AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This
Amended and Restated Employment Agreement is entered into as
of this 11th day of June, 2008 (the “Agreement”),
by and among Vincent R. Volpe Jr., a resident of Harris
county, Texas (“Executive”), and Dresser-Rand
Group Inc., a Delaware corporation (the
“Company”).
WHEREAS,
Executive is currently employed with the Company pursuant to
that certain Employment Agreement among Executive, the Company
and Dresser-Rand Holdings, LLC (“Holdings”),
entered into as of October 27, 2004 (the “Current
Employment Agreement”); and
WHEREAS,
the Company and Executive wish to amend and restate the
Current Employment Agreement in the form of this Agreement and
to continue the employment of Executive with the Company
pursuant to the terms set forth herein; and
WHEREAS,
Holdings acknowledges that this Agreement supersedes the
Current Employment Agreement, agrees to waive any rights it
would have had under the Current Employment Agreement and has
executed this Agreement for the sole purpose of evidencing its
consent to the amendment and restatement of the Current
Employment Agreement in the form of this
Agreement.
NOW,
THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as
follows:
1.
EMPLOYMENT .
The Company hereby agrees to employ Executive, and Executive hereby
agrees to serve, subject to the provisions of this Agreement, as
President and Chief Executive Officer of the Company.
Executive
shall manage,
supervise, and control all of the business of the Company, subject
only to the oversight of the
Board of Directors of the Company (the “Board”).
Executive shall devote substantially all of his business time,
attention, and energies to the performance of the duties assigned
to him hereunder, and to perform such duties faithfully, diligently
and to the best of his abilities, and adhere in all material
respects to the Company's policies and procedures.
Executive
agrees
to refrain from engaging in any business activity that does, will
or could reasonably be deemed to conflict with the best interests
of the
Company. This Section 1 shall not be construed as preventing
Executive from investing his own assets in such form or manner as
will not require his services in the daily operations of the
affairs of the companies in which such investments are made;
provided, however, that Executive complies with the provisions of
Section 8. Further, Executive may serve as a director of other
companies, if such service is approved by the Nominating and
Governance Committee of the Board.
2.
TERM .
This Agreement shall commence on the Effective Date (as such term
is described in Section 24 hereof) and continue for a term of
three (3) years (the original three-year term, and any automatic
extension thereof, hereby referred to as the “Term”).
On each anniversary of the Effective Date, the Term shall be
automatically extended for one (1) additional year unless the
Company provides, at least ninety (90) days in advance of the
anniversary of the Effective Date, written notice to Executive that
the Term will not be so extended. Notwithstanding the above, the
Term will expire upon Executive’s attainment of age 65 or
upon Executive’s termination in accordance with Sections 4 or
5 hereof.
3.
COMPENSATION .
(a)
Salary .
Executive's base salary shall be at an annual rate not less than
the rate as in effect immediately prior to the Effective Date
(“Base Salary”), payable in accordance with the
Company's regular payroll practices. All applicable withholding
taxes and appropriate deductions for insurance contributions shall
be deducted from such payments .
The Board will review the total compensation of Executive at least
once every twelve months .
(b)
Annual Non-Equity Incentive Opportunity .
Annual non-equity incentive compensation (“Bonus”) to
be paid to Executive shall be determined by the Board, pursuant to
the terms and conditions of the Company’s Annual Incentive
Plan (the “Annual Incentive Plan”). The target Bonus
opportunity for Executive shall be determined by the Board, or an
authorized committee of the Board, based upon a sliding scale of
financial and operating targets and qualitative targets. At the
election of Executive, which shall be made in writing to the
Company at least ten (10) business days prior to the
anticipated date of payment of any such Bonus, the Bonus shall be
paid in either (i) cash, (ii) shares of common stock of
the Company (“Shares”), valued at their fair market
value as determined by the Board or pursuant to a method approved
by the Board, or (iii) a combination thereof.
(c)
Benefits .
Benefits shall be provided to Executive in
accordance with the terms and conditions of such
benefit plans and programs as
are
maintained
by the
Company
for
individuals in positions comparable to those of Executive
,
as such plans are amended from time to time .
(d)
Vacation .
Executive shall be entitled to five (5) weeks of paid vacation
during each full year of Executive's employment hereunder, to be
taken at a time which does not conflict with Executive's duties
hereunder.
(e)
Expense Reimbursement .
Executive shall be reimbursed for the expenses incurred in
connection with the performance of Executive's duties hereunder in
accordance with the Company's expense reimbursement policies. The
Board shall designate an individual to whom Executive shall submit
expense reimbursement requests and the approval by such individual
of any such request shall be deemed to be conclusive. Executive
shall also be reimbursed for reasonable out-of-pocket documented
legal fees and expenses incurred through November 1, 2007, in
connection with the implementation,
review
and negotiation
of this Agreement .
Any
reimbursement provided hereunder during one calendar year shall not
affect the amount or availability of reimbursements in another
calendar year. Any reimbursement provided hereunder shall be paid
no later than the earlier of (i) the time prescribed under the
Company's applicable policies and procedures, or (ii) the last day
of the calendar year following the calendar year in which Executive
incurred the reimbursable expense.
(f)
Equity and Long-Term Incentive Program .
Executive shall be entitled to participate in the equity and long
term incentive programs of the Company, including without
limitation, the Company’s Long-term Incentive Program, on a
basis consistent with that of other senior-level
executives.
4.
TERMINATION WITHOUT CHANGE IN CONTROL .
(a)
Time of Termination .
Notwithstanding any provision of this Agreement to the contrary,
the employment of Executive hereunder shall terminate on the first
to occur of the following dates:
(i)
the
date of Executive's death or Disability (as defined
below);
(ii)
the
date on which the Company shall give Executive written notice
of termination for Cause (as defined below);
(iii)
the
date on which Executive gives the Company written notice of
Voluntary Termination without Good Reason (as defined
below);
(iv)
the
date on which Executive gives the Company written notice of
Voluntary Termination with Good Reason (as defined
below);
(v)
the
date on which the Company shall give Executive notice of
termination for any reason other than the reasons set forth in
(i) through (iv) above.
(b)
Payments After Certain Terminations .
In the event Executive's employment hereunder shall terminate for
any reason set forth in Section 4(a)(i), (iv) or (v) and, in
the case of Section 4(a)(iv) or (v), such termination is not within
two (2) years following a Change in Control (as defined in Section
6 below), subject to Executive's compliance with Section 4(e),
Executive (or the
Trustee named in Executive's Last Will and Testament
,
if applicable) shall be entitled to receive, as Executive's sole
and exclusive remedy, (i) a payment equal to two (2) times
Executive's Base Salary (determined as of the Date of Termination),
payable in a lump sum payment and subject to withholding of all
applicable taxes with respect thereto and deductions for insurance
contributions), (ii) any earned but unpaid salary and payment for
accrued but unused vacation days, subject to and in accordance with
Company policies, through the Date of Termination, (iii) any Bonus
previously earned in full but not yet paid for fiscal years of the
Company prior to the fiscal year in which the Date of Termination
occurs, (iv) a payment equal to two (2) times the target Bonus
opportunity for Executive for the year in which the
Date of Termination occurs or if such target Bonus opportunity has
not yet been established as of the Date of Termination, the target
Bonus percentage opportunity for the prior year with respect to
Base Salary for the year in which the Date of Termination occurs,
and (v) continued medical, dental, disability and life insurance
coverage at the active employee rate as provided to Executive and
his eligible dependents immediately prior to such termination for
two (2) years following such termination. For purposes of this
Section 4, calculation of Executive’s Base Salary shall be
determined without regard to any reduction in compensation
constituting Good Reason under Section 6(d)(iii)
hereof.
(c)
Termination for Cause or Voluntary Termination Without Good
Reason .
The Company shall be entitled at any time, upon written notice to
Executive, to terminate Executive's employment hereunder for Cause.
In the event that Executive's employment hereunder shall be
terminated for Cause, or due to a Voluntary Termination by
Executive without Good Reason, Executive shall be entitled to
receive, as his sole and exclusive remedy, (i) any earned but
unpaid salary and payment for accrued but unused vacation days,
subject to and in accordance with Company policies, through the
Date of Termination and (ii) any Bonus previously earned in
full but not yet paid for fiscal years of the Company prior to the
fiscal year in which the Date of Termination occurs.
(d)
Limited Compensation for the Non-Competition Covenant
.
In the event that Executive's employment hereunder shall be
terminated due to Cause or due to a Voluntary Termination by
Executive without Good Reason, then the Company, at its sole
election, shall be entitled to enforce the covenant not to compete
set forth in Section 8(c) for a period of up to three years
following such termination. In the event that the Company so
elects, and as a condition to such enforcement, the Company shall,
within five days after Executive’s termination, confirm that
it elects to enforce the covenant not to compete by delivery of an
election notice to Executive and shall pay and provide Executive,
in addition to any amounts paid pursuant to Section 4(c), (i)
salary continuation payments at an annual rate equal to
Executive’s Base Salary in effect as of the Date of
Termination, payable monthly, (ii) a monthly amount equal to
one-twelfth the Executive’s target Bonus opportunity for the
year in which the Date of Termination occurs or if such target
Bonus opportunity has not yet been established as of the Date of
Termination, the target Bonus percentage opportunity for the prior
year with respect to Base Salary for the year in which the Date of
Termination occurs, and (iii) continued medical, dental, disability
and life insurance coverage in the same manner as provided to
Executive and his eligible dependents immediately prior to such
termination (collectively, the “Additional Benefits”).
If the Company provides Executive with the election notice pursuant
to this Section 4(d), the Non-Competition Period as defined in
clause (ii) of that definition set forth in Section 8(c) shall
remain in effect, and the Company shall be obligated to provide the
Additional Benefits to Executive, during the period commencing on
the Date of Termination and ending on the earlier of (i) the date
that is three (3) years after the Date of Termination or (ii) the
date designated by the Company by ten days advance written notice
to Executive upon which the Company waives its right to further
enforce the provisions of Section 8(c). If the Company provides
Executive with the election notice pursuant to this Section 4(d)
and Executive fails to deliver the release required by Section
4(e), notwithstanding any provision hereof to the contrary,
Executive shall be bound by the covenant not to compete for two
years after the Date of Termination and the Company shall not be
obligated to provide any of the Additional Benefits following the
date that is 45 days after the Date of Termination. In the event of
any termination of Executive’s employment with the Company
other than for Cause or other than for Voluntary Termination
without Good Reason, the Company shall not be obligated to provide
any additional consideration for the non-competition covenant in
Section 8(c). The monthly payments described in this Section are
hereby designated as “separate payments” for purposes
of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”). For purposes of clarification, any
payments or benefits provided under this Section 4(d) are subject
to the payment provisions of Section 13 hereof.
(e)
Release Requirement for Post-Termination Payments
.
As condition to the receipt of any payment made pursuant to
Section 4(b), Section 4(d) or Section 5, Executive
shall execute, and not revoke, a release within 45 days of the Date
of Termination, in the form attached
hereto as Schedule A ,
with such changes as may be necessary or reasonably required to
reflect changes in applicable state or federal law, releasing the
Company, and its subsidiaries and Affiliates, and its officers,
directors, employees, and agents, from any and all claims and from
any and all causes of action of any kind or character, including,
but not limited to, all claims and causes of action arising out of
Executive’s employment with the Company or the termination of
such employment; provided that Executive shall not be expected to
waive any rights accruing under this Agreement ;
and provided further that if Executive refuses to sign such release
Executive will still be bound by the provisions of Article 8
as if Executive signed such release and received payments pursuant
to Section 4(b) ,
Section 4(d) or Section 5.
(f)
Equity Awards .
Any restricted stock, restricted stock units, or other stock based
awards outstanding as of (i) the date of a Voluntary Termination
with Good Reason, (ii) the date of Executive’s termination by
reason of death or disability or (iii) the date that the Company
terminates Executive for any reason other than Cause, shall become
fully vested and any stock options outstanding as of such date and
not then exercisable shall become fully exercisable as of such date
and any restrictions imposed by the Company that are applicable to
any shares of Common Stock granted to Executive by the Company
shall lapse as of such date. Stock options that become vested in
accordance with the previous sentence shall remain exercisable
until the first to occur of (x) one year after the Date of
Termination or (y) the original expiration of the
option.
5.
CHANGE IN CONTROL .
(a)
Termination Following Change in Control .
In the event Executive's employment hereunder shall terminate for
any reason set forth in Section 4(a)(iv) or (v) within two (2)
years following the occurrence of a Change in Control, subject to
Executive's compliance with Section 4(e), Executive (or
the
Trustee named in Executive's Last Will and Testament
,
if applicable) shall be entitled to receive all of the payments and
benefits described in Section 4(b) hereof, enhanced as
follows:
(i)
The
payment specified in clause (i) of Section 4(b) shall be based
on three (3) times Executive’s Base Salary as opposed to
two (2) times;
(ii)
The
payment specified in clause (iv) of Section 4(b) shall be
three (3) times the higher of (A) the target Bonus opportunity
for Executive for the fiscal year of the Company in which the
Date of Termination occurs or (B) the highest Bonus paid (or
earned in full but not yet paid) to Executive in the three (3)
year period preceding the Date of Termination; provided,
however, that the payment under this Section 5(a)(ii) shall
not exceed the Executive’s maximum Bonus opportunity for
the year in which the Date of Termination occurs;
and
(iii)
The
benefit coverage provided in clause (v) of Section 4(b) shall
be provided for a term of three (3) years as opposed to two
(2) years.
(b)
Acceleration of Equity Awards .
Any restricted stock, restricted stock units, or other stock based
awards outstanding as of the Change in Control shall become fully
vested and any stock options outstanding as of the Change in
Control and not then exercisable shall become fully exercisable as
of the date of the Change in Control and any restrictions imposed
by the Company that are applicable to any shares of Common Stock
granted to Executive by the Company shall lapse, as of the date of
the Change in Control. Stock options shall remain exercisable until
the first to occur of (i) one year after the Date of Termination or
(ii) the original expiration of the option.
6.
DEFINITIONS .
(a)
Affiliate .
For
purposes of this Agreement, “Affiliate” shall
mean any
corporation, limited liability company or similar entity which is
under the control of the Company or under common control with the
Company.
(b)
Cause .
For purposes of this Agreement, “Cause” shall mean the
occurrence of any of the following:
(i)
the
material failure or refusal by Executive to perform his duties
hereunder (including, without limitation, Executive's
inability to perform such duties as a result of alcohol or
drug abuse, chronic alcoholism or drug addiction) or to devote
substantially all of his business time, attention and energies
to the performance of his duties hereunder;
(ii)
any
willful, intentional or grossly negligent act by Executive
having the effect of materially injuring the interest,
business or prospects of the Company, or any of its
subsidiaries or Affiliates, or any divisions Executive may
manage;
(iii)
the
material violation or material failure by Executive to comply
with the Company's material published rules, regulations or
policies, as in effect from time to time;
(iv)
Executive's
conviction of a felony offense or conviction of a misdemeanor
offense involving moral turpitude, fraud, theft or
dishonesty;
(v)
any
willful or intentional, misappropriation or embezzlement of
the property of the Company or any of its subsidiaries or
Affiliates (whether or not a misdemeanor or felony);
or
(vi)
a
material breach of any one or more of the covenants of this
Agreement by Executive;
provided ,
however ,
that in the event that the Company determines to terminate
Executive's employment pursuant to clauses (i), (iii)
or (vi) of this definition of Cause, such termination shall
only become effective if the Company shall first give Executive
written notice of such Cause, which notice shall identify in
reasonable detail the manner in which the Company believes Cause to
exist and indicates the steps required to cure such Cause, if
curable, and Executive shall fail within thirty (30) days of
such notice to substantially remedy or correct the
same.
(c)
Disability .
For purposes of this Agreement, “Disability” shall
mean, for a period of not less than 90 days within a given
twelve month period, Executive’s physical or mental
incapacity to perform his essential
functions ,
with
or without reasonable accommodations therefore, which condition a
mutually agreeable physician determines is likely to be continuous
and permanent.
(d)
Voluntary Termination without Good Reason .
For purposes of this Agreement, “Voluntary Termination
without Good Reason” shall mean any termination by Executive
of Executive's employment with the Company other than a Voluntary
Termination with Good Reason.
(e)
Voluntary Termination with Good Reason .
For purposes of the Agreement, “Voluntary Termination with
Good Reason” shall mean the termination by Executive of
Executive's employment with the Company within forty-five (45)
days following the occurrence of any of the following events
without his consent which is not cured by the Company, if curable,
within 30 days as described below:
(i)
a
material and adverse change to Executive's title, duties or
responsibilities, including Executive’s not being
reelected to his position as a member of the Board, provided,
however, that resignation of
Executive from the Board shall not be deemed such a
change;
(ii)
notice
is given to Executive by the Company within two (2) years
following a Change in Control that the Term of the Agreement
will not be extended;
(iii)
the
Company materially reduces the compensation or benefits to
which Executive is entitled under this Agreement;
(iv)
any
relocation of Executive's principal place of employment except
to a location that is within fifty miles of either
(A) Houston, Texas or (B) any location that
Executive has recommended to the Board as a location for the
Company’s headquarters;
(v)
the
succession or assignment of this Agreement in violation of
Section 25 hereof;
(vi)
a
material breach of any one or more of the covenants of this
Agreement by the Company;
or
(vii)
in
the event of a Change in Control in which the Company’s
securities cease to be publicly traded, the assignment to
Executive of any position (including status, offices, title
and reporting requirements), authority, duties or
responsibilities that are not (A) at or with the ultimate
parent company of the entity surviving or resulting from such
merger, consolidation or other business combination and
(B) substantially similar to Executive’s position
(including status, offices, titles and reporting
requirements), authority, duties and responsibilities during
the ninety (90) day period prior to the Change in
Control;
provided ,
however ,
that Executive must provide the Company with written notice within
fifteen (15) days following the first date on which Executive
knows of the occurrence of an event or action constituting Good
Reason and the Company shall have thirty (30) days following
receipt of such notice to cure such event or action.
(f)
Change in Control .
For purposes of this Agreement, a “Change in Control”
shall mean the first to occur of any of the following
events:
(i)
individuals
who, as of the date hereof, constitute the members of the
Board (the “Incumbent Directors”) cease for any
reason other than due to death or disability to constitute at
least a majority of the members of the Board, provided that
any director whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a
majority of the members of the Board who are at the time
Incumbent Directors shall be considered an Incumbent Director,
other than any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the
Board;
(ii)
the
acquisition or ownership by any individual, entity or "group"
(within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”)), other than the Company or any of its Affiliates
or Subsidiaries, or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its
Affiliates or Subsidiaries, of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 30% or more of the combined voting power of the Company's
then outstanding voting securities entitled to vote generally
in the election of directors;
(iii)
the
merger, consolidation or other similar transaction of the
Company, as a result of which the stockholders of the Company
immediately prior to such merger, consolidation or other
transaction, do not, immediately thereafter, beneficially own,
directly or indirectly, more than 50% of the combined voting
power of the voting securities entitled to vote generally in
the election of directors of the merged, consolidated or other
surviving company; or
(iv)
the
sale, transfer or other disposition of all or substantially
all of the assets of the Company to one or more persons or
entities that are not, immediately prior to such sale,
transfer or other disposition, Affiliates of the
Company.
A
“Change in Control” shall not be deemed to occur
if the Company undergoes a bankruptcy, liquidation or
reorganization under the United States Bankruptcy
Code.
(g)
Date of Termination .
For purposes of this Agreement, “Date of Termination”
shall mean the date on which Executive’s termination of
employment with the Company and its Affiliates occurs.
7.
COMPENSATION IN EVENT OF TERMINATION; SURVIVAL
.
Upon termination of Executive's employment for any reason, this
Agreement shall terminate and the Company shall have no further
obligation to Executive except as
provided in Sections 4, 5, 12 and 13 and insurance coverage in
accordance with applicable law;
provided ,
however ,
that the provisions set forth in Sections 8, 9, 10 and 11
hereof shall remain in full force and effect after the termination
of Executive's employment, notwithstanding the termination or
expiration of this Agreement.
8.
CONFIDENTIALITY, NONCOMPETITION, ETC .
(a)
Confidentiality .
Executive acknowledges that: (i) the business of the Company
is intensely competitive and that Executive's employment by the
Company has required and will require that Executive have access to
and knowledge of confidential information of the Company, which the
Company has provided to Executive in the past and will continue to
provide to Executive as necessary to perform his duties hereunder,
which Company confidential information includes, but is not limited
to, formulae, manufacturing processes, distribution systems,
research and development methods and techniques, the identity of
the Company's customers, the identity of the representatives of
customers with whom the Company has dealt, the kinds of services
provided by the Company to customers and offered to be performed
for potential customers, the manner in which such services are
performed or offered to be performed, the service needs of actual
or prospective customers, pricing information, information
concerning the creation, acquisition or disposition of products and
services, customer maintenance listings, computer software
applications and other programs, personnel information and other
trade secrets (the “Confidential Information”);
(ii) the direct or indirect disclosure of any such
Confidential Information would place the Company at a competitive
disadvantage and would do damage, monetary or otherwise, to the
Company's business; (iii) the engaging by Executive in any of
the activities prohibited by thi
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