EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and
entered into as of the ____ day of September, 1997, by and
between ▇▇▇▇ SHIPYARDS CORPORATION, a Delaware corporation
("Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Executive").
RECITALS:
A. The Company desires to engage the services of Executive as
the President of the Company, having been duly elected by the
Board of Directors of the Company.
B. Executive desires to accept such engagement.
C. This Agreement contains other provisions applicable to the
employment of Executive by the Company.
In consideration of the above Recitals and the provisions of
this Agreement, the Company and Executive agree as follows:
I. DUTIES
1.1 Title and Responsibilities. Executive shall serve as
President of the Company and Chairman of ▇▇▇▇ Pacific Shipyards
Corporation ("▇▇▇▇ Pac"), a subsidiary of the Company, serving
in the capacity of chief executive officer of the Company and
▇▇▇▇ Pac. Executive's responsibilities and duties shall
include those items inherent in Executive's position with the
Company and shall further include such other managerial
responsibilities and executive duties as may be assigned to him
from time to time by the Chairman of the Board or the Board of
Directors of the Company. Executive shall devote his best
efforts and full business time to the business and interests of
the Company. During the term of his employment with the
Company, Executive shall not engage in or be involved in any
non-Company business activity (including managing personal
investments and finances and charitable activities) which
materially detracts from Executive's ability to fulfill his
responsibilities and duties to the Company.
1.2 Company Policies. All policies published by the Company
or delivered to the Executive prior to or following this
Agreement regarding employment policies, required behavior by
employees and other similar matters (collectively referred to
as "Company Policies") are incorporated within this Agreement
as though fully set forth in this Agreement. The Executive
agrees to be bound by and adhere to all such Company Policies
as presently exist or as may be hereafter issued or modified by
the Company. To the extent any such Company policies are
inconsistent with or contrary to the provisions of this
Agreement, this Agreement shall prevail. Without limiting the
foregoing, the Executive agrees to conduct business on behalf
of the Company in a manner consistent with proper and ethical
business practices and consistent with the best interests of
the Company.
1.3 Board of Directors. The Board of Directors of the Company
shall nominate Executive for membership on the Board of
Directors of the Company for election of next regular annual
meeting of the Shareholders of the Company scheduled to take
place in the summer of 1998.
II. COMPENSATION
2.1 Base Salary. Executive shall be paid a base salary ("Base
Salary") by the Company during the term of Executive's
employment with the Company at the rate of Two Hundred Twenty-
Five Thousand and 00/100 Dollars ($225,000.00) per year.
Executive's Base Salary shall be reviewed annually by the
Compensation Committee of the Company's Board of Directors and
evaluated based on performance and salary levels of other
executives of comparable position within the geographic
location of the Company. Based upon such evaluation and
review, Executive's Base Salary may be increased from time to
time as determined by the Board of Directors of the Company in
its sole discretion.
2.2 Bonus. In addition to Base Salary, Executive may receive
an annual bonus ("Bonus") based upon performance criteria and
financial and operational results of the Company as determined
by the Board of Directors of the Company in its sole
discretion. The amount of such Bonus, if any, for the
preceding fiscal year and the performance criteria under which
a Bonus would be earned for the current fiscal year, shall be
determined by the Compensation Committee and the Company's
Board of Directors, in their sole discretion no later than
their meeting held during the first quarter of the Company's
fiscal year. If the Compensation Committee and Board of
Directors determine that a Bonus was earned, the Bonus, shall
be an amount which is no less than twenty-five percent (25%)
and no more than one hundred percent (100%) of Base Salary.
2.3 Other Benefits.
(i) Executive shall be entitled to such employee benefits
generally available to the full-time salaried employees of the
Company, including without limitation, health insurance, paid
vacation and other similar benefits to the extent generally
available to Company full-time salaried employees.
(ii) The Company shall pay or reimburse Executive for all
travel and entertainment expenses incurred by Executive in
connection with his duties on behalf of the Company, subject to
the reasonable approval of the Company. Executive shall only
be entitled to reimbursement to the extent that the Executive
follows the reasonable procedures established by the Company
for reimbursement of such expenses which will include, but will
not be limited to, providing satisfactory evidence of such
expenditures.
III. TERMINATION OF EMPLOYMENT
3.1 Notice. Either party may terminate Executive's employment
with the Company upon no less than thirty (30) days written
notice to the other party, subject to the following:
(i) If Executive should terminate his employment with the
Company, the Company may terminate Executive's employment
immediately upon such notice by paying an amount equal to
thirty (30) days of Executive's then existing Base Salary as
compensation for the thirty (30) day period following
Executive's notice of termination. If Executive should
terminate his employment with the Company, the Employee shall
not be entitled to any Severance Compensation or any other
remuneration or benefits beyond such termination, except as
otherwise provided in this Agreement or required under
applicable law; provided that Executive shall be paid for any
accrued but unused vacation and comp time.
(ii) If the Company should terminate Executive's employment
with the Company for reasons other than Cause (as defined
below), the Company shall pay Severance Compensation (as
defined below) to Executive. The Company may terminate
Executive's employment immediately upon notice by beginning
payment of the Severance Compensation. "Severance
Compensation" means an amount equal to the lesser of (i) two
times Executive's Base Salary in effect on the date of such
termination, or (ii) the amount of Base Salary to be paid to
Executive during the remaining term of this Agreement. The
Company shall pay the Severance Compensation to Executive in
installments or in a lump sum at Executive's option. In
addition to the severance, Executive shall be paid for any
accrued but unused vacation and comp time. The acceptance of
Severance Compensation shall be deemed to constitute a release
by the Executive of any and all claims, liabilities, causes of
action, or any other assertion of liability by the Executive
against the Company except for the payment of the remainder of
Severance Compensation.
(iii) In the event that the Company terminates Executive's
employment with the Company for reasons that constitute Cause,
the Company may immediately terminate Executive's employment
upon notice, and the Company shall have no obligation to pay
Executive Severance Compensation, and all other benefits,
compensation or remuneration otherwise payable by the Company
to Executive shall terminate (except for accrued vacation and
those obligations under applicable law which must continue
after termination of Executive's employment). As used herein,
"Cause" means: a) a material and advertent breach of the
provisions of this Agreement by the Executive; b) chemical or
alcohol dependency which materially and adversely affects
Executive's performance of his employment duties; c) any act of
disloyalty or breach of responsibilities to the Company by the
Executive which is meant by the Executive to cause harm to the
Company; or d) conduct which constitutes willful, wanton or
grossly negligent misfeasance of Executive's duties.
3.2 Effect of Termination. Notwithstanding the termination of
Executive's employment with the Company, the Restrictive
Covenants contained in Article 4 of this Agreement shall remain
in full force and effect, together with the Company's right to
enforce such Restrictive Covenants and receive damages in the
event of a breach of any such Restrictive Covenants.
3.3 Responsibilities of Executive Upon Termination. Upon the
termination of Executive's employment with the Company,
irrespective of the reasons for such termination, the Executive
shall deliver all property of the Company to the Company,
together with all notes and memorandum, whether in written or
digital computer form. The property of the Company that must
be returned upon termination of Executive's employment shall
include, but should not be limited to, all written data
concerning the financial performance, products, plans,
projections, or products of the Company and all other data
which would constitute Confidential Information pursuant to
Section 4.4 below. The property to be delivered to the Company
shall include the originals and all copies of all such property
and all data contained on computer disks and other means of
storing computer data.
3.4 Termination of Employment after a Change of Control. Upon
the termination of Executive's employment with the Company
following a Change of Control (as hereafter defined) (i) by
action of the Company or any Successor to the Company (as
hereafter defined) for reasons other than Cause (as defined
above) or (ii) by a voluntary termination by the Executive
within 180 days of such Change in Control, Executive shall
receive a lump sum severance payment equal to two times the
Base Salary of Executive in effect at the time of such Change
in Control.
(i) As used herein, a "Change of Control" shall be deemed to
have occurred if: (A) a "person" (meaning an individual, a
partnership, or other group or association as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934) acquires more than fifty percent (50%) of the combined
voting power of the outstanding securities of the Company
having a right to vote at elections of directors; or (B) the
individuals who at the commencement date of this Agreement
constitute the Board of Directors (the "Incumbent Board") cease
for any reason to constitute a majority thereof; provided,
however, that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's shareholders was approved by a vote of at least a
majority of the directors comprising the Incumbent Board shall
be, for purposes of this subparagraph (B), considered as though
he were a member of the Incumbent Board.
(ii) As used herein "Successor" means any successor to the
business of the Company following a Change of Control which is
the assignee or successor to the rights and obligations of the
Company pursuant to this Agreement.
IV. RESTRICTIVE COVENANTS
4.1 Executive's Acknowledgment. Executive agrees and
acknowledges that in order to assure the Company that it will
retain its value and that of the Business (as defined below) as
a going concern, it is necessary that Executive undertake not
to utilize his special knowledge of the Business and his
relationships with customers and suppliers to compete with the
Company. Executive further acknowledges that: (a) the Company
is and will be engaged in the Business; (b) Executive will
occupy a position of trust and confidence with the Company, and
during Executive's employment with the Company, Executive will
become familiar with the Company's trade secrets and with other
proprietary and confidential information concerning the Company
and the Business; (c) the agreements and covenants contained in
this Article 4 are essential to protect the Company and the
goodwill of the Business; and (e) Executive's employment with
the Company has special, unique and extraordinary value to the
Company and the Company would be irreparably damaged if
Executive were to provide services to any person or entity in
violation of the provisions of this Agreement. As used herein,
"Business" means the construction, sale, maintenance and repair
of ocean-going ships and ferries. For the purposes of this
Article 4, "the Company" shall include its subsidiaries,
affiliates and assignees and any successors in interest of its
subsidiaries and/or affiliates.
4.2 Non-Compete. Executive hereby agrees that for a period
commencing on the date hereof and ending two (2) years
following the termination or expiration of his employment with
the Company (the "Restrictive Period"), he shall not, directly
or indirectly, as employee, agent, consultant, member,
stockholder, director, co-partner or in any other individual or
representative capacity, own, operate, manage, control, engage
in, invest in or participate in any manner in, act as a
consultant or advisor to, render services for (alone or in
association with any person, firm, corporation or entity), or
otherwise assist any person or entity (other than the Company)
that engages in or owns, invests in, operates, manages or
controls any venture or enterprise that directly or indirectly
engages or proposes to engage in the Business (other than
through the Company or its subsidiaries or affiliates or with
the assets of the Company or its subsidiaries or affiliates)
anywhere in North America (the "Territory"); provided, however,
that nothing contained herein shall be construed to prevent
Executive from investing in the stock of any competing
corporation listed on a national securities exchange or traded
in the over-the-counter market, but only if Executive is not
involved in the business of said corporation and if Executive
and his associates (as such term is defined in Regulation 14(A)
promulgated under the Securities Exchange Act of 1934, as in
effect on the date hereof), collectively, do not own more than
an aggregate of five (5%) percent of the stock of such
corporation
4.3 Interference with Relationships. During the Restricted
Period, Executive shall not, directly or indirectly, as
employee, agent, consultant, stockholder, member, director, co-
partner or in any other individual or representative capacity
render assistance to any other person or entity who attempts
to: (i) employ or engage, recruit or solicit for employment or
engagement, any person who is or becomes employed or engaged by
the Company during the Restricted Period, or otherwise seek to
influence or alter any such person's relationship with the
Company, or (ii) solicit or encourage any present or future
customer of the Company, to terminate or otherwise alter his,
her or its relationship with the Company.
4.4 Confidential Information. During the Restricted Period
and thereafter, Executive shall keep secret and retain in
strictest confidence, and shall not, without the prior written
consent of the Company, furnish, make available or disclose to
any third party (except in furtherance of the Company's
business activities and for the sole benefit of the Company) or
use for the benefit of himself or any third party, any
Confidential Information. As used in this Agreement,
"Confidential Information" shall mean any information relating
to the business or affairs of the Company or its business,
including but not limited to information relating to financial
statements, customer identities, potential customers,
employees, suppliers, manufacturing and servicing methods,
equipment, programs, strategies and information, analyses,
profit margins, or other proprietary information used by the
Company in connection with the Business; provided, however,
that Confidential Information shall not include any information
which is in the public domain or becomes known in the industry
through no wrongful act on the part of Executive. Executive
acknowledges that the Confidential Information is vital,
sensitive, confidential and proprietary to the Company.
4.5 Effect on Termination. If the Company or Executive should
terminate this Agreement for any reason, then, notwithstanding
such termination, the provisions contained in this Section 4
hereof shall remain in full force and effect for the duration
of the Restricted Period.
4.6 Remedies. Executive acknowledges and agrees that the
covenants set forth in this Article 4 (collectively, the
"Restrictive Covenants") are reasonable and necessary for the
protection of the Company's business interests, that
irreparable injury will result to the Company if Executive
breaches any of the terms of said Restrictive Covenants, and
that in the event of Executive's actual or threatened breach of
any such Restrictive Covenants, the Company will have no
adequate remedy at law. Executive accordingly agrees that in
the event of any actual or threatened breach by him of any of
the Restrictive Covenants, the Company shall be entitled to
immediate temporary injunctive and other equitable relief,
without bond and without the necessity of showing actual
monetary damages, subject to hearing as soon thereafter as
possible. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies
available to it for such breach or threatened breach, including
the recovery of any damages which it is able to prove.
4.7 Blue-Pencil. If any court of competent jurisdiction shall
at any time deem the term of this Agreement or any particular
Restrictive Covenant (as defined) too lengthy or the Territory
too extensive, the other provisions of this Article 4 shall
nevertheless stand, the Restrictive Period herein shall be
deemed to be the longest period permissible by law under the
circumstances and the Territory herein shall be deemed to
comprise the largest territory permissible by law under the
circumstances. The court in each case shall reduce the time
period and/or Territory to permissible duration or size.
V. GENERAL PROVISIONS
5.1 Arbitration of Disputes. The Executive and the Company
shall resolve any claim, controversy or dispute arising out of
or in connection with this Agreement, or relating to or arising
out of any other relationship or incident between the Executive
and the Company, or alleging the violation of either a
statutory or common law duty, or both, by compulsory
arbitration. Notwithstanding the provisions of this Section,
the Company may seek and obtain appropriate restraining orders
and temporary or permanent injunctions in a court proceeding
without engaging in arbitration with respect to any alleged
violation of the covenants contained in Article 4. The
Executive shall invoke his right to arbitrate any claim,
controversy or dispute with or against the Company only after
first attempting to resolve it through the exhaustion of the
employee problem solving problem mechanism contained in the
Company's Employee Handbook without first obtaining result
satisfactory to the Executive. The rules and procedures for
arbitration pursuant to this Agreement are attached to this
Agreement.
5.2 Modification and Amendment. This Agreement may only be
amended or modified by a written instrument executed by
Executive and the Chairman of the Board of the Company pursuant
to authorization of the Board of Directors.
5.3 Notices. Any notice or other communication required or
permitted under this Agreement shall be in writing and shall be
delivered personally, or sent by certified or registered mail,
postage prepaid, return receipt requested. Any such notice
shall be considered given when delivered personally, or if
mailed, three (3) days after the date of deposit in the United
States mail addressed to the party at the last known address of
the party. Any party may, by notice given to the other
according to the provisions of this Section 5.3, designate an
address or person for the receipt of notices.
5.4 Non-Waiver. Failure to enforce at any time any of the
provisions of this Agreement shall not be interpreted to be a
waiver of such provisions or to affect either the validity of
this Agreement or the right of either party thereafter to
enforce each and every provision of this Agreement.
5.5 Separability. If one or more provisions of this Agreement
is finally determined to be invalid or unenforceable, such
provision will not affect or impair the other provisions of
this Agreement, all of which will continue to be in effect and
will be enforceable, provided however, that any such invalid
provisions shall, to the extent possible, be reformed so as to
implement insofar as practicable the intentions of the parties.
5.6 Assignability. This Agreement and the rights and
obligations of the parties shall not be transferred or assigned
without the written consent of the other party's provided,
however, that the Company may assign its right, pursuant to
this Agreement to any purchaser of a substantial portion of its
business or assets or to any corporation or other entity in
which the Company has a controlling equity interest.
5.7 Term. This Agreement shall have an initial term of three
(3) years from the date hereof, and shall continue thereafter
for successive one (1) year terms unless either party
terminates this Agreement by notice given at least one hundred
eighty (180) days prior to the end of the initial or any
successive term. The term of this Agreement does not create
any term of employment on behalf of Executive and the
termination of this Agreement does not reduce, limit or
terminate Executive's obligations or the Company's rights and
remedies pursuant to this Agreement, including, but not limited
to, all obligations of Executive and the rights and remedies of
the Company contained in Article 4 (Restrictive Covenants) of
this Agreement.
5.8 Law. This Agreement shall be interpreted in accordance
with the laws of the State of Washington.
5.9 Legal Fees. The Company shall bear the legal expenses
incurred by Executive in connection with the negotiations,
preparation and review of this Agreement. In the event either
party breaches this Agreement, the nonbreaching party shall be
entitled to recover from the breaching party any and all
damages, costs and expenses, including without limitation,
attorneys' fees and court costs, incurred by the nonbreaching
party as a result of the breach.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES
▇▇▇▇ SHIPYARDS CORPORATION
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive
0209549.03
ARBITRATION RULES AND PROCEDURES
The rules and procedures of the American Arbitration
Association in effect when any arbitration occurs shall govern
the procedures of any arbitration between the Company and
Executives ("Parties"). Any arbitration held in accordance
with Representative's employment shall take place in Seattle,
Washington.
A single neutral arbitrator shall conduct the arbitration
hearing and decide the issues submitted to arbitration. The
Parties shall request a panel of five arbitrators experienced
with employer-employee disputes from the American Arbitration
Association's Seattle, Washington office. The Parties shall
alternatively strike names from the panel until one arbitrator
remains, who shall then act as the single neutral arbitrator.
The Parties may conduct discovery in accordance with the
Washington Rules of Civil Procedure, including but not limited
to interrogatories, depositions and production of documents,
but discovery procedures will be controlled and may be limited
or curtailed by the arbitrator in his/her discretion.
The Parties grant the following authority and jurisdiction to
the single neutral arbitrator. The arbitrator shall determine
the lawfulness under federal, state, and local law, whether
statutory or common law, or both, of acts or omissions, or
both, that produced the complaint, controversy, or dispute
subject to arbitration. In addition, the arbitrator shall
decide the appropriateness of the Parties' acts or omissions
that comprise the complaint, controversy, or dispute submitted
to arbitration, given the rights and duties under this
Agreement. Further, the arbitrator may interpret and determine
the rights of the Parties under the Agreement and any other
agreement to which they are both parties.
The Single neutral arbitrator may fashion either equitable or
legal relief, or both, as limited by this provision. The
arbitrator may award full reimbursement to the prevailing Party
for such out-of-pocket expenses or losses, including, without
limitation, reasonable attorneys' fees, and back pay that the
evidence supports. However, the arbitrator shall lack any
authority to grant exemplary or punitive damages, or liquidated
damages. Finally, the arbitrator may assess interest on any
award at no greater than the prevailing prime rate during the
relevant period reported in the Wall Street Journal, adjusted
at least quarterly on out-of-pocket expenses or losses, back
pay, and attorneys' fees awarded to the prevailing Party.
The arbitrator's decision shall bind the Parties as a final
decision enforceable in a court of competent jurisdiction. The
Company and the Representative shall share equally the costs of
both the arbitrator and a court reporter to transcribe any
hearings before the arbitrator. Each Party shall pay its own
expenses of presenting evidence and arguments to the
arbitrator.
The prevailing Party may confirm the arbitrator's award in a
court of competent jurisdiction. If either Party refuses to
satisfy an arbitration award, then the other Party shall have
the right to receive reimbursement for all of its costs
incurred to confirm that award, including a reasonable
attorneys' fee.