EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement"), including the attached
Exhibit A, is entered into between NATCO Group Inc., a Delaware corporation,
having offices at 0000 X. Xxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
("Company"), and Xxxx X. Xxxxxx, an individual residing in Houston, Texas
("Employee"), to be effective as of December 7, 2004 (the "Effective Date").
Company is desirous of securing the services of Employee pursuant to the terms
and conditions and for the consideration set forth in this Agreement, and
Employee is desirous of entering employment with the Company or a subsidiary
thereof pursuant to such terms and conditions and for such consideration.
Therefore, for and in consideration of the mutual promises, covenants, and
obligations contained herein, Company and Employee agree as follows:
ARTICLE 1: EMPLOYMENT AND DUTIES
1.1. Company shall employ, or shall cause a subsidiary to employ,
Employee, and Employee shall be employed by Company or such subsidiary,
beginning as of the Effective Date of this Agreement and continuing until the
date set forth on Exhibit A (the "Term"), subject to the terms and conditions
of this Agreement. This Agreement will expire by its own terms and the Employee
will automatically become an employee at will and be included in all general
employment and benefit arrangements at the end of the Term unless the Company
notifies Employee of its intention to extend the Term (such notice to include
the length of the intended extension) at least 60 days prior to the expiration
of the Term and Employee accepts such extension within 10 days of receipt of
such notice.
1.2. Employee shall be employed in the position(s) set forth on
Exhibit A. Employee agrees to serve in the assigned position(s) and to perform
diligently and to the best of Employee's abilities the duties and services
appertaining to such position as determined by Company, as well as such
additional or different duties and services appropriate to such position which
Employee from time to time may be reasonably directed to perform by Company.
Employee shall at all times comply with and be subject to such policies and
procedures as Company may establish from time to time.
1.3. Employee shall, during the period of Employee's employment by
Company or a subsidiary, devote Employee's full business time, energy, and best
efforts to the business and affairs of Company and its subsidiaries and
affiliated entities. Employee may not engage, directly or indirectly, in any
other business, investment, or activity that interferes with Employee's
performance of Employee's duties hereunder, is contrary to the interests of
Company, or requires any significant portion of Employee's business time. The
activities described as "permitted activities" on Exhibit A shall not be deemed
a violation of this Section 1.3.
1.4. Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of Company and its subsidiaries and to do no act which would injure
Company's business, its interests or its reputation. Employee agrees to comply
with the policies and procedures as described and contained in Company's
Business Ethics Policies and related policies, copies of which have been
provided to Employee.
ARTICLE 2: COMPENSATION AND BENEFITS
2.1. Employee shall be paid base salary and bonus and shall accrue
vacation as set forth on Exhibit A. Employee's base salary shall be paid in
bi-weekly installments in accordance with Company's or the employing
subsidiary's standard payroll practice, and (as with all other payments made to
Employee by Company or such subsidiary) is subject to withholding of all
federal, state, city or other taxes as may be required by law.
2.2. While employed by Company or a subsidiary (both during the Term
and thereafter), Employee shall be allowed to participate, on the same basis
generally as other employees of Company or such subsidiary, in all general
employee benefit plans and programs, including improvements or modifications of
the same, which on the effective date or thereafter are made available by
Company or such subsidiary to all or substantially all of its or their
employees. Such benefits, plans and programs may include, without limitation,
medical, dental care, life insurance, disability protection
and qualified plans. Nothing in this Agreement is to be construed or
interpreted to provide greater rights, participation, coverage or benefits
under such benefit plans or programs than provided to similarly situated
employees pursuant to the terms and conditions of such benefit plans and
programs, except as may be approved by Company's Governance, Nominating &
Compensation Committee (or successor committee with responsibility for the
compensation function) and/or Board of Directors.
2.3. Employee shall receive the grants and awards of restricted stock
and options as, and on the dates specified in Exhibit A, subject to his
continued employment on the date of grant. Employee shall be eligible to
participate in the Company's long-term incentive plans and Company's annual
incentive plan currently maintained or hereafter maintained by Company or a
subsidiary for its officers as a group. Any such grants, awards or
participation shall be subject to separate agreements containing the terms and
provisions applicable to each such grant, award or participation as provided in
the applicable incentive plan and by the committee administering such plan.
2.4. Company shall not by reason of this Article 2 be obligated to
institute, maintain or refrain from changing, amending or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as
such actions or inactions are similarly applicable to covered employees
generally. Moreover, unless specifically provided for in a written plan
document adopted by the Board of Directors of Company, none of the benefits or
arrangements described in this Article 2 shall be secured or funded in any way,
and each shall instead constitute an unfunded and unsecured promise to pay
money in the future exclusively from the general assets of Company.
2.5. Company may withhold from any compensation, benefits or amounts
payable under this Agreement all federal, state, city or other taxes as may be
required by law.
2.6. Company shall pay up to $2,500 in moving expenses to move
Employee's office furniture and effects to the Company's headquarters. Such
personal items shall remain the property of Employee.
ARTICLE 3:
TERMINATION PRIOR TO EXPIRATION OF TERM AND EFFECTS OF SUCH TERMINATION
3.1. Notwithstanding any other provisions of this Agreement, Company
shall have the right to terminate Employee's employment under this Agreement at
any time prior to the expiration of the Term for any of the following reasons:
(a) For "cause" upon the determination by the Company's
independent directors of the Board who are neither employees of nor
Affiliated with Company or any subsidiary of Company apart from his or
her capacity as a member of the Board and any Board committee and who
otherwise have no interest in such determination ("Independent
Directors") that "cause" exists for the termination of the employment
relationship. As used in this Section 3.1(a), the term "cause" shall
mean (i) Employee's gross negligence or willful misconduct in the
performance of the duties and services required of Employee pursuant
to this Agreement; or (ii) Employee's final conviction of a felony or
of a misdemeanor involving moral turpitude; (iii) Employee's
involvement in a conflict of interest as referenced in Sections 1.3
and 1.4 with respect to which Company makes a good faith determination
to terminate the employment of Employee; or (iv) Employee's material
breach of any material provision of this Agreement which remains
uncorrected for 30 days following written notice to Employee by
Company of such breach. It is expressly acknowledged and agreed that
the decision as to whether "cause" exists for termination of the
employment relationship by Company is delegated to the Independent
Directors of the Board of Company for determination;
(b) For any other reason whatsoever, with or without cause,
in the sole discretion of the Company's Independent Directors of the
Board;
(c) Upon Employee's death; or
(d) To the extent allowed by law, upon Employee's becoming
incapacitated by accident, sickness or other circumstance which
renders him or her mentally or physically incapable of performing the
duties and services required of Employee, as determined in good faith
by Company.
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The termination of Employee's employment by Company prior to the expiration of
the Term shall constitute a "Termination for Cause" if made pursuant to Section
3.1(a); the effect of such termination is specified in Section 3.4. The
termination of Employee's employment by Company prior to the expiration of the
Term shall constitute an "Involuntary Termination" if made pursuant to Section
3.1(b); the effect of such termination is specified in Section 3.6(a). The
effect of the employment relationship being terminated pursuant to Section
3.1(c) or (d) as a result of Employee's death or disability is specified in
Section 3.6(b).
3.2. Notwithstanding any other provisions of this Agreement except
Section 8.5, Employee shall have the right to terminate the employment
relationship under this Agreement at any time prior to the expiration of the
Term of employment for any of the following reasons:
(a) A material breach by Company of any material provision of
this Agreement or the occurrence of an Involuntary Termination as
defined in Section 3.5 which remains uncorrected for 30 days following
written notice of such breach by Employee to Company; or
(b) For any other reason whatsoever, in the sole discretion
of Employee.
The termination of Employee's employment by Employee prior to the expiration of
the Term shall constitute an "Involuntary Termination" if made pursuant to
Section 3.2(a); the effect of such termination is specified in Section 3.6(a).
The termination of Employee's employment by Employee prior to the expiration of
the Term shall constitute a "Voluntary Termination" if made pursuant to Section
3.2(b); the effect of such termination is specified in Section 3.3.
3.3. Upon a "Voluntary Termination" of the employment relationship by
Employee prior to expiration of the Term, all future compensation to which
Employee would have been entitled and all future benefits for which Employee
would have been eligible shall cease and terminate as of the date of
termination. Employee shall be entitled to pro rata salary and accrued benefits
through the date of such termination, but Employee shall not be entitled to any
bonuses or incentive compensation not yet paid at the date of such termination.
3.4. If Employee's employment hereunder shall be terminated by Company
for Cause prior to expiration of the Term, all future compensation to which
Employee would have been entitled and all future benefits for which Employee
would have been eligible shall cease and terminate as of the date of
termination. Employee shall be entitled to pro rata salary and accrued benefits
through the date of such termination, but Employee shall not be entitled to any
bonuses or incentive compensation not yet paid at the date of such termination.
3.5. As used in this Agreement, "Involuntary Termination" shall also
mean termination of Employee's employment with Company if such termination
results from termination by Employee within 90 days of and in connection with
or based upon any of the following:
(a) A substantial and/or material reduction in the nature or
scope of Employee's duties and/or responsibilities as such duties are
constituted as of the effective date of this Agreement or later agreed
to by Employee and Company, or if Employee is no longer an executive
officer of the Company as defined as Section 16b in SEC regulations,
which reduction remains in place and uncorrected for 30 days following
written notice of such breach to Company by Employee;
(b) A reduction in Employee's base pay (except as part of a
general cutback for all employees or officers);
(c) A change in the location for the primary performance of
Employee's services under this Agreement from the city in which
Employee was serving at the time of notification to a city which is
more than 100 miles away from such location, which change is not
approved by Employee.
3.6. Upon any Involuntary Termination of the employment
relationship by either Company or Employee prior to expiration of the Term,
Employee shall be entitled to receive pro rata base salary and benefits
(including payment for accrued, but unused, vacation) through the date of
termination. Depending upon the type of Involuntary Termination, Employee or
his estate may be entitled to additional compensation and/or benefits, as
described below.
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(a) Upon an Involuntary Termination of the employment
relationship by either Company or Employee prior to expiration of the
Term pursuant to Section 3.1(b), 3.2(a) or 3.5, Employee shall be
entitled, after execution of a Waiver and Release Agreement in
consideration of Employee's continuing obligations hereunder after
such termination (including, without limitation, Employee's
non-competition obligations), to (i) the sum of one year's annual base
salary payable as follows: half of the base salary shall be paid
within 30 days of the termination date; the remaining half shall be
paid at the end of the 6-month period following the termination date;
(ii) the amount of the target bonus compensation earned by Employee
under any applicable bonus plan then in effect in accordance with its
terms through the date of termination, based on Company performance
through such date and prorated by multiplying such bonus compensation
by the fraction obtained by dividing the number of days in the year
through the date of termination by 365, payable as follows: half of
target bonus amount shall be paid within 30 days of the termination
date; the remaining half shall be paid at the end of the 6-month
period following the termination date; (iii) the continuation of the
provision of health insurance, dental insurance and life insurance
benefits for a period of one year following the date of termination to
Employee and Employee's family at least equivalent to and to the same
extent as those which would have been provided to them in accordance
with this Employment Agreement and the plans, programs, practices and
policies of Company as in effect and applicable generally to other
peer executives and their families at the date of termination, at the
election of Employee; provided, however, that if the Employee becomes
re-employed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the
medical and other welfare benefits described herein will be secondary
to those provided under such other plan during such applicable period
of eligibility; and (iv) any bonus compensation that has been earned
under the bonus plan, the payment of which has been deferred under the
terms of the bonus plan, will be paid to Employee in accordance with
the terms of the bonus plan.
(b) Upon an Involuntary Termination of the employment
relationship by either Company or Employee prior to expiration of the
Term pursuant to Section 3.1(c) or (d), Employee or his beneficiary's
shall be entitled to (i) cash in the amount of the target bonus
compensation earned by Employee under any applicable bonus plan then
in effect in accordance with its terms through the date of
termination, based on Company performance through such date and
prorated by multiplying such bonus compensation by the fraction
obtained by dividing the number of days in the year through the date
of termination by 365, payable no later than 90 days following the
date of termination; and (ii) any bonus compensation that has been
earned under the bonus plan, the payment of which has been deferred
under the terms of the bonus plan, will be paid to Employee in
accordance with the terms of the bonus plan.
(c) Upon an Involuntary Termination of the employment
relationship by either Company or Employee prior to expiration of the
Term pursuant to Section 3.1(b), 3.2(a) or 3.5 within 12 months
following a Change of Control, Employee shall be entitled, after
execution of a Waiver and Release Agreement in consideration of
Employee's continuing obligations hereunder after such termination
(including, without limitation, Employee's non-competition
obligations), (i) to the sum of 1.5 times one year's annual base
salary payable as follows: half of the base salary shall be paid
within 30 days of the termination date; the remaining half shall be
paid at the end of the 6-month period following the termination date;
(ii) a lump sum cash amount equal to the product of 1.5 times the
target bonus compensation at the greater of (A) the target bonus
compensation in effect at the time notice of termination is given or
(B) the target bonus compensation in effect immediately preceding the
Change of Control Date, payable as follows: half of target bonus
amount shall be paid within 30 days of the termination date; the
remaining half shall be paid at the end of the 6-month period
following the termination date; (iii) the continuation of the
provision of health insurance, dental insurance and life insurance
benefits for a period of 18 months following the date of termination
to Employee and Employee's family at least equivalent to and to the
same extent as those which would have been provided to them in
accordance with this Employment Agreement and the plans, programs,
practices and policies of Company as in effect and applicable
generally to other peer executives and their families at the date of
termination, at the election of Employee, or the cash-equivalent
thereof; provided, however, that if the Employee becomes re-employed
with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and
other welfare benefits described herein will be secondary to those
provided under such other plan during such applicable period of
eligibility; and (iv) any bonus compensation
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that has been earned under the bonus plan, the payment of which has
been deferred under the terms of the bonus plan, will be paid to
Employee in accordance with the terms of the bonus plan. In addition,
notwithstanding the terms of the any related incentive plan or
agreement, or any award agreement evidencing awards of stock options
or restricted stock to purchase stock of Company, in the event of a
Change of Control while Employee is employed by Company, all
outstanding stock options held by Employee shall fully vest as of the
Change of Control Date and become immediately exercisable in
accordance with their terms and all restrictions on any restricted
stock of Company held by Employee shall lapse as of the Change of
Control Date, and any such stock options shall be exercisable for 12
months after the date of termination, unless the term of the stock
options expires before the end of such longer period, in which case
the stock option shall be exercisable until the expiration of its
term.
(d) Upon an Involuntary Termination of the employment
relationship by either Company or Employee prior to expiration of the
Term pursuant to Section 3.1(b), 3.2(a) or 3.5 within 6 months prior
to a Change of Control, Employee shall be entitled, after execution of
a Waiver and Release Agreement in consideration of Employee's
continuing obligations hereunder after such termination (including,
without limitation, Employee's non-competition obligations), (i) to
the sum of 1.5 times one year's annual base salary payable as follows:
the full amount of such payment shall be paid at the end of the
6-month period following the termination date, with the amount of such
payment to be offset by any payment Employee has previously received
under Section 3.6(a)(i); (ii) a lump sum cash amount equal to the
product of 1.5 times the target bonus compensation at the greater of
(A) the target bonus compensation in effect at the time notice of
termination is given or (B) the target bonus compensation in effect
immediately preceding the Change of Control Date, payable as follows:
the full amount of such payment shall be paid at the end of the
6-month period following the termination date, with the amount of such
payment to be offset by any payment Employee has previously received
under Section 3.6(a)(ii); (iii) the continuation of the provision of
health insurance, dental insurance and life insurance benefits for a
period of 18 months following the date of termination to Employee and
Employee's family at least equivalent to and to the same extent as
those which would have been provided to them in accordance with this
Employment Agreement and the plans, programs, practices and policies
of Company as in effect and applicable generally to other peer
executives and their families at the date of termination, at the
election of Employee, or the cash-equivalent thereof; provided,
however, that if the Employee becomes re-employed with another
employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and other welfare
benefits described herein will be secondary to those provided under
such other plan during such applicable period of eligibility; and (iv)
any bonus compensation that has been earned under the bonus plan, the
payment of which has been deferred under the terms of the bonus plan,
will be paid to Employee in accordance with the terms of the bonus
plan. In addition, Employee shall receive a cash payment, (x) with
respect to any stock option that is forfeited as of the date of his
termination of employment, equal to the difference between the closing
price of the Company stock as of the Change of Control Date and such
option's exercise price (or, if the term of such option would have
expired before the Change of Control Date, the difference between the
closing price of the Company stock as of the date of such option's
expiration date and such option's exercise price) and (y) with respect
to any restricted stock that is forfeited as of the date of his
termination of employment, equal to the closing price of such stock as
of the Change of Control Date, with such payment to be made within 30
days of the Change of Control Date.
(e) "Change of Control" of Company shall occur if: (1)
Company merges or consolidates with any other entity (other than one
of NATCO Group Inc.'s majority owned subsidiaries) and the
shareholders of NATCO Group Inc. own less than 50% of the surviving
entity; (2) Company sells all or substantially all of its assets to
any other person or entity (other than (i) a sale of equity interests
in NATCO Group Inc. or (ii) a sale of assets to another majority owned
subsidiary of NATCO Group Inc. and in connection therewith Employee
becomes employed by such subsidiary, NATCO Group Inc. or a partnership
in which NATCO Group Inc. is the general partner); (3) Company is
dissolved or liquidated; (4) any third person or entity together with
its Affiliates (including a "group" as contemplated by Paragraph
13(d)(3) of the Securities Exchange Act of 1934, as amended) shall
become, directly or indirectly, the Beneficial Owner of greater than
50% of the voting stock of Company, based upon voting power (except as
the result of a distribution of the voting securities of the Company
to the shareholders); or (5) during such time as Company has a class
of Voting Securities registered under the Securities Exchange Act of
1934, the individuals who constituted the members of the Company's
Board of Directors ("Incumbent Board") upon the effective date of such
registration cease for any reason to
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constitute at least a majority thereof, provided that any person
becoming a director whose election or nomination for election by
Company stockholders was approved by a vote of at least two-thirds of
the directors comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to
such nomination) shall be, for purposes of this subclause (5),
considered as though such person were a member of the Incumbent Board.
(f) "Change of Control Date" shall mean the day on which a
Change of Control becomes effective.
(g) Employee shall not be under any duty or obligation to
seek or accept other employment following Involuntary Termination and,
except as provided in Section 6.2, the amounts due Employee hereunder
shall not be reduced or suspended if Employee accepts subsequent
employment. Employee's rights under this Section 3.6 are Employee's
sole and exclusive rights against Company, or its Affiliates, and
Company's sole and exclusive liability to Employee under this
Agreement, in contract, tort, or otherwise, for any Involuntary
Termination of the employment relationship. Employee, to the extent
permitted by law, covenants not to xxx or lodge any claim, demand or
cause of action against Company for any sums for Involuntary
Termination other than those sums specified in this Section 3.6.
3.7. In all cases, the payments payable to Employee under Section 3.6
of this Agreement upon termination of the employment relationship shall be
offset against any amounts to which Employee may otherwise be entitled under
any and all severance plans and policies of Company, or its Affiliates.
3.8. Termination (including expiration of the Term) of the employment
relationship does not terminate those obligations imposed by this Agreement,
which are continuing obligations, including, without limitation, Employee's
obligations under Articles 5 and 6. Upon termination, Employee shall promptly
return all property of the Company and its Affiliates to the Company, including
books, records, computer files, etc.
3.9. Limitation of Benefits.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any benefit,
payment or distribution by Company to or for the benefit of Employee
(whether payable or distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would, if paid, be subject to
the excise tax imposed by Section 4999 of the Code (the "Excise Tax"),
then the Payment shall be reduced to the extent necessary to avoid the
imposition of the Excise Tax. Company may select the Payments to be
limited or reduced.
(b) All determinations required to be made under this Section
3.9, including whether an Excise Tax would otherwise be imposed and
the assumptions to be utilized in arriving at such determination,
shall be made by Independent Tax Counsel which shall provide detailed
supporting calculations both to Company and Employee within 15
business days of the receipt of notice from Employee that a Payment is
due to be made, or such earlier time as is requested by Company. For
purposes of this paragraph, "Independent Tax Counsel" will mean a
lawyer, a certified public accountant with a nationally recognized
accounting firm, or a compensation consultant with a nationally
recognized actuarial and benefits consulting firm with expertise in
the area of executive compensation, who will be selected by Company
and will be reasonably acceptable to Employee, and whose fees and
disbursements will be paid by Company. Any determination by the
Independent Tax Counsel shall be binding upon Company and Employee.
If, as a result of any uncertainty in the application of Section 4999
of the Code at the time the initial determination is made by the
Independent Tax Counsel hereunder, Payments hereunder have been
unnecessarily limited by this Section 3.9 ("Underpayment"), consistent
with the calculations required to be made hereunder, then the
Independent Tax Counsel shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be properly paid by
Company to or for the benefit of Employee. If, however, Payments
hereunder have not been sufficiently limited by this Section 3.9,
consistent with the calculations required to be made hereunder, to
prevent the imposition of an Excise Tax upon Employee (the
"Overpayment"), then Employee shall notify Company in writing within
15 days of any claim by the Internal Revenue Service, that, if
successful, would require the payment by Employee of any Excise Tax,
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and the Independent Tax Counsel shall determine the amount of
Overpayment that has occurred and any such Overpayment shall be
properly refunded by Employee by or for the benefit of Company so as
to properly prevent the imposition of the Excise Tax.
ARTICLE 4:
CONTINUATION OF EMPLOYMENT BEYOND TERM; TERMINATION AND EFFECTS OF TERMINATION
4.1. Should Employee remain employed by Company or a subsidiary beyond
the expiration of the Term of this Agreement, and this Agreement has not been
extended by Company, the employer-employee relationship shall be employment at
will, terminable at any time by either Company, its employing subsidiary or
Employee for any reason whatsoever, with or without cause.
ARTICLE 5: OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS
5.1. All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Company or a subsidiary (whether during business hours
or otherwise and whether on Company's premises or otherwise) which relate to
Company's or such subsidiary's business, products or services (including,
without limitation, all such information relating to corporate opportunities,
research, financial and sales data, pricing and trading terms, evaluations,
opinions, interpretations, acquisition prospects, the identity of customers or
their requirements, the identity of key contacts within the customer's
organizations or within the organization of acquisition prospects, or marketing
and merchandising techniques, prospective names, and marks) shall be disclosed
to Company and are and shall be the sole and exclusive property of Company or
its subsidiary. Moreover, all drawings, memoranda, notes, records, files,
correspondence, drawings, manuals, models, specifications, computer programs,
maps and all other writings or materials of any type embodying any of such
information, ideas, concepts, improvements, discoveries and inventions are and
shall be the sole and exclusive property of Company or its subsidiary.
5.2. Employee acknowledges that the business of Company and its
Affiliates is highly competitive and that its strategies, methods, books,
records and documents, its technical information concerning its products,
equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning its customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special
and unique assets which Company or its Affiliates use in its or their business
to obtain a competitive advantage over its or their competitors. Employee
further acknowledges that protection of such confidential business information
and trade secrets against unauthorized disclosure and use is of critical
importance to Company and its Affiliates in maintaining its and their
competitive position. Employee acknowledges that under this Agreement, Employee
is being given access to confidential business information and trade secrets of
Company and its Affiliates, and Employee hereby agrees that Employee will not,
at any time during or after his or her employment by Company, make any
unauthorized disclosure of any confidential business information or trade
secrets of Company or its Affiliates, or make any use thereof, except in the
carrying out of his or her employment responsibilities hereunder, or as may be
required by law. NATCO Group Inc. and its Affiliates shall be third party
beneficiaries of Employee's obligations under this Section. As a result of
Employee's employment by Company or a subsidiary, Employee may also from time
to time have access to, or knowledge of, confidential business information or
trade secrets of third parties, such as customers, suppliers, partners,
joint-venturers and the like, of Company and its Affiliates. Employee also
agrees to preserve and protect the confidentiality of such third-party
confidential information and trade secrets to the same extent, and on the same
basis, as confidential business information and trade secrets of the Company
and its Affiliates. Employee acknowledges that money damages would not be a
sufficient remedy for any breach of this Article 5 by Employee, and Company
shall be entitled to enforce the provisions of this Article 5 to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach
of this Article 5, but shall be in addition to all remedies available at law or
in equity to Company, including the recovery of damages from Employee and his
or her agents involved in such breach.
ARTICLE 6: POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS
6.1. As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, and as an additional incentive for Company to
enter into this Agreement, and in particular Company's agreement to the
protections contained in Section 3.6, Company and Employee agree to the
non-competition provisions of this Article 6
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during the term of this Agreement. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly
or indirectly for Employee or for others, in any geographic area or market
where Company or any of its Affiliated companies are conducting any business as
of the date of termination of the employment relationship or have during the
previous 12 months conducted any business:
(a) engage in any business competitive with the business
conducted by Company or its Affiliates;
(b) render advice or services to, or otherwise assist, any
other person, association or entity who is engaged, directly or
indirectly, in any business competitive with the business conducted by
Company or its Affiliates; or
(c) induce any employee of Company or any of its Affiliates
to terminate his or her employment with Company or its Affiliates, or
hire or assist in the hiring of any such employee by person,
association, or entity not Affiliated with Company or its Affiliates.
These non-competition obligations shall continue for a period of one
year after termination of this employment relationship.
6.2. Employee understands that the foregoing restrictions may limit
his or her ability to engage in certain businesses during the 12-month period
provided for above, but acknowledges that Employee will receive sufficiently
high remuneration and other benefits under this Agreement to justify such
restriction. Employee acknowledges that money damages would not be sufficient
remedy for any breach of this Article 6 by Employee, and Company shall be
entitled to enforce the provisions of this Article 6 by terminating any
payments then owed to Employee under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach
of this Article 6, but shall be in addition to all remedies available at law or
in equity to Company, including, without limitation, the recovery of damages
from Employee and his or her agents involved in such breach.
6.3. It is expressly understood and agreed that Company and Employee
consider the restrictions contained in this Article 6 to be reasonable and
necessary to protect the proprietary information of Company. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 7: INDEMNIFICATION
7.1 If, at any time during or after the Term of this Agreement,
Employee is made a party to, or is threatened to be made a party in, any civil,
criminal or administrative action, suit or proceeding by reason of the fact
that Employee is or was a director, officer, employee or agent of Company, or
of any other corporation or any partnership, joint venture, trust or other
enterprise for which Employee served as such at the request of Company, then
Employee shall be indemnified by Company, to the fullest extent permitted under
applicable law, against expenses actually and reasonably incurred by Employee
or imposed on Employee in connection with, or resulting from, the defense of
such action, suit or proceeding, or in connection with, or resulting from, any
appeal therein if Employee acted in good faith and in a manner Employee
reasonably believed to be in or not opposed to the best interest of Company,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe Employee's conduct was unlawful, except with respect to matters as
to which it is adjudged that Employee is liable to Company or to such other
corporation, partnership, joint venture, trust or other enterprise for gross
negligence or willful misconduct in the performance of the Employee's duties.
As used herein, the term "expenses" shall include all obligations actually and
reasonably incurred by the Employee for the payment of money, including,
without limitation, attorney's fees, judgments, awards, fines, penalties and
amounts paid in satisfaction of a judgment or in settlement of any such action,
suit or proceeding, except amounts paid to Company or such other corporation,
partnership, joint venture, trust or other enterprise by Employee. The
foregoing indemnification provisions shall be in addition to any other rights
to indemnification to which Employee may be entitled under any officers' and
directors' liability insurance maintained by Company or pursuant to any
separate agreement between Employee and Company with respect to
indemnification.
8
ARTICLE 8: MISCELLANEOUS
8.1. The following terms shall have the meanings ascribed to them
below for purposes of this Agreement:
(a) "Affiliates" or "Affiliated" means an entity who
directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with Company.
(b) "Involuntary Termination Date" shall mean Employee's last
date of employment by reason of an Involuntary Termination.
8.2. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows: If to Company, to:
NATCO Group Inc.
0000 X. Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Chairman of the Governance,
Nominating & Compensation Committee
If to Employee, to:
Xxxx X. Xxxxxx
0000 Xxx Xxxxx
Xxxxxxx, Xxxxx 00000
Either Company or Employee may furnish a change of address to the other in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.
8.3. This Agreement shall be governed in all respects by the laws of
the State of Texas, excluding any conflict-of-law rule or principle that might
refer the construction of the Agreement to the laws of another state or
country.
8.4. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
8.5. If a dispute arises out of or related to this Agreement, other
than a dispute regarding Employee's obligations under Article 5, Section 5.2,
or Article 6, Section 6.1, and if the dispute cannot be settled through direct
discussions, then Company and Employee agree to first endeavor to settle the
dispute in an amicable manner by mediation, before having recourse to any other
proceeding or forum. Thereafter, the matter shall be submitted to binding
arbitration as follows:
ANY DISPUTE, CLAIM, OR CONTROVERSY ARISING OUT OF OR RELATED IN ANY
WAY TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO ITS ENFORCEABILITY,
VALIDITY, OR INTERPRETATION, OR RELATED IN ANY WAY TO EMPLOYEE'S EMPLOYMENT
WITH COMPANY OR A SUBSIDIARY THAT IS NOT FIRST RESOLVED BY AGREEMENT OR
MEDIATION AS PROVIDED ABOVE, SHALL BE SUBMITTED TO AND RESOLVED BY BINDING
ARBITRATION WITH THE AMERICAN ARBITRATION ASSOCIATION ("AAA") IN HOUSTON,
TEXAS, IN ACCORDANCE WITH THE AAA'S APPLICABLE RULES TO THE RESOLUTION OF
EMPLOYMENT DISPUTES. JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY
BE ENTERED IN ANY COURT HAVING JURISDICTION. IT IS SPECIFICALLY AGREED THAT THE
ARBITRATION PROVISION SHALL BE BINDING ON EMPLOYEE'S HEIRS, ADMINISTRATORS, AND
PERSONAL REPRESENTATIVES. THE PARAGRAPH SHALL BE GOVERNED BY THE FEDERAL
ARBITRATION ACT. NOTHING CONTAINED IN THE AGREEMENT SHALL PREVENT COMPANY FROM
SEEKING INJUNCTIVE RELIEF AGAINST EMPLOYEE FOR VIOLATION OF ANY AGREEMENT
PERTAINING TO NON-COMPETITION, TRADE SECRETS OR CONFIDENTIALITY.
Company shall pay all costs of such mediation and binding arbitration,
exclusive of Employee's legal fees.
8.6. It is a desire and intent of the parties that the terms,
provisions, covenants and remedies contained in
9
this Agreement shall be enforceable to the fullest extent permitted by law. If
any such term, provision, covenant or remedy of this Agreement or the
application thereof to any person, association, or entity or circumstances
shall, to any extent, be construed to be invalid or unenforceable in whole or
in part, then such term, provision, covenant or remedy shall be construed in a
manner so as to permit its enforceability under the applicable law to the
fullest extent permitted by law. In any case, the remaining provisions of this
Agreement or the application thereof to any person, association or entity or
circumstances other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect.
8.7. This Agreement shall be binding upon and inure to the benefit of
Company and any other person, association or entity which may hereafter acquire
or succeed to all or substantially all of the business or assets of Company by
any means whether direct or indirect, by purchase, merger, consolidation or
otherwise. Company may assign this Agreement to any Affiliate or any other
entity of NATCO Group Inc. Employee's rights and obligations under this
Agreement hereof are personal and such rights, benefits, and obligations of
Employee shall not be voluntarily or involuntarily assigned, alienated, or
transferred, whether by operation of law or otherwise, without the prior
written consent of Company.
8.8. There exist other agreements between Company and Employee
relating to the employment relationship between them, e.g., the agreement with
respect to Company policies contained in Company's Business Ethics Policies and
agreements with respect to indemnification and incentive matters. This
Agreement replaces and merges previous agreements and discussions pertaining to
the following subject matters covered herein: the nature of Employee's
employment relationship with Company and the term and termination of such
relationship. This Agreement constitutes the entire agreement of the parties
with regard to such subject matters, and contains all of the covenants,
promises, representations, warranties and agreements between the parties with
respect such subject matters. Each party to this Agreement acknowledges that no
representation, inducement, promise or agreement, oral or written, has been
made by either party with respect to such subject matters, which is not
embodied herein, and that no agreement, statement or promise relating to the
employment of Employee by Company that is not contained in this Agreement shall
be valid or binding. Any modification of this Agreement will be effective only
if it is in writing and signed by each party whose rights hereunder are
affected thereby, provided that any such modification must be authorized or
approved by the Board of Directors of Company.
IN WITNESS WHEREOF, Company and Employee have duly executed this Agreement in
multiple originals to be effective on the date first stated above.
NATCO GROUP INC.
By:
------------------------------------------
Xxxxxx X. Xxxxxx, Xx.
Chairman of the Governance, Nominating &
Compensation Committee of the
NATCO Group Inc. Board of Directors
This 10th day of December 2004
XXXX X. XXXXXX
---------------------------------------------
This 10th day of December 2004
10
EXHIBIT A
TO EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN NATCO GROUP INC. AND XXXX X. XXXXXX
Employee Name: Xxxx X. Xxxxxx
Term: Approximately three years (expires
December 31, 2007)
Position: Chairman of the Board of Directors and Chief
Executive Officer of NATCO Group Inc.;
Chief Executive Officer of National Tank
Company
Reporting Relationship: NATCO Group Inc. Board of Directors
Location: Houston, Texas
Annual Base Salary: Employee's annual base salary shall not be
less than $396,000.
Bonus: Employee will be eligible to participate in
the 2005 NATCO Group Inc. Annual Bonus Plan
or any appropriate replacement bonus plan
of Company or National Tank Company. All
bonuses are discretionary and shall be paid
in accordance with the terms and provisions
of the applicable plan. The annual targeted
incentive is 75% of the annual base salary.
In consideration of Employee's service as
interim CEO and acceptance of a permanent
position with Company, Employee shall
receive a one-time bonus payment of
$100,000 on January 10, 2005.
Long Term Incentives:
o 57,000 shares of non-performance based
restricted stock, with restrictions
lapsing after 3 years of service,
subject to earlier lapse on Change of
Control, death or disability, grant
date January 5, 2005
o 22,000 shares of performance based
restricted stock, with restrictions
lapsing upon achievement of $1.00 EPS as
provided in, and having terms similar
to, 9/9/04 grants to other senior
officers, grant date December 7, 2004
o Nonqualified Stock Options to acquire
up to 39,500 shares having terms
similar to 9/9/04 grants to other
senior officers, grant date December 7,
2004
43,000 shares of performance based
o restricted stock, with restrictions
lapsing after the Company's stock has
traded @ $12.00/share or more for 30
consecutive trading days, expiring
after 5 years if restrictions do
not lapse prior to such time, grant
date January 5, 2005
o Employee is eligible to participate in
any long-term incentive plans as
recommended and approved by the Board
of Directors of NATCO Group Inc. In the
event of a Change of Control as defined
in Article 3, Section 3.6(e),
accelerated vesting shall occur on the
Change of Control date for all unvested
options under any award grants that
have not otherwise expired.
Vacation Benefits: Employee shall receive four weeks of
vacation per year accrued on a bi-weekly
basis.
Permitted Activities: Authorized to continue to participate on
Board of Director assignments with Houston
Exploration Company, Harvest Natural
Resources, Inc. and FuelQuest, provided that
there are no conflicts of interest as
determined by the NATCO Group Inc. Audit
Committee.
