any Prohibited Business, and (2) such investment does not
create a conflict of interest between Executive's duties hereunder and
Executive's interest in such investment.
(c) Executive agrees that, during the period of his employment
with the Company and/or its Subsidiaries and, if Executive's employment
is terminated for any reason, thereafter for a period of one (1) year,
Executive shall not (1) employ any employee of the Company and/or its
Subsidiaries or (2) interfere with the Company's or any of its
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Subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its Subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after
the date of Executive's termination of employment), was an employee,
customer, vendor or supplier of, or maintained a business relationship
with, any business of the Company and/or its Subsidiaries which was
conducted at any time during the period commencing one year prior to
the termination of employment.
(d) For the purpose of this Section 10.2, "Prohibited Business"
shall be defined as any construction and engineering business
specializing in the engineering and design, materials procurement,
fabrication, erection, repair and modification of steel tanks and other
steel plate structures and associated systems and any branch, office or
operation thereof, which is a direct and material competitor of the
Company wherever the Company does business, including the Netherlands,
the United States and any other country.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing, the Company
shall not be precluded from pursuing any and all remedies it may have at law or
in equity for breach of such obligations; provided, however, that such breach
shall not in any manner or degree whatsoever limit, reduce or otherwise affect
the obligations of the Company under this Agreement, and in no event shall an
asserted breach of the Executive's obligations under this Article X constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. 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.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement.
Any successor to the business and/or assets of the Company which assumes and
agrees to perform this Agreement by operation of law, contract, or otherwise
shall be jointly and severally liable with the Company under this Agreement.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid as soon as administratively practicable in a lump sum to the
beneficiary designated in writing by the Executive, or if none is so designated,
to the Executive's estate.
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11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other
portions of this Agreement are declared by any court or governmental authority
to be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
11.6 Amendments. Except as provided in Section 2.2 hereof, this
Agreement shall not be altered, amended or modified except by written instrument
executed by the Company and Executive.
11.7 Notices. All notices and other communications under this
Agreement shall be in writing and delivered by hand or by first class registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Mr. Robert H. Wolfe
732 Fairfield Court
Westmont, Illinois 60559
If to the Company (including any or all of CBICNV,
CBIC or CBICD):
Chicago Bridge & Iron Company
1501 North Division Street
Plainfield, Illinois 60544
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed
in accordance with the laws of the State of Illinois, without regard to its
choice of law principles.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
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11.11 Tax Withholding. The Company may withhold from any amounts
payable under this Agreement any federal, state or local taxes that are required
to be withheld pursuant to any applicable law or regulation.
11.12 Joint and Several Obligations. The obligations of the Company
under this Agreement are joint and several obligations of CBICNV, CBIC and
CBICD; provided, however, that each of CBICNV, CBIC and CBICD may agree between
themselves but without adversely affecting the rights of the Executive which of
them shall provide any particular payment or benefit under this Agreement.
11.13 No Waiver. The Executive's failure to insist upon strict
compliance with any provision of this Agreement shall not be deemed a waiver of
such provision or any other provision of this Agreement. A waiver of any
provision of this Agreement shall not be deemed a waiver of any other provision,
and any waiver of any default in any such provision shall not be deemed a waiver
of any later default thereof or of any other provision.
11.14 Prior Agreement. The Change of Control Severance Agreement dated
March 4, 1999, between CBIC and the Executive is hereby terminated effective on
the date of this Agreement.
11.15 Entire Agreement. This Agreement contains the entire
understanding of the Company and the Executive with respect to its subject
matter and supercedes any prior change of control severance agreement and any
Change of Control severance benefit provisions in any prior employment agreement
between the Company and the Executive.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
EXECUTIVE
/s/ Robert H. Wolfe
------------------------------------------
Robert H. Wolfe
CHICAGO BRIDGE & IRON COMPANY N.V.
By: /s/ Gerald M. Glenn
-------------------------------------
Title: Managing Director
-----------------------------------
CHICAGO BRIDGE & IRON COMPANY
By: /s/ Robert B. Jordan
-------------------------------------
Title:
-----------------------------------
CHICAGO BRIDGE & IRON COMPANY (DELAWARE)
By: /s/ Timothy J. Wiggins
-------------------------------------
Title:
-----------------------------------
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