**EXHIBIT 10**

 

# **MATERIAL CONTRACTS**

 

Exhibit 10 is:

 

(1) Amended and Restated Employment Agreement between James S. Marlenand the Company. 

 

(2) Change of Control Agreement between Javier Solis and the Company. 

 

(3) Change of Control Agreement between Gary Wagner and the Company.

 

(4) Change of Control Agreement between James R. McLaughlin and theCompany. 

 

(5) 2001 Stock Incentive Plan. 

 

Exhibit 10, Items (2) and (3) are incorporated by reference to AnnualReport on Form 10-K filed with the Commission for Registrant’s fiscal yearended November 30, 1998. 

 

Exhibit 10, Item (4) is incorporated by reference to Annual Report onForm 10-K filed with the Commission for Registrant’s fiscal year endedNovember 30, 2000. 

 

Exhibit 10, Item (5) is incorporated by reference to RegistrationStatement No. 333-61816 on Form S-8 filed with the Commission on May 29, 2001

 

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AMENDED AND RESTATED

 

EMPLOYMENT AGREEMENT

 

This amended and restated employment agreement (“Agreement”) is madeeffective as of January 22, 2003, by and between Ameron InternationalCorporation, a Delaware corporation (the “Company”), and James S. Marlen(“Employee”).  It supersedes andreplaces the Employment Agreement previously entered into between the Companyand Employee which was effective as of June 11, 1996, and was amendedeffective as of May 15, 1998 and May 16, 2001.

 

In consideration of the mutual promises and agreements set forthherein, the Company and Employee agree as follows:

 

1.             Term.

 

1.1                                 Theterm of this Agreement shall commence on January 22, 2003, and shall beautomatically extended from day to day so that it always has a remaining termof three years and six months or until Employee attains age 671⁄2, if sooner (the“Term”), subject to earlier termination in accordance with the provisions ofsection 10 hereinbelow.  In noevent shall the Term of this Agreement extend beyond the date when Employeeattains age 671⁄2, unless the Company and Employee hereafter expressly agree inwriting to extend the Term of this Agreement beyond such date.

 

2.             Positionand Title.

 

2.1                                 TheCompany hereby employs Employee as its Chairman of the Board, President andChief Executive Officer, and Employee hereby accepts such employment.

 

2.2                                 Employeeshall devote substantially all of his efforts on a full time basis to thebusiness and affairs of the Company and to its subsidiaries andaffiliates.  Employee shall not engagein any business or perform any services in any capacity whatsoever adverse tothe interests of the Company.

 

2.3                                 Employeeshall at all times faithfully, industriously, and to the best of his ability,experience and talents, perform all of the duties of the office of Chairman ofthe Board, President and Chief Executive Officer of the Company.

 

2.4                                 AsPresident and Chief Executive Officer, Employee shall be responsible to theBoard of Directors for all actions and activities of the Company.

 

3.             (Deleted)

 

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4.             BaseSalary.

 

4.1                                 Asof January 22, 2003, Employee’s base salary is $714,000 per year.  Employee’s base salary and performance shallbe reviewed annually during the Term by the Board of Directors of the Companyand may be increased from time to time at the discretion of, and by, such Boardbased on merit or such other considerations as such Board shall deemappropriate.

 

5.             Short-TermIncentive Bonus.

 

5.1                                 TheCompany has adopted a management incentive bonus plan for its executives, whichplan is currently known as the “Management Incentive Compensation Plan” (hereinthe “MIC Plan”), and a Key Executive Long-Term Cash Incentive Plan (herein the“LTIP”).

 

5.2                                 Employeeshall be deemed to be a participant under the MIC Plan and the LTIP, as well asany successor management incentive bonus plans adopted by the Company for itsexecutives.  Individual goals andguidelines for bonus payable to Employee under the MIC Plan and the LTIP, andany successor plans, shall be subject to review and approval by the Board ofDirectors of the Company.

 

5.3                                 Employee’sparticipation in the MIC Plan and the LTIP shall be in accordance with theterms and conditions of those plans and other compensation arrangements asagreed to herein.  In the event ofEmployee’s termination of employment other than for cause (as defined in paragraph10.1 hereinbelow), Employee shall be entitled to a pro-rata portion of theaward he would have been entitled to receive under the MIC Plan in respect ofthe fiscal year in which Employee’s termination date occurs had he continued inemployment until the end of such fiscal year.

 

5.4                                 TheCompany shall consider in good faith any recommendations of Employee withrespect to any management incentive bonus plans subsequent to the MIC Plan andthe LTIP.

 

6.             StockGrants & Options.

 

6.1                                 (Deleted)

 

6.2                                 (Deleted)

 

6.3                                 Stockoption and/or restricted stock grants may be granted from time to time at thesole discretion of, and by, the Board of Directors of the Company.  The Board of Directors of the Company shallconsider in good faith any recommendations of Employee with respect to anyalternative formulas or plans for stock options.

 

7.             (Deleted).

 

8.             Pension.

 

8.1                                 Duringthe Term, the Company shall provide pensions benefits to Employee in accordancewith 

 

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the terms and conditions of Company’s Pension Plan forSalaried Employees and its Supplemental Executive Retirement Plan as in effectas of March 20, 2002.

 

8.2                                 Inaddition to the pension benefits described in paragraph 8.1 hereinabove, theCompany shall provide the following additional pension benefits toEmployee.  Those additional benefitsshall be calculated by crediting Employee with twenty-five (25) years ofservice under the Supplemental Executive Retirement Plan (the “SERP”) describedin paragraph 8.1 hereinabove at age 60, and with an additional year of serviceunder the SERP for each actual year of service during his employment with theCompany between ages 60 and 65 so that Employee will be credited with thirty(30) years of service under the SERP at age 65.

 

8.3                                 Vestingof the pension benefits described in paragraphs 8.1 and 8.2 hereinabove beganas of June 11, 1993.

 

8.4                                 Inthe event that Employee’s employment is terminated by the Company without cause(as defined in paragraph 10.2 hereinbelow) and/or due to or following a Changeof Control (as defined in paragraph 10.5 hereinbelow) during the Term, Employeeshall be entitled to continue to accrue the pension benefits described inparagraphs 8.1, 8.2 and 8.3 hereinabove for the additional period starting fromthe date of such termination of employment with the Company and continuinguntil the effective date of his obtaining of new employment, if any; providedhowever that such additional period for the accrual of those pension benefitsshall not exceed three (3) years from the date of termination of employmentwith the Company.

 

9.             AdditionalEmployee Benefits.

 

9.1                                 TheCompany shall provide Employee the right to participate in its Executive LifeInsurance plan, together with all other fringe benefit programs in whichexecutive officers of the Company generally participate so long as suchprograms are continued by the Company, and all other fringe benefit programswhich may hereafter be adopted by the Company for its executive officers.

 

9.2                                 TheCompany shall provide Employee the right to participate in its medical anddental insurance plans.

 

9.3                                 Inthe event that Employee should voluntarily resign or is terminated withoutcause (as defined in paragraph 10.2 hereinbelow) by the Company during theTerm, the Company shall provide Employee with substantially the same level ofhealth and medical benefits in effect for Employee as of the date of suchresignation or termination, with Employee remaining obligated to continuing topay employee contributions towards such coverage at the same level as in effectas of such date, until the earlier of (1) the second anniversary of such dateof resignation or termination, or (2) the date Employee becomes employed byanother party.

 

9.4                                 TheCompany shall provide Employee the right to participate in its long-termdisability insurance plan, which as of this date generally provides that in theevent of total disability, the plan will provide an annual benefit equal to 60%of the sum of (i) Employee’s annual base salary plus (ii) the average of thethree highest annual bonuses paid to Employee (but not less than 60% of

 

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Employee’s annual base salary), less any incomereceived by Employee from other sources, such as by way of example and notlimitation, Social Security and worker’s compensation.

 

9.5                                 TheCompany shall provide Employee the right to participate in its 401(k) SavingsPlan.

 

9.6                                 TheCompany shall reimburse Employee for dues and assessments for membership at theAnnandale Country Club, the California Club and the Los Angeles Country Club.

 

9.7                                 TheCompany shall provide Employee with the use of a company car substantiallyequivalent to a Cadillac STS, together with normal maintenance, insurance andoperating expenses.

 

9.8                                 Employeeshall be entitled to vacation in accordance with the customary practice of theCompany with regard to its executives, which is currently four (4) weeksannually.

 

9.9                                 Employeeshall be reimbursed for financial/tax consulting services provided by The AYCOCompany, L.P. through participation in the Financial and Tax Services Programfor Key Executives which was approved (with a tax gross-up feature) by theBoard of Directors on November 20, 2002.

 

9.10                           TheCompany shall reimburse Employee for fees actually paid by Employee to his legalcounsel in connection with legal review of this employment agreement, providedthat such reimbursement shall not exceed $5,000.

 

9.11                           TheCompany agrees that in the event of an audit of Employee’s tax returns by theInternal Revenue Service with respect to issues arising under this Agreement(including, but not limited to, Section 10.5 hereof), Employee will havethe right to select his own professional advisors to represent Employee in theaudit proceedings, and the reasonable expenses thereof shall be borne by theCompany.

 

10.           Termination;Extension.

 

10.1                           Duringthe Term of this Agreement, the Company’s Board of Directors may terminateEmployee’s employment herein at any time for cause as contemplated bySection 2924 of the California Labor Code (copy of which in effect as ofthe date hereof is attached hereto as Exhibit “E” and made a part hereof), oras a result of a material breach by Employee of his obligations under thisAgreement, provided however that Company shall provide Employee with not lessthan sixty (60) days prior written notice describing the behavior or conductwhich is alleged by the Company to constitute cause for termination andEmployee shall be provided with reasonable opportunity to correct such behavioror conduct within that notice period.

 

10.2                           In theevent that the Company terminates Employee’s employment for any cause otherthan the causes set forth in paragraph 10.1 hereinabove, such shall beconsidered to be termination “without cause.” Removal from Employee of the title of “President, Chief ExecutiveOfficer and Chairman of the Board” during the Term, without Employee’s consent,shall be deemed to be termination without cause.

 

10.3                           In theevent that the Company terminates Employee’s employment without cause at anytime

 

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during the Term of this Agreement, except fortermination without cause due to or following a Change of Control (as that termis defined in paragraph 10.5 hereinbelow), then:

 

(1)                                  theCompany shall pay Employee a lump-sum severance amount within thirty (30) daysfollowing termination equal to 3.5 (or the number of years and fractional yearsremaining in the Term, if the remaining Term of this Agreement is less thanthree years and six months as of the date of the termination) times the sum of(i) Employee’s annual base salary in effect as of the date of termination, and(ii) the highest management incentive bonus paid to Employee during the threeand one-half years preceding termination (but not less than one hundred percent(100%) times Employee’s annual base salary determined as of the date oftermination);

 

(2)                                  allunvested restricted stock grants and stock options granted to Employee shallautomatically vest in full; and

 

(3)                                  Employeeshall be entitled to the benefits described in paragraphs 8.3, 8.4 and 9.3hereinabove.

 

Employee shall not be obligated to seek other employment or take anyother action by way of mitigation of the amounts payable to Employee under anyof the provisions of this Agreement.

 

10.4                           TheTerm of this Agreement shall be automatically extended from day to day so thatit always has a remaining term of three years and six months (or until Employeeattains age 671⁄2, if sooner) until the Company or Employee shall give writtennotice to the other that the Term shall not be further extended.  In such event the Term shall end three yearsand six months after delivery of such written notice in the manner provided inparagraph 12.3 hereinbelow (or when Employee attains age 671⁄2, if sooner).  If the Company notifies Employee that theTerm shall not be further extended, then Employee may elect within 90 daysafter receipt of such notice to terminate employment and consider hisemployment to have been terminated by the Company without cause, in which caseEmployee shall be entitled to those termination benefits described in paragraph10.3 hereinabove.

 

10.5                           In theevent of a Change of Control at any time during the Term of this Agreement:

 

(1)                                  Allunvested restricted stock grants and stock options granted to Employee shallautomatically vest in full upon a Change of Control.

 

(2)                                  Inthe event that the Company terminates Employee’s employment without cause atany time during the Term of this Agreement within the period of twelve (12)months following the date of a Change of Control, then Employee shall beentitled to the termination benefits described in paragraph 10.3 hereinabove;provided that the lump-sum severance amount paid to Employee under thisparagraph 10.5(2) which is calculated based on paragraph 10.3(1) hereinabove(i) shall be reduced to equal the present value, determined in accordance withIRC 280G(d)(4), of the lump-sum severance amount which would otherwise bepayable under paragraph 10.3(1), and (ii) shall be reduced to offset compensationand other earned income earned by Employee in the manner provided in paragraphs10.5(3) and (4) below.

 

(3)                                  Theamount of the lump-sum severance amount payable to Employee under paragraph10.5(2)

 

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which is calculated based on paragraph 10.3(1) shallbe reduced by one hundred percent (100%) of any compensation and other earnedincome (within the meaning of Section 911(d)(2)(A) of the Internal RevenueCode (“IRC”)) which is earned by Employee for services rendered to persons orentities other than the Company or its affiliates during the remaining Term ofthis Agreement as of the date of termination. Health and medical benefits shall be offset as provided in paragraph9.3.

 

(4)                                  Notless frequently than annually (by December 31 of each year), Employeeshall account to the Company with respect to all compensation and other earnedincome earned by Employee which is required hereunder to be offset against thelump-sum severance amount received by Employee from the Company under paragraph10.5(2) which is calculated based on paragraph 10.3(1).  If the Company has paid a lump-sum severanceamount in excess of the amount to which Employee is entitled (after givingeffect to the offsets provided above), Employee shall reimburse the Company forsuch excess by December 31 of such year. The requirements imposed under this paragraph shall terminate onDecember 31 of the last calendar year which begins during the remainingterm of this Agreement as of the date of termination.

 

Notwithstanding any other provisions in this Agreement or any otheragreement, plan or arrangement, if any payment or benefit received or to bereceived by Employee, whether under the terms of this Agreement, or any otheragreement, plan or arrangement with the Company or any person affiliated withthe Company (all such payments and benefits being hereinafter referred to as“Total Payments”) would be subject, in whole or in part, to taxes imposed byIRC Section 4999, then an additional gross-up payment shall be made toEmployee in accordance with the provisions of Exhibit “T” hereof, theprovisions of which Exhibit are hereby fully incorporated herein by reference,such that, after payment of all Federal, state and local income, employment andexcise taxes, Employee will be in the same after-tax position as if no excisetaxes (or interest or penalties thereon) had been imposed.

 

As used herein, the term “Change of Control” means either:  (i) the dissolution or liquidation of theCompany; (ii) a reorganization, merger or consolidation of the Company with oneor more corporations as a result of which the Company is not the survivingcorporation; (iii) approval by the stockholders of the Company of any sale,lease, exchange or other transfer (in one or a series of transactions) of allor substantially all of the assets of the Company; (iv) approval by thestockholders of the Company of any merger or consolidation of the Company inwhich the holders of voting stock of the Company immediately before the mergeror consolidation will not own fifty percent (50%) or more of the outstandingvoting shares of the continuing or surviving corporation immediately after suchmerger or consolidation; or (v) a change of 25% (rounded to the next wholeperson) in the membership of the Board of Directors of the Company within a12-month period, unless the election or nomination for election by stockholdersof each new director within such period was approved by the

 

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vote of 85% (rounded to the next whole person) of the directors thenstill in office who were in office at the beginning of the 12-month period.

 

10.6                           In theevent that Employee should voluntarily resign or is terminated for cause by theCompany during the Term, Employee shall not be entitled to any of thetermination benefits described in this section 10, other than any paymentwhich may be due pursuant to paragraph 9.3 or 10.5 hereinabove.

 

10.7                           In theevent that Employee should die or become disabled or incapacitated for anuninterrupted period in excess of six (6) months during the Term, then (1) allunvested restricted stock grants and stock options granted to Employee shallautomatically vest in full, and (2) Employee shall remain eligible (or entitledas the case may be) for a prorated management incentive or bonus award for theperiod prior to Employer’s death or disability.

 

11.           Covenants.

 

11.1                           Employeeagrees that any and all confidential knowledge or information, including butnot limited to customer lists, books, records, data, formulae, specifications,inventions, processes and methods, developments and improvements, which has orhave been or may be obtained or learned by him in the course of his employmentwith the Company, will be held confidential by him and that he will notdisclose the same to any person outside of the Company either during hisemployment or after his employment by the Company has terminated.

 

11.2                           Employeeagrees that upon termination of his employment with the Company he will immediatelysurrender and turn over to the Company all books, records, formsspecifications, formulae, data and all papers and writings relating to thebusiness of the Company and all other property belonging to the Company, itbeing understood and agreed that the same are the sole property of the Companyand that Employee will not make or retain any copies thereof.

 

11.3                           Employeeagrees that all inventions, development or improvements which he may make,conceive, invent, discover or otherwise acquire during his employment by theCompany in the scope of his responsibilities or otherwise shall become the soleproperty of the Company.

 

12.           Miscellaneous.

 

12.1                           Allterms and conditions of this Agreement are set forth herein, and there are nowarranties, agreements or understandings, express or implied, except thoseexpressly set forth herein.

 

12.2                           Anymodification of this Agreement shall be binding only if evidenced in writingsigned by both parties hereto.

 

12.3                           Anynotice or other communication required or permitted to be given hereunder shallbe deemed properly given if personally delivered or deposited in the UnitedStates mail, registered or certified and postage prepaid, addressed to theCompany at 245 S. Los Robles Ave., Pasadena, CA 91101, or to Employee at 750Chester Avenue, San Marino, CA 91108, or at such other addresses as may fromtime to time be designated by the respective parties in writing.

 

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12.4                           Thelaws of the State of California shall govern the validity of this Agreement,the construction of its terms and the interpretation of the rights and dutiesof the parties.

 

12.5                           In theevent that any one or more of the provisions contained in this Agreement shallfor any reason be held to be invalid, illegal or unenforceable, the same shallnot be affect any other provisions of this Agreement, but this Agreement shallbe construed as if such invalid, illegal or unenforceable provisions had neverbeen contained herein.

 

12.6                           ThisAgreement shall be binding upon, and inure to the benefit of, the successorsand assigns of the Company and the personal representatives, heirs and legateesof Employee.

 

IN WITNESS WHEREOF, theparties have executed this Agreement effective as of the date first abovewritten.

 

AMERONINTERNATIONAL CORPORATION

 

 
| By:              |                                                      |   |
|------------------|-----------------------------------------------------------|--------|
|             | John E. Peppercorn                                        |
|             | Chairman-elect, Compensation & Stock Option Committee |
|             | of the Board of Directors                                 |
|             |                                                      |   |
| EMPLOYEE         |                                                      |
|             |                                                      |
|             |                                                      |
| James S.  Marlen |                                                      |

 

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EXHIBIT E

 

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DEERING’S CALIFORNIA CODES

 

 

**labor code**

 

*Annotated*

 

 

OF THE STATE OF CALIFORNIA

 

 

*AdoptedApril 24, 1937*with amendmentsthrough theFirst Extraordinary Session of the 1989-1990 Legislature

 

 

§ 2924.  Employment forspecified term; Grounds for termination by employer.

An employment for a specified term may be terminated at any time by theemployer in case of any willful breach of duty by the employee in the course ofhis employment, or in case of his habitual neglect of his duty or continuedincapacity to perform it.

Enacted 1937.  Amended Stats 1969, ch 1529 § 3; Stats 1971, ch 1580§ 2, ch 1607 § 3.

 

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EXHIBIT T

 

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Exhibit “T”

(Page 1 of 1)

 

If any portion of the Total Payments (as defined in Paragraph 10.5 ofthe Agreement) shall be subject to excise tax pursuant to Section 4999 ofthe Internal Revenue Code of 1986, or any successor or similar provisionthereto, or comparable state or local tax laws, the Company shall pay to theEmployee such additional compensation as is necessary (after taking into accountall Federal, state and local income, employment and excise taxes payable by theEmployee as a result of the receipt of such additional compensation) to placethe Employee in the same after-tax position he would have been in had no suchexcise tax (or any interest or penalties thereon) been paid or incurred.  The Company shall pay additionalcompensation upon the earlier of (i) the time at which the Company withholdssuch excise tax from any payments to the Employee or (ii) 30 days after theEmployee notifies the Company that the Employee has filed a tax return whichtakes the position that such excise tax is due and payable in reliance on awritten opinion of the Employee’s tax counsel or accountant that it is morelikely than not that such payment with respect to any such excise tax is dueand payable.  If the Employee makes anypayment with respect to any such excise tax as a result of an adjustment to theEmployee’s tax liability by any Federal, state or local authority, the Companywill pay such additional compensation within 30 days after the Employeenotifies the Company of such payment. Without limiting the obligation of the Company hereunder, the Employeeagrees, in the event that Employee makes any payment pursuant to the precedingsentence, to negotiate with the Company in good faith with respect toprocedures reasonably requested by the Company which would afford the Companythe ability to contest the imposition of such excise tax; provided, howeverthat the Employee will not be required to afford the Company any right tocontest the applicability of any such excise tax to the extent that theEmployee reasonably determines that such contest is inconsistent with theoverall tax interests of the Employee. The Company agrees to hold in confidence and not to disclose, withoutthe Employee’s prior written consent, any information with regard to theEmployee’s tax position which the Company obtains pursuant to this Exhibit T.

 

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