<PAGE> 1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended June 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 1-12815
CHICAGO BRIDGE & IRON COMPANY N.V.
Incorporated in The Netherlands IRS Identification Number: Not Applicable
Polarisavenue 31
2132 JH Hoofddorp
The Netherlands
31-23-568-5660
(Address and telephone number of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
The number of shares outstanding of a single class of common stock as of
June 30, 1999 - 11,275,734
<PAGE> 2
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Financial Statements
Statements of Income
Three and Six Months Ended June 30, 1999 and 1998 3
Balance Sheets
June 30, 1999 and December 31, 1998 4
Statements of Cash Flows
Six Months Ended June 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6 - 8
Management's Discussion and Analysis of
Results of Operations and Financial Condition 9 - 13
PART II. OTHER INFORMATION 13
SIGNATURE PAGE 14
</TABLE>
2
<PAGE> 3
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues $ 181,202 $ 181,808 $ 351,883 $ 371,689
Cost of revenues 162,329 164,270 315,008 337,263
--------- --------- --------- ---------
Gross profit 18,873 17,538 36,875 34,426
Selling and administrative expenses 11,927 11,963 23,870 23,755
Other operating income, net (505) (336) (1,051) (664)
--------- --------- --------- ---------
Income from operations 7,451 5,911 14,056 11,335
Interest expense (774) (956) (1,330) (1,949)
Interest income 195 529 463 759
--------- --------- --------- ---------
Income before taxes and minority interest 6,872 5,484 13,189 10,145
Income tax expense (2,062) (1,536) (3,957) (2,841)
--------- --------- --------- ---------
Income before minority interest 4,810 3,948 9,232 7,304
Minority interest in (income) loss (444) (21) (640) (27)
--------- --------- --------- ---------
Net income $ 4,366 $ 3,927 $ 8,592 $ 7,277
========= ========= ========= =========
Net income per share
Basic $ 0.39 $ 0.32 $ 0.76 $ 0.59
Diluted $ 0.38 $ 0.32 $ 0.75 $ 0.59
Weighted average shares outstanding
Basic 11,296 12,284 11,329 12,344
Diluted 11,409 12,284 11,445 12,344
Dividends on shares
Amount $ 677 $ 737 $ 1,354 $ 1,473
Per share $ 0.06 $ 0.06 $ 0.12 $ 0.12
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
3
<PAGE> 4
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1999 1998
<S> <C> <C>
Current assets
Cash and cash equivalents $ 8,390 $ 5,636
Accounts receivable, net of allowance for doubtful
accounts of $2,042 in 1999 and $2,050 in 1998 136,105 143,911
Contracts in progress with earned revenues
exceeding related progress billings 56,306 51,953
Other current assets 6,551 6,760
--------- ---------
Total current assets 207,352 208,260
--------- ---------
Property and equipment 108,166 110,481
Goodwill 17,807 18,051
Other non-current assets 11,948 11,917
--------- ---------
Total assets $ 345,273 $ 348,709
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 1,147 $ 3,088
Accounts payable 37,622 41,536
Accrued liabilities 47,036 50,045
Contracts in progress with progress billings
exceeding related earned revenues 59,858 77,359
Income taxes payable 231 2,882
--------- ---------
Total current liabilities 145,894 174,910
--------- ---------
Long-term debt 26,000 5,000
Other non-current liabilities 63,134 62,199
Minority interest in subsidiaries 5,587 4,944
--------- ---------
Total liabilities 240,615 247,053
--------- ---------
Shareholders' equity
Common stock, NLG .01 par value;
authorized: 35,000,000 in 1999 and 50,000,000 in 1998;
12,517,552 issued in 1999 and 1998;
outstanding: 11,275,734 in 1999 and 11,414,294 in 1998 74 74
Additional paid-in capital 89,638 94,037
Retained earnings 36,089 28,851
Treasury stock, at cost: 1,241,818 in 1999 and 1,103,258 in 1998 (14,031) (13,144)
Cumulative translation adjustment (7,112) (8,162)
--------- ---------
Total shareholders' equity 104,658 101,656
--------- ---------
--------- ---------
Total liabilities and shareholders' equity $ 345,273 $ 348,709
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
4
<PAGE> 5
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities
Net income $ 8,592 $ 7,277
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 8,811 8,942
(Decrease)/increase in deferred income taxes (928) 1,467
Gain on sale of property and equipment (1,051) (664)
Change in operating assets and liabilities (see below) (23,657) 2,981
-------- --------
Net cash (used in)/provided by operating activities (8,233) 20,003
-------- --------
Cash flows from investing activities
Proceeds from sale of property and equipment 1,637 1,498
Capital expenditures (6,496) (6,335)
-------- --------
Net cash used in investing activities (4,859) (4,837)
-------- --------
Cash flows from financing activities
(Decrease)/increase in notes payable (1,941) 1,581
Net borrowing/(repayment) under Revolving Credit Facility 21,000 (5,000)
Purchase of treasury stock (3,138) (3,698)
Issuance of treasury stock 1,279 234
Dividends paid (1,354) (1,473)
-------- --------
Net cash provided by/(used in) financing activities 15,846 (8,356)
-------- --------
Increase in cash and cash equivalents 2,754 6,810
Cash and cash equivalents, beginning of the year 5,636 10,240
-------- --------
Cash and cash equivalents, end of the period $ 8,390 $ 17,050
======== ========
Change in operating assets and liabilities
Decrease in receivables, net $ 7,806 $ 6,569
(Increase)/decrease in contracts in progress, net (21,854) 9,699
(Decrease) in accounts payable (3,914) (1,822)
-------- --------
Change in contract capital (17,962) 14,446
Decrease/(increase) in other current assets 459 (2,344)
(Decrease) in income taxes payable (2,651) (3,868)
(Decrease) in accrued and other non-current liabilities (6,169) (3,213)
Decrease/(increase) in other 2,666 (2,040)
-------- --------
Total $(23,657) $ 2,981
======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
5
<PAGE> 6
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements for Chicago Bridge
& Iron Company N.V. and Subsidiaries (the "Company") have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures, normally included in financial statements
prepared in accordance with generally accepted accounting principles, have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. The accompanying unaudited interim consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the 1998 Annual Report on
Form 10-K of the Company.
In the opinion of the Company, all adjustments necessary to present fairly the
financial position of the Company and the results of its operations and cash
flows for the period then ended have been included. The results of operations
for such interim periods are not necessarily indicative of the results for the
full year.
2. SIGNIFICANT ACCOUNTING POLICIES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for fiscal years
beginning after June 15, 2000. SFAS 133 requires all derivative instruments be
recorded on the balance sheet at their fair value and that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. The Company has not yet determined the impact
that the adoption of SFAS 133 will have on its earnings or statement of
financial position. However, the Company anticipates that, due to its limited
use of derivative instruments, the adoption of SFAS 133 will not have a
significant effect on its results of operations or its financial position.
3. LONG-TERM DEBT
The weighted average interest rate on $26,000 of borrowings under the Company's
revolving credit facility was 5.63% at June 30, 1999.
6
<PAGE> 7
4. COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net income $4,366 $3,927 $8,592 $7,277
Other comprehensive income, net of tax:
Cumulative translation adjustment 1,144 (1,845) 1,050 (2,195)
------ ------ ------ ------
Comprehensive income $5,510 $2,082 $9,642 $5,082
====== ====== ====== ======
</TABLE>
5. PER SHARE COMPUTATIONS
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net income - Basic and Diluted $ 4,366 $3,927 $8,592 $7,277
======= ====== ====== ======
Weighted average shares outstanding - Basic 11,296 12,284 11,329 12,344
Effect of Restricted Stock Units 105 - 104 -
Effect of Directors Deferred Fee Shares 7 - 6 -
Effect of Performance Share Units - - 5 -
Effect of Stock Options 1 - 1 -
------- ------ ------ ------
Weighted average shares outstanding - Diluted 11,409 12,284 11,445 12,344
======= ====== ====== ======
Net income per share - Basic $ 0.39 $0.32 $0.76 $0.59
======= ====== ====== ======
Net income per share - Diluted $ 0.38 $0.32 $0.75 $0.59
======= ====== ====== ======
</TABLE>
6. COMMON STOCK
The Company entered into an equity forward purchase contract in the second
quarter of 1999. During the second quarter, the Company agreed to purchase
349,100 shares under this arrangement at a net cost of $4,122 to be settled on
August 17, 1999. This transaction is reflected in the Company's June 30, 1999
consolidated balance sheet in accrued liabilities and additional paid-in
capital.
7
<PAGE> 8
7. SEGMENT INFORMATION
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues
North America $ 82,443 $ 72,288 $ 155,091 $162,580
Europe, Africa & Middle East 34,237 57,326 75,514 98,787
Asia Pacific 22,109 33,626 42,492 63,908
Central & South America 42,413 18,568 78,786 46,414
-------- -------- --------- --------
Total $181,202 $181,808 $351,883 $371,689
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Income From Operations
North America $ 2,352 $ 2,973 $ 4,297 $ 4,918
Europe, Africa & Middle East 819 6,586 3,669 10,153
Asia Pacific 806 913 1,263 1,096
Central & South America 3,474 (4,561) 4,827 (4,832)
------- ------- ------- -------
Total $ 7,451 $ 5,911 $14,056 $11,335
======= ======= ======= =======
</TABLE>
8. SUBSEQUENT EVENT
At the Annual Meeting of Shareholders held on May 12, 1999, the shareholders
authorized the Company to cancel shares held by the Company in its own share
capital. On July 28, 1999, the 1,221,865 shares owned by the Company were
cancelled.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and accompanying notes.
RESULTS OF OPERATIONS
For the three months ended June 30, 1999, new business taken was $202 million
compared with $204 million in the year-earlier period. More than 65% of the new
business taken during the quarter was for contracts awarded outside North
America. New contract awards in the quarter included a large low temperature
tank and several large tankage projects in the Europe, Africa, Middle East
(EAME) area, including the Company's first significant project in Egypt in
nearly a decade. During the quarter, new business taken increased 56% in the
EAME area and 25% in North America, but declined 59% in the Asia Pacific (AP)
area and 61% in the Central and South America (CSA) area. For the six months
ended June 30, 1999, new business taken was $395 million compared with $415
million in the first half of 1998. Backlog at June 30, 1999 stood at $534
million, compared with a $508 million backlog at year-end 1998.
Revenues for the second quarter of 1999 were $181.2 million compared with $181.8
million in the second quarter of 1998. Revenues increased in North America and
in the CSA area as a result of work being put in place that follows from last
year's record level of new business taken. The EAME area and the AP area
reported lower revenues in the second quarter, as EAME benefited from
particularly strong revenues in the comparable 1998 period. It is common for the
Company to experience such shifts of revenue among geographic regions given the
changing mix of projects worldwide. Revenues for the first six months of 1999
were $351.9 million compared with $371.7 million for the first half of 1998.
Revenues for the second half of 1999 may be lower than the first half due to the
level and timing of customer releases of new business.
Gross profit for the three months ended June 30, 1999 increased 8% to $18.9
million, or 10.4% of revenues, compared with $17.5 million, or 9.6% of revenues,
in the prior year quarter. The improvement was due primarily to significantly
better results in the CSA area. Continued improvements in project execution have
contributed to better overall operating results. Gross profit for the first half
of 1999 was $36.9 million, or 10.5% of revenues, compared with $34.4 million, or
9.3% of revenues, for the first six months of 1998. The future level of 1999
gross profit is dependent in part upon the volume of work, in particular, the
pace at which new project awards are converted to revenues.
Selling and administrative expenses for the quarter ended June 30, 1999 were
$11.9 million or 6.6% of revenues, matching the prior year quarter. In the first
half of 1999, selling and administrative expenses of $23.9 million matched the
level for the comparable 1998 period.
Other operating income for the quarter ended June 30, 1999 was $0.5 million
compared with $0.3 million for the second quarter of 1998 and consisted of gains
on the sale of property and equipment around the world. The Company anticipates
similar gains in the foreseeable future, as it continues to evaluate and sell
underutilized and older assets.
9
<PAGE> 10
Income from operations for the second quarter of 1999 increased 26% to $7.5
million compared with operating income of $5.9 million for the second quarter of
1998. Operating income was favorably impacted by significantly improved results
in CSA, which more than offset lower income in EAME and North America, both of
which benefited from several large projects in the 1998 period. Income from
operations for the first six months of 1999 was $14.1 million compared with
$11.3 million in the first half of 1998.
Interest expense was $0.8 million for the second quarter of 1999 compared with
$1.0 million in the comparable period of 1998. The decrease was primarily due to
lower debt levels. Long-term debt stood at $26 million as of June 30, 1999, down
from $30 million at the end of the first quarter but up from an unusually low
level of $5 million at year end 1998. Cash and cash equivalents at the end of
the second quarter were $8.4 million. Interest income consisted primarily of
interest earned on cash balances at non-U.S. subsidiaries.
For the six months ended June 30, 1999, income tax expense was $4.0 million, or
an effective income tax rate of 30%, compared with income tax expense of $2.8
million, or an effective income tax rate of 28%, in the comparable period of the
prior year. The increase in the effective tax rate is the result of the
geographic mix of taxable income.
Net income for the three months ended June 30, 1999 was $4.4 million or $0.38
per diluted share, a 19% increase, compared with net income of $3.9 million or
$0.32 per diluted share for the same period in 1998. Net income for the first
six months of 1999 was $8.6 million or $0.75 per diluted share, a 27% increase,
compared with net income of $7.3 million or $0.59 per diluted share for the
first half of 1998.
FINANCIAL CONDITION
For the three months ended June 30, 1999, the Company generated cash from
operations of $12.2 million, reducing cash used from operations to $8.2 million
for the first half of 1999. Capital expenditures were $3.6 million during the
quarter, bringing the year-to-date total to $6.5 million.
The Company continues to be impacted by the Tuban project in Indonesia, where
work remains suspended. At June 30, 1999, the Company's backlog related to this
project was approximately $50 million and the Company and its affiliates had
approximately $35 million of net receivables outstanding. Similar to other major
contractors involved in the project, the Company has received approval to
redeploy certain material purchased for this project in order to reduce its
costs. The Company believes that permanent financing for the project will not be
secured until the political and economic situation in Indonesia improves. While
the Company believes the project is viable and work will ultimately resume, no
assurances can be given that this will happen, or even though the project
resumes, that it will not have an adverse impact on the Company.
Management anticipates that by using cash generated from operations and funds
provided under the Revolving Credit Facility, the Company will be able to meet
its working capital and capital expenditure needs for at least the next 24
months.
10
<PAGE> 11
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company seeks to minimize the risks from currency exchange rate fluctuations
through regular operating and financing activities and, when deemed appropriate,
through its limited use of currency forward contracts. The Company's exposure to
changes in currency exchange rates arises from receivables, payables and firm
commitments from international transactions, as well as intercompany loans used
to finance non-U.S. subsidiaries. The Company does not use financial instruments
for trading or speculative purposes.
Although the Company does not engage in currency speculation, it periodically
uses forward contracts to hedge currency transactions. Gains or losses are
included in income. At June 30, 1999 and December 31, 1998 the Company had
currency exchange contracts of less than one year duration. Outstanding currency
exchange contracts to purchase Canadian dollars represented $609 and $10,034 and
currency exchange contracts to sell British pounds represented $882 and $2,909
at June 30, 1999 and December 31, 1998, respectively. The Company also had
$1,400 and $2,400 of currency exchange contracts to sell Singapore Dollars at
June 30, 1999 and December 31, 1998, respectively and had $1,127 of currency
exchange contracts to sell Dutch Guilders at June 30, 1999.
YEAR 2000
The Company continues to execute its plan to address the effect of Year 2000
issues on its worldwide businesses. The plan consists of two primary phases:
Assessment (consisting of identification, business criticality ranking and
impact analysis, and remediation planning) and Remediation (consisting of
repair, testing, implementation, certification and contingency plans). This plan
involves representatives of the Company from all operational and geographical
areas and encompasses information technology (IT) systems, embedded (non-IT)
systems and suppliers. The Year 2000 team reports to senior management and the
Audit Committee of the Supervisory Board on a quarterly basis.
Assessment has been completed on all of the Company's worldwide IT systems. The
Remediation phase for all critical areas remains on schedule and is expected to
be completed by the end of August 1999. Additional final testing and
certification of certain systems and the customizing of contingency plans is
scheduled to be completed by the end of September 1999.
Assessment of North American non-IT systems is complete, and the Remediation
phase continues and is scheduled for completion by the end of August 1999.
Non-IT systems include building and mechanical systems (such as
telecommunication systems, HVAC and security systems) and fabrication and field
construction equipment. Assessment of non-IT systems outside North America on
building and mechanical systems in facilities currently used by the Company was
completed in June 1999 and the Remediation phase is scheduled to be completed by
the end of August 1999. The Company's assessment and remediation of its
fabrication and field construction equipment throughout the world has been
completed.
Due to the continual change of geographic location and type of projects on which
the Company is executing work, the Company is familiar with reassessing and
reestablishing its supplier chain through the use of alternative sourcing of
materials and services to meet its business needs.
11
<PAGE> 12
The Company has identified key material suppliers and service providers
("suppliers"), and has initiated discussions and mailed correspondence to these
suppliers to survey their state of readiness on Year 2000 issues. Completion of
this assessment is dependent upon their cooperation. Responses have been
received from 98% of the North American inquiries and 94% of the non-North
American inquiries. The Company continues to work to get responses from
suppliers. At this point, it is not possible to predict whether there will be
any significant disruption due to supplier failure to remediate their own Year
2000 issues. The Company, as part of the Remediation phase, has formulated its
contingency plan. This plan includes the Company's continuous communication with
suppliers to assure that they are able to continue to perform without
disruption.
The Company estimates that the cost to remediate its Year 2000 issues is $2.0
million ($1.7 million expense and $0.3 million capitalized for the accelerated
purchase of desktop hardware). As of June 30, 1999, $1.2 million had been
expensed and $0.2 million had been capitalized. The cost estimate excludes the
direct costs of the ongoing J.D. Edwards implementation (which is a Year 2000
compliant system), the costs of which are being capitalized. The decision to
implement this new information system was made independent of the Company's Year
2000 compliance efforts. A portion of the J.D. Edwards system implementation
will enable the Company to meet its Year 2000 remediation need and is scheduled
to be completed by August 31, 1999. Over the next several years the Company will
continue to integrate its other software systems into J.D. Edwards in order to
fully utilize the system's capabilities.
The Company has performed Year 2000 remediation audits of its systems on a
global basis and are scheduled to be completed by the end of October 1999. No
critical issues have been identified during these audits. The Company believes
that the current efforts to address and resolve the issues associated with Year
2000 are adequate. However, the Company cannot guarantee that all Year 2000
issues will be anticipated and corrected, and there can be no assurance that the
systems of any third party on which the Company's systems and operations rely
will be timely converted. It is too soon to determine whether the Company will
experience disruption to transportation, communication, electric power or other
infrastructure systems due to Year 2000 issues that affect the public
infrastructure in the locations where it executes projects. The inability of the
Company, its suppliers or the public infrastructure to effectuate solutions to
their respective Year 2000 issues on a timely and cost effective basis may have
a material adverse effect on the Company.
Because of the uncertainties the Company faces with regard to Year 2000 issues,
it has developed contingency plans to provide for continuation of its critical
operations in spite of possible Year 2000 disruptions. Contingency plans for the
Company's specific global locations are being customized to address the severity
levels of Year 2000 issues that may be encountered. Completion of these plans is
expected by the end of September 1999. If the Company is unsuccessful in
implementing the J.D. Edwards system at remaining locations by the Year 2000,
the cost of implementing the J.D. Edwards contingency plan would not be material
to the Company.
This discussion and analysis contains certain forward-looking statements that
involve a number of risks and uncertainties. Actual events or results may differ
materially from the Company's expectations. In addition to matters described
herein, including the Tuban project and Year 2000 issues, the uncertain timing
of awards and contracts, project cancellation risks, operating risks,
12
<PAGE> 13
risks associated with fixed price contracts, risks associated with percentage of
completion accounting, fluctuating revenues and cash flow, dependence on the
petroleum and petrochemical industries, and competitive conditions, as well as
risk factors listed from time to time in the Company's reports filed with the
Securities and Exchange Commission (including, but not limited to its
Registration Statement on Form S-1 [File No.333-18065], as amended), may affect
the actual results achieved by the Company.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments in the legal proceedings as described
in Note 7 of the Notes to Consolidated Financial Statements submitted with the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3 Amended Articles of Association of the Company
(English translation)
10.9 Form of Amended Termination Agreements between the
Company and Certain Executive Officers
10.20 The Company's Equity Forward Purchase Contract
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file a current report on Form 8-K during
the three months ended June 30, 1999.
13
<PAGE> 14
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Chicago Bridge & Iron Company N.V.
/s/ Timothy J. Wiggins
---------------------------------------
By: Chicago Bridge & Iron Company B.V.
Its: Managing Director
Timothy J. Wiggins
Managing Director
(Principal Financial Officer)
Date: August 13, 1999
14
<PAGE> 1
Exhibit 3
Chapter I.
Definitions.
Article 1.
In the articles of association the following expressions shall have the
following meanings:
a. the general meeting: the body of the company formed by shareholders,
and other persons entitled to vote;
b. the general meeting of shareholders: the meeting of shareholders, and
other persons entitled to attend the general meetings;
c. the distributable part of the net assets: that part of the company's
net assets which exceeds the aggregate of the part of the capital
which has been paid and called up and the reserves which must be
maintained by virtue of the law;
d. the annual accounts: the balance sheet and profit and loss account
with the explanatory notes; e. the accountant: a registered accountant
or other accountant referred to in Section 393 of Book 2 of the Civil
Code;
f. the annual meeting: the general meeting of shareholders held for the
purpose of discussion and adoption of the annual accounts.
Chapter II.
Name, seat, objects.
Article 2. Name and seat.
1. The name of the company is: CHICAGO BRIDGE & IRON COMPANY N.V.
2. The official seat of the company is in Amsterdam.
Article 3 Objects.
The objects of the company are:
a. to incorporate, to own, to participate in any way whatsoever, to
manage, to supervise, to operate and to promote enterprises, companies
and businesses;
b. to perform any and all activity of an industrial, financial or
commercial nature;
c. to design, develop, manufacture, market, sell and service products of
any nature, including without limitation any hardware and/or software;
d. to develop and trade in patents, trademarks, copyrights, licenses,
know-how and other intellectual property rights;
e. to borrow, to lend and to raise funds, including the issuance of
bonds, promissory notes or other securities or evidence of
indebtedness, as well as to enter into agreements in connection with
the aforementioned;
f. to furnish advice and to render services to enterprises and companies
with which the company forms a group and to third parties;
g. to render guarantees, to bind the company and to pledge its assets for
obligations of the companies and enterprises with which it forms a
group, including its subsidiaries, and on behalf of third parties;
h. to obtain, alienate, manage and exploit real estate and items of
property in general;
i. to trade in securities and items of property in general; as well as
everything pertaining to the foregoing, relating thereto or in
furtherance thereof, all in the widest sense of the word.
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Chapter III
Capital and shares. Register.
Article 4. Authorized capital.
1. The authorized capital amounts to three hundred and fifty thousand Dutch
guilders (NLG 350,000.--).
2. The authorized capital is divided into thirty-five million (35.000.000)
shares of one cent (NLG 0,01) each.
3. All shares are, at the option of the shareholder, either registered shares
or bearer shares.
Article 5. Certificates of shares.
1. For bearer shares, share certificates shall be issued. Share certificates
may, at the request of a shareholder, also be issued for registered shares.
Share certificates shall be numbered in the manner to be determined by the
management board.
2. Multiple certificates shall be issued at a shareholder's request for such
numbers of shares as shall be determined by the management board. At the
holder's request, a multiple certificate shall be exchanged for
certificates of single shares up to the same nominal amount.
3. The share certificates shall be signed by a member of the management board
or by both a member of the supervisory board and a member of the management
board and such signatures will be valid if reproduced on the certificates
in print. One or, as the case may be, both of these signatures may also be
replaced by a distinctive company stamp, provided by the company or under
its supervision. If there is at least one original signature, then no
company stamp described hereinabove is required.
4. The company shall not charge any fee for the issuance and exchange of share
certificates.
Article 5.A. CF-certificates; K-certificates.
1. A share certificate relating to one or more bearer shares shall be provided
with a simplified dividend sheet, without dividend coupons and voucher.
Such share certificates shall be referred to hereinafter as
CF-certificates.
2. A simplified dividend sheet (hereinafter referred to as a CF-dividend
sheet) may only be issued by the company to a custodian to be designated by
the shareholder. This custodian may only be designated from a group of
custodians which are accepted as such by the company and who provide for
the custody of the CF-dividend sheets to be administered by an organisation
independent of the company but accepted by it. These custodians shall
undertake not to issue the CF-dividend sheets in their charge to any
persons other than custodians accepted by the company or the company
itself.
3. For all dividends and other distributions relating to a share for which a
CF-certificate has been issued, the company shall be released towards the
person entitled thereto by placing those dividends or distributions at the
disposal of, or at the instruction of the independent organisation referred
to in paragraph 2.
4. A share certificate relating to one or more bearer shares may have a
dividend sheet annexed, consisting of dividend coupons and a voucher. Such
share certificates shall be referred to hereinafter as K-certificates. The
management board decides whether or not K-certificates shall be issued. A
decision of the management board to issue K-certificates is subject to the
approval of the supervisory board.
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5. The management board has the right to draw up further rules governing
the issuance of K-certificates, CF-certificates and the conversion of
K-certificates into CF-certificates and vice versa.
Article 5.B. Conversion of shares.
1. Bearer shares may, at the shareholder's request, be converted into
registered shares and vice versa.
2. Conversion of bearer shares into registered shares shall be
effected by the surrendering of share certificates and simultaneous
entry in the register referred to in article 5.D. The dividend sheets
belonging thereto must also be surrendered.
3. Conversion of registered shares into bearer shares shall be
effected at the written request of the shareholder. If a life interest
or a right of pledge is created in a share, the cooperation of the
beneficiary of the life interest or pledgee shall be required. At the
issuance of bearer share certificates the entry in the register shall
be deleted.
4. The company shall not charge any fee for conversion.
Article 5.C. Duplicate certificates.
1. In the event of the loss, theft or destruction of share
certificates, coupon sheets, dividend coupons or vouchers relating to
bearer shares, the management board can issue duplicates. The
management board may attach conditions to the issuance of duplicates,
including the provision of security and the payment of costs by the
applicant.
2. The issuance of a duplicate shall render the original document of
no value with regard to the company.
3. The new document shall clearly state that it is a duplicate.
Article 5.D. Register of shareholders.
1. The management board shall keep a register containing the names and
addresses of all holders of registered shares.
2. Every holder of one or more registered shares and any person having
a life interest or a right of pledge over one or more such shares
shall be obliged to provide the company in writing with their address.
3. All entries and notes in a register shall be signed by a member of
the management board or by a person authorised thereto by a member of
the management board.
4. Furthermore, article 85, Book 2 of the Civil Code applies to the
register.
5. Extracts from the register are not transferable.
Chapter IV. Issuance of shares. Own shares.
Article 6. Issuance of shares. Body competent to issue shares.
1. The issuance of shares shall be effected pursuant to a resolution of
the supervisory board provided that the supervisory board has been
designated by the general meeting as authorized body for this purpose.
Such authorization of the supervisory board shall only take place for
a specific period of no more than five years and may not be extended
by more than five years on each occasion.
2. The provisions of paragraph 1 of this article shall also apply to the
issuance of options to subscribe for new shares.
3. In case the supervisory board is no longer authorized to issue shares,
the general meeting shall be authorized to issue shares upon the
proposal of the supervisory board.
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4. The supervisory board is authorised, provided that the supervisory
board has been designated by the general meeting as the body
authorized to issue shares, to issue, at the expense of a reserve of
the company, with due observance of the provisions of article 31,
paragraph 3, shares and options to subscribe for new shares, provided
that such shares and options are issued to employees of the company
under a valid employee option scheme of the company.
Article 7. Conditions of issuance. Rights of pre-emption.
1. A resolution for the issuance of shares shall stipulate the price and
further conditions of issuance.
2. On the issuance of shares, each shareholder shall have a right of
pre-emption in proportion to the aggregate nominal value of his
shares. No pre-emptive rights shall exist with regard to shares issued
against a contribution other than cash nor with regard to shares
issued to employees of the company or employees of group companies.
3. Shareholders shall have a similar right of pre-emption if options are
granted to subscribe for shares.
4. The company shall inform the shareholders of the issuance of shares in
respect of which there is a right of pre-emption, or, as the case may
be, the granting of options to subscribe for shares in respect of
which there is a right of pre-emption, as well as the period of time
during which the right of pre-emption may be exercised, with due
observance of the applicable provisions of Dutch law.
5. The right of pre-emption may, subject to due observance of the
relevant provisions of the law, be limited or excluded by the
supervisory board provided the supervisory board is designated as the
authorized body in this respect by resolution of the general meeting
for a fixed period of time not exceeding five years. Article 6
paragraph 3 shall apply correspondingly.
Article 8. Payment for shares.
1. The full nominal amount of each share must be paid in on issue, as
well as, if a share is subscribed for at a higher price, the balance
of these amounts.
2. Payment for a share must be made in cash insofar as no other manner of
payment has been agreed on. Payment in foreign currency can be made
only after approval by the company, which approval shall be deemed
given upon acceptance of foreign currency by the company.
3. The management board shall be authorised to enter into transactions
concerning non-monetary contributions on shares, and the other
transactions referred to in article 94 paragraph 1, Book 2 of the
Civil Code, without the prior approval of the general meeting.
Article 9. Own shares.
1. When issuing shares the company shall not be entitled to subscribe for
its own shares.
2. The company shall be entitled to acquire its own fully paid up shares
or depository receipts in respect thereof, provided either no valuable
consideration is given or provided that:
a. the distributable part of the net assets is at least equal
to the purchase price; and
b. the nominal value of the shares or the depository receipts
in respect thereof to be acquired by the company itself,
already held by the company or pledged for the benefit of
the company, or which are held by a subsidiary, does not
exceed one tenth of the issued share capital.
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3. The validity of the acquisition shall be determined by the amount of
the net assets according to the latest adopted balance sheet, decreased
by the consideration for shares in the company's capital or depository
receipts in respect thereof and distributions of profits or by the
charge of any reserve to third parties which have fallen due by the
company and its subsidiaries after the balance sheet date. If more than
six months of a financial year have elapsed and the annual accounts
have not been adopted, any acquisition in conformity with paragraph 2
shall not be permitted.
4. An acquisition for valuable consideration shall be permitted only if
the general meeting has authorized the management board in this respect
and after approval of the supervisory board. The authorization by the
general meeting shall be valid for a period not exceeding eighteen
months. The general meeting shall stipulate in the authorization how
many shares or depositary receipts in respect thereof may be acquired,
how they may be acquired, and between what limits the price must be.
5. An acquisition of shares in contravention of paragraphs 2-4 shall be
void. Depositary receipts in respect of shares acquired by the company
in contravention of paragraphs 2-4 shall be transferred to all members
of the management board by operation of law.
6. The transfer of shares owned by the company or depositary receipts in
respect thereof held by the company shall be effected by virtue of a
resolution of the management board, after approval of the supervisory
board. The resolution to such transfer shall also stipulate the
conditions thereof.
7. No voting rights can be exercised in the general meeting in respect of
any share belonging to the company or to any subsidiary of the company;
the same applies to any share in respect of which either the company or
any subsidiary holds depositary receipts. The beneficiary of a life
interest in respect of a share held by the company itself or a
subsidiary company is, however, not excluded from exercising the right
to vote if the life interest was created before the share was held by
the company or one of its subsidiaries. The company or its subsidiary
may not exercise voting rights in respect of shares of which the
company has a life interest.
8. In establishing to what extent shareholders exercise voting rights, are
present or are represented, shares for which no voting rights can be
exercised shall not be taken into consideration.
9. The company may take its own shares or depositary receipts in respect
thereof as pledge only if:
a. the shares to be pledged are fully paid up;
b. the aggregate nominal value of the shares and depositary
receipts in respect thereof to be pledged and already held
or held in pledge does not exceed one-tenth of the issued
capital, and
c. the general meeting has approved the pledge agreement.
10. Upon the proposal of the management board - which proposal must have
prior approval from the supervisory board - the general meeting shall
have the power to decide to cancel shares acquired by the company in
its own share capital, subject however to the statutory provisions
relating hereto.
Chapter V
Transfer of shares. rights "in rem".
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Article 10. Transfer of shares. Life interest ("vruchtgebruik"). Pledging
("pandrecht"). Depositary Receipts.
1. The transfer of shares and the creation and transfer of limited rights
thereon shall take place in accordance with the provisions of Dutch law
applicable thereto.
2. The shareholder shall have the voting rights in respect of the shares
in which a life interest has been created. However, the voting rights
shall accrue to the beneficiary of a life interest if it was so
stipulated at the creation of the life interest. The shareholder who
holds no voting rights and the beneficiary of a life interest who does
hold voting rights, shall have the rights which the law attributes to
holders of depository receipts issued with the company's co-operation.
The rights referred to in the preceding sentence shall not accrue to
the beneficiary of the life interest who holds no voting rights.
3. The shareholder shall have the rights resulting from a share in which a
life interest has been created relating to the acquisition of newly
issued shares, such as stock dividends, it being understood that he/she
shall have to compensate the beneficiary of the life interest for the
value of these rights insofar as the latter is entitled thereto by
virtue of his/her life interest.
4. When shares are pledged, the voting rights cannot be assigned to the
pledgee. He shall not have the rights which the law attributes to
holders of depository receipts issued with the company's co-operation.
5. The company shall not co-operate with the issuance of depository
receipts in respect of its shares.
Chapter VI
Management.
Article 11. Management Board.
1. The management of the company shall be constituted by a management
board consisting of one or more members.
2. The number of members shall be determined by the supervisory board.
Article 12. Appointment.
1. The members of the management board shall be appointed by the general
meeting from a nomination of at least two persons for every position to
be filled, which has been drawn up by the supervisory board.
2. The general meeting shall be free to make the appointment if the
supervisory board has not made any nomination within, on or before the
date which is three months after the vacancy occurs.
3. Every nomination made by the supervisory board shall be binding if made
on or before the date which is three months after the vacancy occurs.
The general meeting can only disturb the binding character of the
nomination by resolution passed by a majority of at least two thirds of
the votes cast, which two thirds of the votes represents more than half
of the issued share capital.
Article 13. Suspension and dismissal.
1. A member of the management board may at any time be suspended or
dismissed by the general meeting.
2. With respect to any suspension or dismissal other than on the
proposal of the supervisory board, the general meeting can only
pass a resolution based on a majority of at least two
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thirds of the votes cast which two thirds of the votes represent more
than half of the issued share capital.
3. A member of the management board may at any time be suspended by the
supervisory board. Such suspension may be discontinued by the general
meeting at any time.
4. Any suspension may be extended one or more times, but may not last
longer than three months in the aggregate. If at the end of that period
no decision has been taken on termination of the suspension, or on
dismissal, the suspension shall cease.
Article 14. Renumeration.
The renumeration and further conditions of employment of every member of the
management board shall be determined by the supervisory board.
Article 15. Duties of the management board. Decision making process. Allocation
of duties.
1. Subject to the restrictions imposed by these articles of association,
the management board shall be entrusted with the management of the
company.
2. The management board may lay down rules regarding its own
decisionmaking process. These rules shall be subject to the approval of
the supervisory board.
3. Meetings of the management board shall only be held in the Netherlands
except that the management board may decide to have telephonic
meetings. The management board may adopt resolutions without a meeting
provided the proposal concerned is submitted to all members of the
management board and none of them objects to this manner of adopting
resolutions.
4. The management board may determine which duties in particular each
member of the management board will be charged with. The allocation of
duties shall be subject to the approval of the supervisory board.
Article 16. Representation.
1. The management board as such is authorized to represent the company.
Each member of the management board shall also be authorized to
represent the company.
2. The management board may appoint staff members with general or limited
power to represent the company. Each of those staff members shall be
authorized to represent the company with due observance of any
restrictions imposed on him/her. The management board shall determine
such staff members' titles.
3. In the event of a conflict of interest between the company and a member
of the management board, the company shall be represented by a member
of the management board or another person as the supervisory board
shall designate for this purpose.
Article 17. Approval of decisions of the management board.
1. The supervisory board is entitled to require such resolutions of the
management board to be subject to its approval as the supervisory board
shall decide. Such resolutions shall be clearly specified and notified
to the management board in writing.
2. The supervisory board is authorized to give the management board
instructions concerning the general policy of the company for
financial, social and economic matters. The management board shall act
in accordance with such instructions.
3. The lack of approval referred to in this article 17 does not affect the
authority of the management board or its members to represent the
company.
Article 18. Absence or prevention.
If a member of the management board is absent or is prevented from performing
his duties, the remaining members or member of the management board shall be
temporarily entrusted with the
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entire management of the company. If all members of the management board or the
sole member of the management board are/is absent or are/is prevented from
performing their duties, the management of the company shall be temporarily
entrusted to the supervisory board which shall then be authorized to entrust the
management temporarily to one or more persons, whether or not from among its
members.
Chapter VII
Supervisory board.
Article 19. Number of members.
1. The company shall have a supervisory board, consisting of at least six
members, with a maximum of twelve members.
2. With due observance of the provisions of paragraph 1., the number of
members of the supervisory board shall be determined by the supervisory
board.
3. Where the number of members of the supervisory board falls below six,
measures shall be taken forthwith to fill the number of members. In the
meantime the supervisory board shall keep all its powers.
Article 20. Appointment.
1. All members of the supervisory board shall be appointed by the general
meeting from a nomination of at least two persons for every position to
be filled, which has been drawn up by the supervisory board.
2. The provisions in paragraph 2 and 3 of article 12 shall likewise
apply to an appointment by the general meeting.
3. No person who has reached the age of seventy-two may be appointed as a
supervisory board member.
Article 21. Suspension and dismissal. Retirement.
1. Every member of the supervisory board may be suspended or dismissed by
the general meeting at any time.
2. The provisions in paragraph 2 of article 13 shall similarly apply to
the suspension and dismissal of supervisory board members by the
general meeting.
3. A supervisory board member shall retire no later than at the next
annual meeting held after a period of three years following his
appointment. A so retired member of the supervisory board may be
immediately re-elected.
4. Every member of the supervisory board shall retire no later than on the
day on which the annual meeting is held in the financial year in which
he reaches the age of seventy-two.
5. With due observance of the preceding paragraphs the supervisory board
shall draw up a rotation plan.
Article 22. Remuneration.
The general meeting shall determine the remuneration for every member of the
supervisory board.
Article 23. Duties and powers.
1. It shall be the duty of the supervisory board to supervise the
activities of the management board and the general course of affairs in
the company and in the business connected therewith. It shall assist
the management board with advice. In performing their duties, the
supervisory board members shall act in accordance with the interests of
the company and of the business connected therewith.
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2. The management board shall supply the supervisory board, in due time,
with the information required for the performance of its duties.
3. The supervisory board may delegate any of its powers to committees
consisting of such member or members of its body as it thinks fit; any
committee so formed shall, in the exercise of the power so delegated,
conform to any regulations that may be imposed on it by the supervisory
board.
Article 24. Proceedings and decision-making process.
1. The supervisory board shall elect a chairman from among its members,
and a vice chairman who shall take the place of the chairman in the
latter's absence. It shall appoint a secretary, who need not be a
member of the supervisory board, and shall make arrangements for
his/her substitution in case of absence.
2. In the absence of the chairman and the vice chairman at a meeting, the
board members in attendance shall designate a chairman therefor.
3. The supervisory board shall meet whenever the chairman, or two other
supervisory board members, or the management board, deem(s) such
necessary, but if the supervisory board has not met for six months, any
supervisory board member may call a meeting.
4. The secretary shall keep minutes of the proceedings at meetings of the
supervisory board. The minutes shall be adopted in the same meeting or
in the following meeting of the supervisory board and shall be signed
by the chairman and the secretary as evidence thereof.
5. All resolutions of the supervisory board shall be adopted by a
majority of the votes cast.
6. With the exception of article 25 paragraph 4 under a., resolutions
of the supervisory board shall only be valid if passed at a meeting at
which the majority of the supervisory board members are present or
represented. The supervisory board may also adopt resolutions in a
telephone meeting or without a meeting, provided the proposal
concerned is submitted to all supervisory board members and none of
them objects to this manner of adopting resolutions. The secretary
shall draw up a report regarding a resolution thus adopted and shall
attach the replies received to the report, which shall be signed by
the chairman and the secretary.
7. A supervisory board member may be represented by a co-member of the
supervisory board authorized in writing. The expression "in writing"
shall include any message transmitted by current means of communication
and received in writing. A supervisory board member may not act as
representative for more than one co-member.
8. The supervisory board shall meet together with the management board as
often as the supervisory board or management board deems necessary.
Article 25. Indemnification. Limited liability.
1. The company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the company)
by reason of the fact that he is or was a supervisory director, member
of the management board, officer, employee or agent of the company, or
is or was serving at the request of the company as a supervisory
director, member of the management board, officer, director, employee,
trustee or agent of another company, a partnership, joint venture,
trust or other enterprise or entity, against all expenses (including
attorneys' fees), judgements, fines and amounts paid in settlement
actually and reasonably incurred by
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him in connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful or outside of his mandate. The termination of any
action, suit or proceeding by a judgement, order, settlement,
conviction, or upon a plea of nolo contender or its equivalent, shall
not, of itself, create a presumption that the person did not act in
good faith and not in a manner which he reasonably could believe to be
in or not opposed to the best interest of the company, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
2. The company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or proceeding by or in the right of the company to procure a
judgement in its favour, by reason of the fact that he is or was a
supervisory director, member of the management board, officer or agent
of the company, or is or was serving at the request of the company as
a supervisory director, member of the management board, officer,
director, employee, trustee or agent of another company, a
partnership, joint venture, trust or other enterprise or entity,
against all expenses (including attorneys' fees) judgements, fines and
amounts paid in settlement, actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the company, except that no indemnification
shall be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable for gross negligence
or wilful misconduct in the performance of his duty to the company,
unless and only to the extent that the court in which such action or
proceeding was brought or any other court having appropriate
jurisdiction shall determine upon application that, despite the
adjudication of liability but in view of all of the circumstances of
the case, such person is fairly and reasonably entitled to
indemnification against such expenses which the court in which such
action or proceeding was brought or such other court having
appropriate jurisdiction shall deem proper.
3. To the extent that a supervisory director, member of the management
board, officer, employee or agent of the company has been successful on
the merits or otherwise in defense of any action, suits of proceeding,
referred to in paragraphs 1 and 2, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
4. Any indemnification by the company referred to in paragraphs 1 and 2
shall (unless ordered by a court) only be made upon a determination
that indemnification of the supervisory director, member of the
management board, officer, director, employee, trustee or agent is
proper under the circumstances because he had met the applicable
standard of conduct set forth in paragraph 1 and 2 of this Article 25.
Such determination shall be made:
a. by a majority of supervisory directors who are not parties
to such action, suit or proceeding, even though less than
a quorum, or;
b. if there are no supervisory directors who are not named as
parties to such action, suit or proceeding or if the
supervisory directors who are not named as parties to such
action, suit or proceeding so direct, by independent legal
counsel in a written opinion; or
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c. by the general meeting of shareholders.
5. Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the company in advance of the final
disposition of such action, suit or proceeding upon a resolution of the
supervisory board with respect to the specific case upon receipt of an
undertaking by or on behalf of the supervisory director, member of the
management board, officer, director, employee, trustee or agent to
repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the company as authorized in this
article.
6. The indemnification provided for by this article shall not be
deemed exclusive of any other right to which a person seeking
indemnification may be entitled under the laws of the Netherlands as
from time to time amended or under any by-laws, agreement, resolution
of the general meeting of shareholders or of the disinterested members
of the supervisory board or otherwise, both as to actions in his
official capacity and as to actions in another capacity while holding
such position, and shall continue as to a person who has ceased to be
a supervisory director, member of the management board, officer,
director, employee, trustee or agent and shall also inure to the
benefit of the heirs, executors and administrators of such a person.
7. The company shall have the power to purchase and maintain insurance on
behalf of any person who is or was a supervisory director, member of
the management board, officer, employee or agent of the company, or is
or was serving at the request of the company as a supervisory director,
member of the management board, officer, director, employee, trustee or
agent of another company, a partnership, joint venture, trust or other
enterprise, or entity, against any liability asserted against him and
incurred by him in any such capacity or arising out of his capacity as
such, whether or not the company would have the power to indemnify him
against such liability under the provisions of this article.
8. Whenever in this article reference is made to the company, this
shall include, in addition to the resulting or surviving company also
any constituent company (including any constituent company of a
constituent company) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had the power to
indemnify its supervisory directors, members of the management board,
officers, employees and agents, so that any person who is or was a
supervisory director, member of the management board, officer,
employee or agent of such constituent company, or is or was serving at
the request of such constituent company as a supervisory director,
member of the management board, officer, director, employee, trustee
or agent of another company, a partnership, joint venture, trust or
other enterprise or entity, shall stand in the same position under the
provisions of this article with respect to the resulting or surviving
company as he would have with respect to such constituent company if
its separate existence had continued.
9. No person shall be personally liable to the company or its
stockholders for monetary damages for breach of fiduciary duty as a
supervisory director or member of the management board; provided,
however, that the foregoing shall not eliminate or limit the liability
of a supervisory director or member of the management board (1) for
any breach of such individual's duty of loyalty to the company or its
stockholders, (2) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (3) for
any transaction from which the director derived an improper
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personal benefit or (4) for personal liability which is imposed by
Dutch law, as from time to time amended. Any amendment, repeal or
modification of this Article 25 shall not adversely affect any right
or protection of any person with respect to any act or omission
occurring prior to such amendment, repeal or modification.
Chapter VIII
Annual Accounts. Profits.
Article 26. Financial year. Drawing up the annual accounts. Deposition for
inspection.
1. The fiscal year of the company shall be the calendar year.
2. Annually, and not later than five months after the end of the fiscal
year, the management board shall draw up the annual accounts, unless,
by reason of special circumstances, this period is extended with a
maximum extension of six months by the general meeting.
3. Within the period referred to in paragraph 2, the annual accounts shall
be deposited at the office of the company for inspection by the
shareholders. Within this period of time, the management board shall
also submit the annual report. The statement of the accountant, as
mentioned in article 29, and the additional information required by
virtue of the law shall be added to the annual accounts.
4. The annual accounts shall be signed by all the members of the
management board; if the signature of one or more of the members is
lacking, this shall be stated and reasons given.
Article 27. Accountant.
1. The company shall appoint an accountant to audit the annual accounts.
2. Such appointment shall be made by the general meeting. This resolution
of the general meeting shall require the approval of the supervisory
board. If the general meeting fails to make an appointment, the
supervisory board shall be competent to do so or, in the absence of the
supervisory board members or in the event the supervisory board fails
to do so, the management board shall be competent to do so. The
appointment of an accountant shall not be limited by virtue of any
nomination; the appointment may, at all times, be revoked by the
general meeting or by the supervisory board or management board if
either of the latter boards has appointed the accountant.
3. The accountant shall issue a report on his audit examination to the
supervisory board and the management board.
4. The accountant shall give the results of his investigations in a
declaration as to the faithfulness of the annual accounts.
Article 28. Submission to the supervisory board.
1. The management board shall submit simultaneously the annual accounts
and the annual report to the supervisory board.
2. The annual accounts shall be signed by the members of the supervisory
board; if the signature of one or more of them is lacking, this shall
be stated and reasons given.
3. The supervisory board shall present a report on the annual accounts
to the general meeting.
Article 29. Adoption.
1. The company shall ensure that the annual accounts, the annual
report and the information to be added by virtue of the law are kept
at its office as of the date on which the annual meeting is convened.
Shareholders, and beneficiaries of a life interest in shares to whom
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the right to vote the shares accrue, may inspect the documents at such
place and obtain a copy thereof, free of charge.
2. The general meeting shall adopt the annual accounts. The annual
accounts may not be adopted in the event that the general meeting has
been unable to inspect the accountant's declaration referred to in
article 27, paragraph 4, unless a legal ground is given in the
information required to be added by law for the lack of the
accountant's declaration referred to in article 27, paragraph 4.
3. The unconditional adoption of the annual accounts by the general
meeting shall serve to constitute a discharge of the management board
members for their management and for the supervisory board members for
their supervision insofar as such management and supervision is
apparent from the annual accounts.
Article 30. Publication.
1. The company shall publish the annual accounts within eight days
following the adoption thereof. The publication shall be effected by
the deposit of a complete copy in the Dutch language or, if such copy
was not prepared, a copy in the French, German or English language, at
the offices of the Trade Register in whose district the company has its
official seat according to these articles of association. The date of
adoption must be stated on the copy.
2. If the annual accounts are not adopted within seven months of the
termination of the fiscal year, in accordance with the legal
requirements, then the management board shall, without further delay,
publish the prepared annual accounts in the manner prescribed in
paragraph 1; it shall be noted on the annual accounts that they have
not yet been adopted.
3. In the event that the general meeting shall have extended the period
for the preparation of the annual accounts in accordance with article
28 paragraph 2, then the last preceding paragraph shall apply with
effect from the date falling two months from the termination of such
period.
4. A copy of the annual report, produced in the same language or in Dutch,
shall, together with the additional information required by virtue of
law, be published at the same time and in the same manner as the annual
accounts. Insofar as the law permits, the foregoing shall not apply if
copies of those documents are held at the office of the company for
inspection by any person and, upon request, full or partial copies
thereof are supplied at a price not exceeding the cost; the company
shall make an official return thereof for filing in the Trade Register.
5. The publication shall be effected with due observance of the
applicable legal exemptions.
Article 31. Profits. Distribution.
1. From the profits appearing from the annual accounts as adopted,
such an amount shall be reserved by the company as shall be determined
by the management board which resolution requires the approval of the
supervisory board. The profits remaining thereafter shall be treated
in accordance with the provisions of the following paragraphs of this
article.
2. The profits remaining after the reservation referred to in paragraph 1
are at the disposal of the general meeting for distribution on the
shares equally and proportionally and/or for reservation.
3. A distribution can only take place up to the distributable part of
the net assets.
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4. Distributions of profits shall take place after adoption of the annual
accounts from which it shall appear that approval of such accounts has
been given.
5. The management board may, subject to due observance of the provisions
of article 31, paragraph 3, and with the approval of the supervisory
board resolve to pay an interim dividend in anticipation of the final
dividends.
6. On the proposal of the management board, which proposal shall require
the prior approval of the supervisory board, subject to the due
observance of the provisions of article 31, paragraph 3, the general
meeting may resolve to make distributions at the expense of any
reserve.
7. The supervisory board or - in case the supervisory board is no longer
authorised to issue shares in accordance to article 6 - the general
meeting, may determine to distribute stock dividends.
Article 32. Date on which distributions become payable. Currency.
1. The date on which dividends and other payments become payable shall
be announced in accordance with article 42. V
2. The management board may resolve to make payments in the currency of
the country where these payments are made payable.
3. Any claim of a shareholder for payment shall be barred after five
years have elapsed.
Chapter IX
General meetings of shareholders.
Article 33. Annual meeting.
1. Annually, and not later than six months after the end of the fiscal
year, the annual meeting shall be held.
2. The agenda for such meeting shall set forth, inter alia, the following
points for discussion:
a. the annual report;
b. adoption of the annual accounts;
c. appropriation of profits;
d. filling of any vacancies in the management board and/or
supervisory board and if necessary the appointment of the
accountants;
e. other proposals put forward for discussion and announced with
due observance of article 35 by the supervisory board, the
management board or by the shareholders and beneficiaries of a
life interest to whom the voting right has been granted,
representing, in the aggregate, at least one-tenth of the
issued capital.
Article 34. Other meetings.
1. Other general meetings of shareholders shall be held as often as the
management board or the supervisory board deems such necessary.
2. Shareholders, and beneficiaries of a life interest to whom the voting
right have been granted, representing in the aggregate at least
one-tenth of the issued capital, may request the management board to
convene a general meeting of shareholders, stating the subjects to be
discussed. If the management board has not convened a meeting within
four weeks in such a manner that the meeting can be held within six
weeks after the request has been made, the persons who have made the
request shall be authorized to convene a meeting themselves.
Article 35. Convocation. Agenda.
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1. General meetings of shareholders shall be convened by the management
board.
2. The convocation shall be given no later than on the fifteenth day
prior to the date of the meeting.
3. The convocation shall specify the subjects to be discussed.
Subjects that were not specified in the notification may be
announced at a later date, subject to due observance of the
requirements set out in this article.
4. The convocation shall be made in the manner stated in article 42.
Article 36. The entire capital is represented.
As long as the entire issued capital is represented at a general meeting of
shareholders, valid resolutions can be adopted on all subjects brought up for
discussion, even if the formalities prescribed by law or by the articles of
association for the convocation and holding of meetings have not been complied
with, provided such resolutions are adopted unanimously.
Article 37. Place of the meetings.
The general meetings of shareholders shall be held in Amsterdam, Rotterdam, The
Hague or Schiphol Airport (municipality Haarlemmermeer). In meetings held
elsewhere, resolutions can be validly adopted provided the entire issued capital
is present.
Article 38. Chairmanship.
1. The general meetings of shareholders shall be presided over by the
chairman of the supervisory board or, in his absence, by the vice
chairman of the supervisory board; in the event that the latter is
also absent, the supervisory board members present shall elect a
chairman from their midst. The supervisory board may designate another
person to act as chairman of a general meeting of shareholders.
2. If the chairman has not been appointed in accordance with paragraph 1,
the shareholders present at such meeting shall, themselves, choose a
chairman.
Article 39. Minutes. Records.
1. Minutes of the proceedings at any general meeting of shareholders shall
be kept by a secretary to be designated by the chairman. The minutes
shall be confirmed by the chairman and the secretary and shall be
signed by them as proof thereof.
2. The supervisory board, the chairman or the person who has convened the
meeting may determine that notarial minutes of the proceedings of the
meeting shall be drawn up. The notarial minutes shall be co-signed by
the chairman.
3. The management board shall keep a record of the resolutions made at
this general meeting. If the management board is not represented at a
general meeting, the chairman of the meeting shall provide the
management board with a transcript of the resolutions made as soon as
possible after the meeting. The records shall be deposited at the
offices of the company for inspection by the shareholders and the
holders of depositary receipts. Upon request, each of them shall be
provided with a copy or an extract of such record at not more than the
actual cost thereof. Shareholders in this respect shall include
beneficiaries of a life interest who hold voting rights.
Article 40. Meeting rights. Admittance.
1. Each shareholder entitled to vote and each beneficiary of a life
interest or pledgee to whom the voting rights accrue shall be entitled
to attend the general meeting of shareholders, to address the meeting
and to exercise his voting rights. Where it concerns registered shares,
the management board must be notified in writing of the intention to
attend the meeting. Such notice must be received by the management
board not later than
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on the date mentioned in the notice of the meeting. Where it concerns
bearer shares the share certificates must be lodged not later than on
the date mentioned in the notice of the meeting, at the place
mentioned therein.
2. The right to take part in the meeting in accordance with paragraph 1
may be exercised by a proxy authorised in writing, provided that the
power of attorney has been received by the management board not later
than on the date mentioned in the notice of the meeting.
3. The date mentioned in the notice of the meeting, referred to in
paragraphs 1 and 2, cannot be prior than the seventh day prior to the
date of the meeting.
4. If the voting rights on a share accrue to the beneficiary of a life
interest or to a pledgee, instead of to the shareholder, the
shareholder is also authorised to attend the general meeting of
shareholders and to address the meeting, provided that, where it
concerns registered shares, the management board has been notified of
the intention to attend the meeting in accordance with paragraph 1,
and, where it concerns bearer shares, the lodging as prescribed by
paragraph 1 has taken place. Paragraph 2 applies accordingly.
5. Each share confers the right to cast one vote.
6. Each person entitled to vote or his proxy shall sign the attendance
list.
7. The members of the supervisory board and of the management board shall,
as such, have the right to advise the general meeting of shareholders.
8. The chairman shall decide whether persons other than those who shall be
admitted in accordance with the above provisions of this article shall
be admitted to the meeting.
Article 41. Votes.
1. Insofar as no greater majority is prescribed by law or these articles
of association, all resolutions of the general meeting shall be adopted
by a majority of the votes cast.
2. If, in an election of persons, a majority is not obtained, a second
vote shall be taken. If, again, a majority is not obtained, further
votes shall be taken until either one person obtains the absolute
majority or the election is between two persons who have received an
equal number of votes. In the event of a further election (not
including the second free vote), the election shall be between the
persons who participated in the preceding election, with the exception
of the person who received the smallest number of votes in that
preceding election. If, in that preceding election, more than one
person received the smallest number of votes, it shall be decided by
lot who of these persons shall no longer participate in the new
election. If the votes are equal in the election between the two, it
shall be decided by lot who is to be chosen. If there is a tie vote in
a vote for the election of persons out of a binding list of nominees,
the first person on that list shall be elected.
3. If there is a tie vote on a matter other than a vote for the election
of persons, the proposal shall be rejected.
4. Votes need not be held in writing. The chairman is, however, entitled
to decide that a vote shall be by secret ballot. If the vote concerns
an election of persons, any person present at the meeting and entitled
to vote can also demand a vote by a secret ballot.
5. Abstentions and invalid votes shall not be counted as votes that have
been cast.
6. Voting by acclamation shall be allowed if none of the persons present
and entitled to vote objects to it.
7. The chairman's decision at the meeting about the outcome of a vote
shall be final and conclusive. The same shall apply to the contents of
an adopted resolution regarding the voting on an unwritten proposal.
If, however, the correctness of that decision is
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challenged immediately after its pronouncement, a new vote shall be
taken if either the majority of the persons present and entitled to
vote so requests, or, if the original voting was taken by roll call or
in writing, any person present and entitled to vote so requests. As a
result of the new vote, the original vote shall have no legal
consequence and shall be cancelled.
Chapter X.
Convocation and notification.
Article 42.
1. All announcements for the general meetings of shareholders, all
notifications concerning dividend and other payments and all other
communications to holders of registered shares shall be effected by
means of letters mailed to the addresses as shown in the register of
shareholders. In case there are bearer shares issued any outstanding
announcements, notifications and other communications to shareholders
shall also be effected by means of a notice in a national daily paper
and, in case of a listing on the AEX-Effectenbeurs N.V. in the Official
Price List, without prejudice to the provisions of article 96a
paragraph 4, Book 2 of the Civil Code.
2. The expression "shareholders" in paragraph 1 shall include the
beneficiaries of a life interest and pledgees to which the voting
rights on shares accrue.
Chapter XI
Amendment of the articles of association and dissolution. Liquidation.
Article 43. Amendment of the articles of association. Dissolution.
1. When a proposal to amend the articles of association or to dissolve
the company is to be submitted to the general meeting, such must be
mentioned in the notice of the general meeting of shareholders and, if
an amendment to the articles of association is to be discussed, a copy
of the proposal, setting forth the text of the proposed amendment
verbatim, shall at the same time be deposited at the company's office
and, if shares are listed on the AEX-Effectenbeurs N.V. at the office
of a member of the AEX-Effectenbeurs N.V. to be designated in the
notice of the meeting or another payment office as referred to in the
relevant Rules of the AEX-Effectenbeurs N.V. for inspection and shall
be held available for shareholders as well as for beneficiaries of a
life interest and pledgees to which the voting rights on share accrue,
free of charge until the end of the meeting.
2. A proposal to amend the articles of association to legally merge or to
dissolve the company shall require prior approval of the supervisory
board.
Article 44. Liquidation.
1. In the event of dissolution of the company by virtue of a resolution of
the general meeting, the members of the management board shall be
charged with the liquidation of the business of the company, and the
members of the supervisory board with the supervision thereof.
2. During liquidation, the provisions of these articles of association
shall remain in force to the extent possible.
3. The balance remaining after payment of creditors shall be transferred
to the shareholders.
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4. The liquidation shall take place in accordance with the provisions
of Section 1 of Volume 2 of the Civil Code.
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EXHIBIT 10.9
March 4, 1999
Mr. Robert H. Wolfe
732 Fairfield Court
Westmont, Illinois 60559
CHANGE OF CONTROL SEVERANCE AGREEMENT
Dear Mr. Wolfe:
Chicago Bridge & Iron Company, a Delaware corporation, (the "Company")
is a wholly-owned subsidiary of Chicago Bridge & Iron Company N.V., a
Netherlands corporation (the "Holding Corporation"). The Company recognizes that
members of senior management may become concerned about the effect of a Change
of Control (as defined below) on their job and financial security. The Company
considers the maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and the Holding
Corporation. Accordingly, the Board of Directors of the Company has determined
that the Company should enter into this agreement (your "Agreement") to provide
you with severance benefits in the event your employment with the Company
(including any subsidiary of the Company by which you are then employed)
terminates following a Change of Control under certain circumstances.
The purpose of entering into this Agreement is to induce you to remain
in the employ of the Company pending and after any Change of Control. Therefore,
in consideration of your continued employment with the Company under these
circumstances, the Company and you agree as follows:
1. Termination Benefits.
(a) Basic Benefits. In the event your employment with the
Company and any subsidiary of the Company terminates by reason of a Qualifying
Termination within two years after a Change of Control, you shall receive,
within thirty days after your employment terminates, a lump sum amount equal to
Seven Hundred Fifty Thousand Dollars ($750,000.00). In addition, if your
employment with the Company and any subsidiary by which you are employed is
terminated by the Company or any such subsidiary for any reason (other than your
willful misconduct or gross negligence in the performance of your duties as an
employee which results in a material detriment to either the Company or the
Holding Corporation) within six months prior to the occurrence of a Change of
Control, you shall be paid the lump sum referred to in the immediately preceding
sentence, minus the gross amount of any severance benefits otherwise paid to
you, within ten days following such Change of Control.
<PAGE> 2
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March 4, 1999
(b) Outplacement. In the event of a Qualifying Termination (or
a termination of your employment prior to a Change of Control with respect to
which you are entitled to receive a payment under Section 1(a) of this
Agreement), the Company agrees that, upon a written request from you, it will
engage on your behalf an outplacement or similar firm of your choice to provide
you with customary services and support in seeking other appropriate employment.
(c) Certain Further Payments.
(i) Additional Payments in Respect of Excise Taxes. In the
event that any amount or benefit paid or distributed to you pursuant to this
Agreement, taken together with any amounts or benefits otherwise paid or
distributed to you (the "Covered Payments"), are or become subject to the tax
(the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any similar tax that may hereafter be imposed,
the Company shall pay you, at the same time as it pays the severance benefit
described above, an additional amount (the "Tax Reimbursement Payment") such
that the net amount retained by you with respect to such Covered Payments, after
deduction of any Excise Tax on the Covered Payments and any Federal, state and
local income or employment tax and Excise Tax on the Tax Reimbursement Payment
provided for by this Section 1(b), but before deduction for any Federal, state
or local income or employment tax withholding on such Covered Payments, shall be
equal to the amount of the Covered Payments.
(ii) Calculation of the Excise Tax. For purposes of
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(A) all "parachute payments" in excess of the "base
amount" (as defined under Section 280G(b)(3)) of the Code)
shall be treated as subject to the Excise Tax, unless, and
except to the extent that, in the good faith judgment of the
Company's independent certified public accountants appointed
prior to the Change of Control or tax counsel selected by such
Accountants (the "Accountants"), the Company has a reasonable
basis to conclude that such Covered Payments (in whole or in
part) represent reasonable compensation for personal services
actually rendered (within the meaning of Section 280G(b)(4)(B)
of the Code) in excess of the "base amount," or such
"parachute payments" are otherwise not subject to such Excise
Tax, and
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March 4, 1999
(B) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the
Accountants in accordance with the principles of Section 280G
of the Code.
(iii) Calculation of the Tax Reimbursement Payment. For
purposes of determining the amount of the Tax Reimbursement Payment, you shall
be deemed to pay:
(A) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year
in which the Tax Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the
calendar year in which the Tax Reimbursement Payment is to be
made, net of the maximum reduction in Federal income taxes
which could be obtained from the deduction of such state or
local taxes if paid in such year.
(d) Adjustments to Tax Reimbursement Payment. In the event
that the Excise Tax is subsequently determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, you shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has been
paid to any Federal, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been made to you.
You and the Company shall mutually agree upon the course of action to be pursued
if your good faith claim for refund or credit is denied, provided that the
Company shall bear the cost of any expenses incurred which are related to
pursuing any recovery of any amount paid in respect of the Excise Tax.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the amount taken into account hereunder at the time
the Tax Reimbursement Payment is made (including, but not limited to, by reason
of any payment the existence or amount of which cannot be determined at the time
of the Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalty
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
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March 4, 1999
2. Definitions.
(a) Change of Control When the Company or the Holding
Corporation is Public. A "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), other than
Holding Corporation, the Company or any majority owned
subsidiary of the Holding Corporation or the Company, becomes
the "beneficial owner" (as such term is used in Section 13 of
the Exchange Act) of 25% or more of the total voting power of
the Company's or the Holding Corporation's outstanding
securities;
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation
with or into another company pursuant to which the
stockholders of the Company or the Holding Corporation, as the
case may be, do not own, immediately after the transaction,
more than 50% of the voting power and the value of the stock
of the company that survives, or (B) the sale, exchange or
other disposition of all or substantially all of the assets of
the Company or the Holding Corporation; or
(iii) if, during any period of two years or less,
individuals who at the beginning of such period constituted
the Board of Directors of the Company or the Holding
Corporation, as the case may be, cease for any reason to
constitute at least a majority thereof; provided that any new
director who is elected to, or nominated for election to, the
Board of Directors with the approval of at least 75% of the
directors then still in office who were directors at the
beginning of the period shall be treated as though having been
a director at the beginning of such period.
(b) "Qualifying Termination" means the termination of your
employment with the Company and any of its subsidiaries by which you are
employed (i) by the Company or any such subsidiary for any reason other than
your willful misconduct or gross negligence in the performance of your duties as
an employee which results in a material detriment to the Company or the Holding
Corporation or (ii) by you within 180 days following the occurrence of any of
the following events (without your prior written consent):
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March 4, 1999
(A) any significant reduction in your
positions, duties, titles, responsibilities and status with
the Company and its subsidiaries from those in effect
immediately prior to such Change of Control;
(B) a reduction in your base salary, a
reduction in your annual bonus opportunity or a material
reduction in the aggregate value of your participation in the
Company's employee benefits programs, as each was in effect
immediately prior to such Change of Control;
(C) your principal place of employment is
moved to a location more than 50 miles from your principal
place of employment immediately prior to such Change of
Control or you are required in the performance of your duties
to travel to an extent substantially more burdensome than your
travel obligations immediately prior to such Change of
Control; or
(D) the letter of credit or escrow referred
to in Section 3.1(b) fail for any reason to be in force in
accordance with Section 3.1(b).
Notwithstanding anything else contained herein to the contrary, a Qualifying
Termination shall not be deemed to have occurred by reason of (i) your death,
(ii) any termination of your employment due to your inability to perform the
duties of your position for a period of at least 180 days on account of any
physical or mental impairment, or (iii) your voluntary retirement at or after
your normal retirement date under any of the Company's employee pension plans in
which you participate.
3. Miscellaneous.
(a) Arbitration: Related Expenses. Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration held in accordance with the rules of the American Arbitration
Association pertaining to the resolution of employment disputes. Any such
arbitration shall be held in Chicago, Illinois or such other location which the
parties have mutually agreed to in writing. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall pay on a
current basis all legal expenses (including attorneys' fees) incurred by you in
connection with such arbitration, subject to your obligation to repay such
amounts, plus interest at the short-term annual Applicable Federal Rate (as
determined under Section 1274(b) of the Code as in effect on the date your
employment terminates), if you should not prevail as to at least one material
issue adjudicated in such proceeding.
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March 4, 1999
(b) Letter of Credit: Escrow. To secure its obligations under
Section 3.1(a), the Company shall procure and maintain in force until at least
one year after your termination of employment a letter of credit and an escrow
in favor of you (together with other senior management executives similarly
situated). The letter of credit shall be issued by a bank or trust company
organized under the laws of the United States or Canada or a state or province
thereof and having a combined capital and surplus of not less than one hundred
million dollars ($100,000,000), shall be in the aggregate amount of two million
dollars ($2,000,000), and shall be substantially in the form of that attached
(with its attached Annexes and Exhibits) to this Agreement as Exhibit A. The
Company shall notify you not less than 15 days before the scheduled expiry date
of the letter of credit whether or not the letter of credit has been renewed or
the Company has obtained a substitute letter of credit whose provisions (other
than the expiration terms thereof) are identical to those of the letter of
credit in all material respects and which expires not less than one (1) year
from the date of issuance. The escrow shall be maintained in the State of
Illinois under an escrow agreement with a bank or trust company organized under
the laws of the United States or Canada or a state or province thereof and
having a combined capital and surplus of not less than one hundred million
dollars ($100,000,000), and shall be substantially in the form of that attached
(with its attached Exhibits) to this Agreement as Exhibit B.
(c) No Offset: No Mitigation. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against you or others whether by reason of your
subsequent employment or otherwise. You shall not be obligated to mitigate any
damages you incur by reason of any Qualifying Termination and the amounts
payable hereunder shall not be reduced by any amounts received by you as a
result of your employment or self-employment following your termination
hereunder.
(d) Entire Obligation of Company. In the event your employment
with the Company and any subsidiary of the Company by which you are employed
terminates following a Change of Control, the amounts payable to you hereunder
and any vested amounts or benefits owing to you under the Company's otherwise
applicable employee benefit plans and programs and any accrued vacation pay not
yet paid, shall constitute the entire obligation of the Company and its
affiliates to you. Payment or other satisfaction thereof shall be contingent
upon your execution of a release in favor of the Company substantially in the
form of that attached hereto as Exhibit C, stating that the payments and other
benefits referred to in the immediately preceding sentence constitute full
settlement of any claim under law or in equity that you might otherwise assert
against the Company or any of its subsidiaries on account of such termination.
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March 4, 1999
(e) Employment at Will. This Agreement shall neither obligate
the Company or any subsidiary of the Company to continue you in its employ (or
to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Company or any
subsidiary of the Company.
(f) Successors. This Agreement shall be binding upon and inure
to the benefit of you, your estate and the Company and any successor of the
Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
(g) Governing Law. This Agreement shall be governed by the
laws of the State of Illinois, applied without reference to principles of
conflict of laws.
(h) Severability. If any provision of this contract as applied
to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
(i) Waiver. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company or a duly authorized Committee thereof. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of any other condition or provision at any
time.
(j) Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. This Agreement specifically supersedes the Change of
Control Severance Agreement between you and the Company dated January 31, 1997.
The express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof. This Agreement may
not be modified or amended other than by an agreement in writing.
<PAGE> 8
Page 8
March 4, 1999
If you are in agreement with the foregoing, please so indicate by
signing and returning to the Company the enclosed copy of this letter, whereupon
this letter shall constitute a binding agreement between you and the Company.
Very truly yours,
CHICAGO BRIDGE & IRON COMPANY
By:
---------------------------------
Agreed:
- ---------------------------------
Employee
<PAGE> 9
March 4, 1999
Mr. Timothy J. Wiggins
2205 Hanford Lane
Aurora, Illinois 60504
CHANGE OF CONTROL SEVERANCE AGREEMENT
Dear Mr. Wiggins:
Chicago Bridge & Iron Company, a Delaware corporation, (the "Company")
is a wholly-owned subsidiary of Chicago Bridge & Iron Company N.V., a
Netherlands corporation (the "Holding Corporation"). The Company recognizes that
members of senior management may become concerned about the effect of a Change
of Control (as defined below) on their job and financial security. The Company
considers the maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and the Holding
Corporation. Accordingly, the Board of Directors of the Company has determined
that the Company should enter into this agreement (your "Agreement") to provide
you with severance benefits in the event your employment with the Company
(including any subsidiary of the Company by which you are then employed)
terminates following a Change of Control under certain circumstances.
The purpose of entering into this Agreement is to induce you to remain
in the employ of the Company pending and after any Change of Control. Therefore,
in consideration of your continued employment with the Company under these
circumstances, the Company and you agree as follows:
1. Termination Benefits.
(a) Basic Benefits. In the event your employment with the
Company and any subsidiary of the Company terminates by reason of a Qualifying
Termination within two years after a Change of Control, you shall receive,
within thirty days after your employment terminates, a lump sum amount equal to
One Million Dollars ($1,000,000.00). In addition, if your employment with the
Company and any subsidiary by which you are employed is terminated by the
Company or any such subsidiary for any reason (other than your willful
misconduct or gross negligence in the performance of your duties as an employee
which results in a material detriment to either the Company or the Holding
Corporation) within six months prior to the occurrence of a Change of Control,
you shall be paid the lump sum referred to in the immediately preceding
sentence, minus the gross amount of any severance benefits otherwise paid to
you, within ten days following such Change of Control.
<PAGE> 10
Page 2
March 4, 1999
(b) Outplacement. In the event of a Qualifying Termination (or
a termination of your employment prior to a Change of Control with respect to
which you are entitled to receive a payment under Section 1(a) of this
Agreement), the Company agrees that, upon a written request from you, it will
engage on your behalf an outplacement or similar firm of your choice to provide
you with customary services and support in seeking other appropriate employment.
(c) Certain Further Payments.
(i) Additional Payments in Respect of Excise Taxes.
In the event that any amount or benefit paid or distributed to you pursuant to
this Agreement, taken together with any amounts or benefits otherwise paid or
distributed to you (the "Covered Payments"), are or become subject to the tax
(the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any similar tax that may hereafter be imposed,
the Company shall pay you, at the same time as it pays the severance benefit
described above, an additional amount (the "Tax Reimbursement Payment") such
that the net amount retained by you with respect to such Covered Payments, after
deduction of any Excise Tax on the Covered Payments and any Federal, state and
local income or employment tax and Excise Tax on the Tax Reimbursement Payment
provided for by this Section 1(b), but before deduction for any Federal, state
or local income or employment tax withholding on such Covered Payments, shall be
equal to the amount of the Covered Payments.
(ii) Calculation of the Excise Tax. For purposes of
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(A) all "parachute payments" in excess of
the "base amount" (as defined under Section 280G(b)(3)) of the
Code) shall be treated as subject to the Excise Tax, unless,
and except to the extent that, in the good faith judgment of
the Company's independent certified public accountants
appointed prior to the Change of Control or tax counsel
selected by such Accountants (the "Accountants"), the Company
has a reasonable basis to conclude that such Covered Payments
(in whole or in part) represent reasonable compensation for
personal services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the "base
amount," or such "parachute payments" are otherwise not
subject to such Excise Tax, and
<PAGE> 11
Page 3
March 4, 1999
(B) the value of any non-cash benefits or
any deferred payment or benefit shall be determined by the
Accountants in accordance with the principles of Section 280G
of the Code.
(iii) Calculation of the Tax Reimbursement Payment.
For purposes of determining the amount of the Tax Reimbursement Payment, you
shall be deemed to pay:
(A) Federal income taxes at the highest
applicable marginal rate of Federal income taxation for the
calendar year in which the Tax Reimbursement Payment is to be
made, and
(B) any applicable state and local income
taxes at the highest applicable marginal rate of taxation for
the calendar year in which the Tax Reimbursement Payment is to
be made, net of the maximum reduction in Federal income taxes
which could be obtained from the deduction of such state or
local taxes if paid in such year.
(d) Adjustments to Tax Reimbursement Payment. In the event
that the Excise Tax is subsequently determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, you shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has been
paid to any Federal, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been made to you.
You and the Company shall mutually agree upon the course of action to be pursued
if your good faith claim for refund or credit is denied, provided that the
Company shall bear the cost of any expenses incurred which are related to
pursuing any recovery of any amount paid in respect of the Excise Tax.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the amount taken into account hereunder at the time
the Tax Reimbursement Payment is made (including, but not limited to, by reason
of any payment the existence or amount of which cannot be determined at the time
of the Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalty
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
<PAGE> 12
Page 4
March 4, 1999
2. Definitions.
(a) Change of Control When the Company or the Holding
Corporation is Public. A "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), other than
Holding Corporation, the Company or any majority owned
subsidiary of the Holding Corporation or the Company, becomes
the "beneficial owner" (as such term is used in Section 13 of
the Exchange Act) of 25% or more of the total voting power of
the Company's or the Holding Corporation's outstanding
securities;
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation
with or into another company pursuant to which the
stockholders of the Company or the Holding Corporation, as the
case may be, do not own, immediately after the transaction,
more than 50% of the voting power and the value of the stock
of the company that survives, or (B) the sale, exchange or
other disposition of all or substantially all of the assets of
the Company or the Holding Corporation; or
(iii) if, during any period of two years or less,
individuals who at the beginning of such period constituted
the Board of Directors of the Company or the Holding
Corporation, as the case may be, cease for any reason to
constitute at least a majority thereof; provided that any new
director who is elected to, or nominated for election to, the
Board of Directors with the approval of at least 75% of the
directors then still in office who were directors at the
beginning of the period shall be treated as though having been
a director at the beginning of such period.
(b) "Qualifying Termination" means the termination of your
employment with the Company and any of its subsidiaries by which you are
employed (i) by the Company or any such subsidiary for any reason other than
your willful misconduct or gross negligence in the performance of your duties as
an employee which results in a material detriment to the Company or the Holding
Corporation or (ii) by you within 180 days following the occurrence of any of
the following events (without your prior written consent):
<PAGE> 13
Page 5
March 4, 1999
(A) any significant reduction in your
positions, duties, titles, responsibilities and status with
the Company and its subsidiaries from those in effect
immediately prior to such Change of Control;
(B) a reduction in your base salary, a
reduction in your annual bonus opportunity or a material
reduction in the aggregate value of your participation in the
Company's employee benefits programs, as each was in effect
immediately prior to such Change of Control;
(C) your principal place of employment is
moved to a location more than 50 miles from your principal
place of employment immediately prior to such Change of
Control or you are required in the performance of your duties
to travel to an extent substantially more burdensome than your
travel obligations immediately prior to such Change of
Control; or
(D) the letter of credit or escrow referred
to in Section 3.1(b) fail for any reason to be in force in
accordance with Section 3.1(b).
Notwithstanding anything else contained herein to the contrary, a Qualifying
Termination shall not be deemed to have occurred by reason of (i) your death,
(ii) any termination of your employment due to your inability to perform the
duties of your position for a period of at least 180 days on account of any
physical or mental impairment, or (iii) your voluntary retirement at or after
your normal retirement date under any of the Company's employee pension plans in
which you participate.
3. Miscellaneous.
(a) Arbitration: Related Expenses. Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration held in accordance with the rules of the American Arbitration
Association pertaining to the resolution of employment disputes. Any such
arbitration shall be held in Chicago, Illinois or such other location which the
parties have mutually agreed to in writing. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall pay on a
current basis all legal expenses (including attorneys' fees) incurred by you in
connection with such arbitration, subject to your obligation to repay such
amounts, plus interest at the short-term annual Applicable Federal Rate (as
determined under Section 1274(b) of the Code as in effect on the date your
employment terminates), if you should not prevail as to at least one material
issue adjudicated in such proceeding.
<PAGE> 14
Page 6
March 4, 1999
(b) Letter of Credit: Escrow. To secure its obligations under
Section 3.1(a), the Company shall procure and maintain in force until at least
one year after your termination of employment a letter of credit and an escrow
in favor of you (together with other senior management executives similarly
situated). The letter of credit shall be issued by a bank or trust company
organized under the laws of the United States or Canada or a state or province
thereof and having a combined capital and surplus of not less than one hundred
million dollars ($100,000,000), shall be in the aggregate amount of two million
dollars ($2,000,000), and shall be substantially in the form of that attached
(with its attached Annexes and Exhibits) to this Agreement as Exhibit A. The
Company shall notify you not less than 15 days before the scheduled expiry date
of the letter of credit whether or not the letter of credit has been renewed or
the Company has obtained a substitute letter of credit whose provisions (other
than the expiration terms thereof) are identical to those of the letter of
credit in all material respects and which expires not less than one (1) year
from the date of issuance. The escrow shall be maintained in the State of
Illinois under an escrow agreement with a bank or trust company organized under
the laws of the United States or Canada or a state or province thereof and
having a combined capital and surplus of not less than one hundred million
dollars ($100,000,000), and shall be substantially in the form of that attached
(with its attached Exhibits) to this Agreement as Exhibit B.
(c) No Offset: No Mitigation. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against you or others whether by reason of your
subsequent employment or otherwise. You shall not be obligated to mitigate any
damages you incur by reason of any Qualifying Termination and the amounts
payable hereunder shall not be reduced by any amounts received by you as a
result of your employment or self-employment following your termination
hereunder.
(d) Entire Obligation of Company. In the event your employment
with the Company and any subsidiary of the Company by which you are employed
terminates following a Change of Control, the amounts payable to you hereunder
and any vested amounts or benefits owing to you under the Company's otherwise
applicable employee benefit plans and programs and any accrued vacation pay not
yet paid, shall constitute the entire obligation of the Company and its
affiliates to you. Payment or other satisfaction thereof shall be contingent
upon your execution of a release in favor of the Company substantially in the
form of that attached hereto as Exhibit C, stating that the payments and other
benefits referred to in the immediately preceding sentence constitute full
settlement of any claim under law or in equity that you might otherwise assert
against the Company or any of its subsidiaries on account of such termination.
<PAGE> 15
Page 7
March 4, 1999
(e) Employment at Will. This Agreement shall neither obligate
the Company or any subsidiary of the Company to continue you in its employ (or
to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Company or any
subsidiary of the Company.
(f) Successors. This Agreement shall be binding upon and inure
to the benefit of you, your estate and the Company and any successor of the
Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
(g) Governing Law. This Agreement shall be governed by the
laws of the State of Illinois, applied without reference to principles of
conflict of laws.
(h) Severability. If any provision of this contract as applied
to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
(i) Waiver. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company or a duly authorized Committee thereof. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of any other condition or provision at any
time.
(j) Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. This Agreement specifically supersedes the Change of
Control Severance Agreement between you and the Company dated January 31, 1997.
The express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof. This Agreement may
not be modified or amended other than by an agreement in writing.
<PAGE> 16
Page 8
March 4, 1999
If you are in agreement with the foregoing, please so indicate by
signing and returning to the Company the enclosed copy of this letter, whereupon
this letter shall constitute a binding agreement between you and the Company.
Very truly yours,
CHICAGO BRIDGE & IRON COMPANY
By:
-------------------------------
Agreed:
- --------------------------------
Employee
<PAGE> 17
March 4, 1999
Mr. Robert B. Jordan
2319 Fleetwood Court
Naperville, Illinois 60565
CHANGE OF CONTROL SEVERANCE AGREEMENT
Dear Mr. Jordan:
Chicago Bridge & Iron Company, a Delaware corporation, (the "Company")
is a wholly-owned subsidiary of Chicago Bridge & Iron Company N.V., a
Netherlands corporation (the "Holding Corporation"). The Company recognizes that
members of senior management may become concerned about the effect of a Change
of Control (as defined below) on their job and financial security. The Company
considers the maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and the Holding
Corporation. Accordingly, the Board of Directors of the Company has determined
that the Company should enter into this agreement (your "Agreement") to provide
you with severance benefits in the event your employment with the Company
(including any subsidiary of the Company by which you are then employed)
terminates following a Change of Control under certain circumstances.
The purpose of entering into this Agreement is to induce you to remain
in the employ of the Company pending and after any Change of Control. Therefore,
in consideration of your continued employment with the Company under these
circumstances, the Company and you agree as follows:
1. Termination Benefits.
(a) Basic Benefits. In the event your employment with the
Company and any subsidiary of the Company terminates by reason of a Qualifying
Termination within two years after a Change of Control, you shall receive,
within thirty days after your employment terminates, a lump sum amount equal to
One Million Dollars ($1,000,000.00). In addition, if your employment with the
Company and any subsidiary by which you are employed is terminated by the
Company or any such subsidiary for any reason (other than your willful
misconduct or gross negligence in the performance of your duties as an employee
which results in a material detriment to either the Company or the Holding
Corporation) within six months prior to the occurrence of a Change of Control,
you shall be paid the lump sum referred to in the immediately preceding
sentence, minus the gross amount of any severance benefits otherwise paid to
you, within ten days following such Change of Control.
<PAGE> 18
Page 2
March 4, 1999
(b) Outplacement. In the event of a Qualifying Termination (or
a termination of your employment prior to a Change of Control with respect to
which you are entitled to receive a payment under Section 1(a) of this
Agreement), the Company agrees that, upon a written request from you, it will
engage on your behalf an outplacement or similar firm of your choice to provide
you with customary services and support in seeking other appropriate employment.
(c) Certain Further Payments.
(i) Additional Payments in Respect of Excise Taxes.
In the event that any amount or benefit paid or distributed to you pursuant to
this Agreement, taken together with any amounts or benefits otherwise paid or
distributed to you (the "Covered Payments"), are or become subject to the tax
(the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any similar tax that may hereafter be imposed,
the Company shall pay you, at the same time as it pays the severance benefit
described above, an additional amount (the "Tax Reimbursement Payment") such
that the net amount retained by you with respect to such Covered Payments, after
deduction of any Excise Tax on the Covered Payments and any Federal, state and
local income or employment tax and Excise Tax on the Tax Reimbursement Payment
provided for by this Section 1(b), but before deduction for any Federal, state
or local income or employment tax withholding on such Covered Payments, shall be
equal to the amount of the Covered Payments.
(ii) Calculation of the Excise Tax. For purposes of
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(A) all "parachute payments" in excess of
the "base amount" (as defined under Section 280G(b)(3)) of the
Code) shall be treated as subject to the Excise Tax, unless,
and except to the extent that, in the good faith judgment of
the Company's independent certified public accountants
appointed prior to the Change of Control or tax counsel
selected by such Accountants (the "Accountants"), the Company
has a reasonable basis to conclude that such Covered Payments
(in whole or in part) represent reasonable compensation for
personal services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the "base
amount," or such "parachute payments" are otherwise not
subject to such Excise Tax, and
<PAGE> 19
Page 3
March 4, 1999
(B) the value of any non-cash benefits or
any deferred payment or benefit shall be determined by the
Accountants in accordance with the principles of Section 280G
of the Code.
(iii) Calculation of the Tax Reimbursement Payment.
For purposes of determining the amount of the Tax Reimbursement Payment, you
shall be deemed to pay:
(A) Federal income taxes at the highest
applicable marginal rate of Federal income taxation for the
calendar year in which the Tax Reimbursement Payment is to be
made, and
(B) any applicable state and local income
taxes at the highest applicable marginal rate of taxation for
the calendar year in which the Tax Reimbursement Payment is to
be made, net of the maximum reduction in Federal income taxes
which could be obtained from the deduction of such state or
local taxes if paid in such year.
(d) Adjustments to Tax Reimbursement Payment. In the event
that the Excise Tax is subsequently determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, you shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has been
paid to any Federal, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been made to you.
You and the Company shall mutually agree upon the course of action to be pursued
if your good faith claim for refund or credit is denied, provided that the
Company shall bear the cost of any expenses incurred which are related to
pursuing any recovery of any amount paid in respect of the Excise Tax.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the amount taken into account hereunder at the time
the Tax Reimbursement Payment is made (including, but not limited to, by reason
of any payment the existence or amount of which cannot be determined at the time
of the Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalty
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
<PAGE> 20
Page 4
March 4, 1999
2. Definitions.
(a) Change of Control When the Company or the Holding
Corporation is Public. A "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), other than
Holding Corporation, the Company or any majority owned
subsidiary of the Holding Corporation or the Company, becomes
the "beneficial owner" (as such term is used in Section 13 of
the Exchange Act) of 25% or more of the total voting power of
the Company's or the Holding Corporation's outstanding
securities;
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation
with or into another company pursuant to which the
stockholders of the Company or the Holding Corporation, as the
case may be, do not own, immediately after the transaction,
more than 50% of the voting power and the value of the stock
of the company that survives, or (B) the sale, exchange or
other disposition of all or substantially all of the assets of
the Company or the Holding Corporation; or
(iii) if, during any period of two years or less,
individuals who at the beginning of such period constituted
the Board of Directors of the Company or the Holding
Corporation, as the case may be, cease for any reason to
constitute at least a majority thereof; provided that any new
director who is elected to, or nominated for election to, the
Board of Directors with the approval of at least 75% of the
directors then still in office who were directors at the
beginning of the period shall be treated as though having been
a director at the beginning of such period.
(b) "Qualifying Termination" means the termination of your
employment with the Company and any of its subsidiaries by which you are
employed (i) by the Company or any such subsidiary for any reason other than
your willful misconduct or gross negligence in the performance of your duties as
an employee which results in a material detriment to the Company or the Holding
Corporation or (ii) by you within 180 days following the occurrence of any of
the following events (without your prior written consent):
<PAGE> 21
Page 5
March 4, 1999
(A) any significant reduction in your
positions, duties, titles, responsibilities and status with
the Company and its subsidiaries from those in effect
immediately prior to such Change of Control;
(B) a reduction in your base salary, a
reduction in your annual bonus opportunity or a material
reduction in the aggregate value of your participation in the
Company's employee benefits programs, as each was in effect
immediately prior to such Change of Control;
(C) your principal place of employment is
moved to a location more than 50 miles from your principal
place of employment immediately prior to such Change of
Control or you are required in the performance of your duties
to travel to an extent substantially more burdensome than your
travel obligations immediately prior to such Change of
Control; or
(D) the letter of credit or escrow referred
to in Section 3.1(b) fail for any reason to be in force in
accordance with Section 3.1(b).
Notwithstanding anything else contained herein to the contrary, a Qualifying
Termination shall not be deemed to have occurred by reason of (i) your death,
(ii) any termination of your employment due to your inability to perform the
duties of your position for a period of at least 180 days on account of any
physical or mental impairment, or (iii) your voluntary retirement at or after
your normal retirement date under any of the Company's employee pension plans in
which you participate.
3. Miscellaneous.
(a) Arbitration: Related Expenses. Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration held in accordance with the rules of the American Arbitration
Association pertaining to the resolution of employment disputes. Any such
arbitration shall be held in Chicago, Illinois or such other location which the
parties have mutually agreed to in writing. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall pay on a
current basis all legal expenses (including attorneys' fees) incurred by you in
connection with such arbitration, subject to your obligation to repay such
amounts, plus interest at the short-term annual Applicable Federal Rate (as
determined under Section 1274(b) of the Code as in effect on the date your
employment terminates), if you should not prevail as to at least one material
issue adjudicated in such proceeding.
<PAGE> 22
Page 6
March 4, 1999
(b) Letter of Credit: Escrow. To secure its obligations under
Section 3.1(a), the Company shall procure and maintain in force until at least
one year after your termination of employment a letter of credit and an escrow
in favor of you (together with other senior management executives similarly
situated). The letter of credit shall be issued by a bank or trust company
organized under the laws of the United States or Canada or a state or province
thereof and having a combined capital and surplus of not less than one hundred
million dollars ($100,000,000), shall be in the aggregate amount of two million
dollars ($2,000,000), and shall be substantially in the form of that attached
(with its attached Annexes and Exhibits) to this Agreement as Exhibit A. The
Company shall notify you not less than 15 days before the scheduled expiry date
of the letter of credit whether or not the letter of credit has been renewed or
the Company has obtained a substitute letter of credit whose provisions (other
than the expiration terms thereof) are identical to those of the letter of
credit in all material respects and which expires not less than one (1) year
from the date of issuance. The escrow shall be maintained in the State of
Illinois under an escrow agreement with a bank or trust company organized under
the laws of the United States or Canada or a state or province thereof and
having a combined capital and surplus of not less than one hundred million
dollars ($100,000,000), and shall be substantially in the form of that attached
(with its attached Exhibits) to this Agreement as Exhibit B.
(c) No Offset: No Mitigation. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against you or others whether by reason of your
subsequent employment or otherwise. You shall not be obligated to mitigate any
damages you incur by reason of any Qualifying Termination and the amounts
payable hereunder shall not be reduced by any amounts received by you as a
result of your employment or self-employment following your termination
hereunder.
(d) Entire Obligation of Company. In the event your employment
with the Company and any subsidiary of the Company by which you are employed
terminates following a Change of Control, the amounts payable to you hereunder
and any vested amounts or benefits owing to you under the Company's otherwise
applicable employee benefit plans and programs and any accrued vacation pay not
yet paid, shall constitute the entire obligation of the Company and its
affiliates to you. Payment or other satisfaction thereof shall be contingent
upon your execution of a release in favor of the Company substantially in the
form of that attached hereto as Exhibit C, stating that the payments and other
benefits referred to in the immediately preceding sentence constitute full
settlement of any claim under law or in equity that you might otherwise assert
against the Company or any of its subsidiaries on account of such termination.
<PAGE> 23
Page 7
March 4, 1999
(e) Employment at Will. This Agreement shall neither obligate
the Company or any subsidiary of the Company to continue you in its employ (or
to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Company or any
subsidiary of the Company.
(f) Successors. This Agreement shall be binding upon and inure
to the benefit of you, your estate and the Company and any successor of the
Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
(g) Governing Law. This Agreement shall be governed by the
laws of the State of Illinois, applied without reference to principles of
conflict of laws.
(h) Severability. If any provision of this contract as applied
to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
(i) Waiver. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company or a duly authorized Committee thereof. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of any other condition or provision at any
time.
(j) Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
<PAGE> 24
Page 8
March 4, 1999
If you are in agreement with the foregoing, please so indicate by
signing and returning to the Company the enclosed copy of this letter, whereupon
this letter shall constitute a binding agreement between you and the Company.
Very truly yours,
CHICAGO BRIDGE & IRON COMPANY
By:
-------------------------------
Agreed:
- ----------------------------
Employee
<PAGE> 25
March 4, 1999
Mr. Stephen M. Duffy
15117 Ginger Creek Lane
Orland Park, Illinois 60467
CHANGE OF CONTROL SEVERANCE AGREEMENT
Dear Mr. Duffy:
Chicago Bridge & Iron Company, a Delaware corporation, (the "Company")
is a wholly-owned subsidiary of Chicago Bridge & Iron Company N.V., a
Netherlands corporation (the "Holding Corporation"). The Company recognizes that
members of senior management may become concerned about the effect of a Change
of Control (as defined below) on their job and financial security. The Company
considers the maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and the Holding
Corporation. Accordingly, the Board of Directors of the Company has determined
that the Company should enter into this agreement (your "Agreement") to provide
you with severance benefits in the event your employment with the Company
(including any subsidiary of the Company by which you are then employed)
terminates following a Change of Control under certain circumstances.
The purpose of entering into this Agreement is to induce you to remain
in the employ of the Company pending and after any Change of Control. Therefore,
in consideration of your continued employment with the Company under these
circumstances, the Company and you agree as follows:
1. Termination Benefits.
(a) Basic Benefits. In the event your employment with the
Company and any subsidiary of the Company terminates by reason of a Qualifying
Termination within two years after a Change of Control, you shall receive,
within thirty days after your employment terminates, a lump sum amount equal to
Two Hundred Forty Thousand Dollars ($240,000.00). In addition, if your
employment with the Company and any subsidiary by which you are employed is
terminated by the Company or any such subsidiary for any reason (other than your
willful misconduct or gross negligence in the performance of your duties as an
employee which results in a material detriment to either the Company or the
Holding Corporation) within six months prior to the occurrence of a Change of
Control, you shall be paid the lump sum referred to in the immediately preceding
sentence, minus the gross amount of any severance benefits otherwise paid to
you, within ten days following such Change of Control.
<PAGE> 26
Page 2
March 4, 1999
(b) Outplacement. In the event of a Qualifying Termination (or
a termination of your employment prior to a Change of Control with respect to
which you are entitled to receive a payment under Section 1(a) of this
Agreement), the Company agrees that, upon a written request from you, it will
engage on your behalf an outplacement or similar firm of your choice to provide
you with customary services and support in seeking other appropriate employment.
(c) Certain Further Payments.
(i) Additional Payments in Respect of Excise Taxes.
In the event that any amount or benefit paid or distributed to you pursuant to
this Agreement, taken together with any amounts or benefits otherwise paid or
distributed to you (the "Covered Payments"), are or become subject to the tax
(the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any similar tax that may hereafter be imposed,
the Company shall pay you, at the same time as it pays the severance benefit
described above, an additional amount (the "Tax Reimbursement Payment") such
that the net amount retained by you with respect to such Covered Payments, after
deduction of any Excise Tax on the Covered Payments and any Federal, state and
local income or employment tax and Excise Tax on the Tax Reimbursement Payment
provided for by this Section 1(b), but before deduction for any Federal, state
or local income or employment tax withholding on such Covered Payments, shall be
equal to the amount of the Covered Payments.
(ii) Calculation of the Excise Tax. For purposes of
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(A) all "parachute payments" in excess of
the "base amount" (as defined under Section 280G(b)(3)) of the
Code) shall be treated as subject to the Excise Tax, unless,
and except to the extent that, in the good faith judgment of
the Company's independent certified public accountants
appointed prior to the Change of Control or tax counsel
selected by such Accountants (the "Accountants"), the Company
has a reasonable basis to conclude that such Covered Payments
(in whole or in part) represent reasonable compensation for
personal services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the "base
amount," or such "parachute payments" are otherwise not
subject to such Excise Tax, and
<PAGE> 27
Page 3
March 4, 1999
(B) the value of any non-cash benefits or
any deferred payment or benefit shall be determined by the
Accountants in accordance with the principles of Section 280G
of the Code.
(iii) Calculation of the Tax Reimbursement Payment.
For purposes of determining the amount of the Tax Reimbursement Payment, you
shall be deemed to pay:
(A) Federal income taxes at the highest
applicable marginal rate of Federal income taxation for the
calendar year in which the Tax Reimbursement Payment is to be
made, and
(B) any applicable state and local income
taxes at the highest applicable marginal rate of taxation for
the calendar year in which the Tax Reimbursement Payment is to
be made, net of the maximum reduction in Federal income taxes
which could be obtained from the deduction of such state or
local taxes if paid in such year.
(d) Adjustments to Tax Reimbursement Payment. In the event
that the Excise Tax is subsequently determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, you shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has been
paid to any Federal, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been made to you.
You and the Company shall mutually agree upon the course of action to be pursued
if your good faith claim for refund or credit is denied, provided that the
Company shall bear the cost of any expenses incurred which are related to
pursuing any recovery of any amount paid in respect of the Excise Tax.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the amount taken into account hereunder at the time
the Tax Reimbursement Payment is made (including, but not limited to, by reason
of any payment the existence or amount of which cannot be determined at the time
of the Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalty
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
<PAGE> 28
Page 4
March 4, 1999
2. Definitions.
(a) Change of Control When the Company or the Holding
Corporation is Public. A "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), other than
Holding Corporation, the Company or any majority owned
subsidiary of the Holding Corporation or the Company, becomes
the "beneficial owner" (as such term is used in Section 13 of
the Exchange Act) of 25% or more of the total voting power of
the Company's or the Holding Corporation's outstanding
securities;
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation
with or into another company pursuant to which the
stockholders of the Company or the Holding Corporation, as the
case may be, do not own, immediately after the transaction,
more than 50% of the voting power and the value of the stock
of the company that survives, or (B) the sale, exchange or
other disposition of all or substantially all of the assets of
the Company or the Holding Corporation; or
(iii) if, during any period of two years or less,
individuals who at the beginning of such period constituted
the Board of Directors of the Company or the Holding
Corporation, as the case may be, cease for any reason to
constitute at least a majority thereof; provided that any new
director who is elected to, or nominated for election to, the
Board of Directors with the approval of at least 75% of the
directors then still in office who were directors at the
beginning of the period shall be treated as though having been
a director at the beginning of such period.
(b) "Qualifying Termination" means the termination of your
employment with the Company and any of its subsidiaries by which you are
employed (i) by the Company or any such subsidiary for any reason other than
your willful misconduct or gross negligence in the performance of your duties as
an employee which results in a material detriment to the Company or the Holding
Corporation or (ii) by you within 180 days following the occurrence of any of
the following events (without your prior written consent):
<PAGE> 29
Page 5
March 4, 1999
(A) any significant reduction in your
positions, duties, titles, responsibilities and status with
the Company and its subsidiaries from those in effect
immediately prior to such Change of Control;
(B) a reduction in your base salary, a
reduction in your annual bonus opportunity or a material
reduction in the aggregate value of your participation in the
Company's employee benefits programs, as each was in effect
immediately prior to such Change of Control;
(C) your principal place of employment is
moved to a location more than 50 miles from your principal
place of employment immediately prior to such Change of
Control or you are required in the performance of your duties
to travel to an extent substantially more burdensome than your
travel obligations immediately prior to such Change of
Control; or
(D) the letter of credit or escrow referred
to in Section 3.1(b) fail for any reason to be in force in
accordance with Section 3.1(b).
Notwithstanding anything else contained herein to the contrary, a Qualifying
Termination shall not be deemed to have occurred by reason of (i) your death,
(ii) any termination of your employment due to your inability to perform the
duties of your position for a period of at least 180 days on account of any
physical or mental impairment, or (iii) your voluntary retirement at or after
your normal retirement date under any of the Company's employee pension plans in
which you participate.
3. Miscellaneous.
(a) Arbitration: Related Expenses. Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration held in accordance with the rules of the American Arbitration
Association pertaining to the resolution of employment disputes. Any such
arbitration shall be held in Chicago, Illinois or such other location which the
parties have mutually agreed to in writing. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall pay on a
current basis all legal expenses (including attorneys' fees) incurred by you in
connection with such arbitration, subject to your obligation to repay such
amounts, plus interest at the short-term annual Applicable Federal Rate (as
determined under Section 1274(b) of the Code as in effect on the date your
employment terminates), if you should not prevail as to at least one material
issue adjudicated in such proceeding.
<PAGE> 30
Page 6
March 4, 1999
(b) Letter of Credit: Escrow. To secure its obligations under
Section 3.1(a), the Company shall procure and maintain in force until at least
one year after your termination of employment a letter of credit and an escrow
in favor of you (together with other senior management executives similarly
situated). The letter of credit shall be issued by a bank or trust company
organized under the laws of the United States or Canada or a state or province
thereof and having a combined capital and surplus of not less than one hundred
million dollars ($100,000,000), shall be in the aggregate amount of two million
dollars ($2,000,000), and shall be substantially in the form of that attached
(with its attached Annexes and Exhibits) to this Agreement as Exhibit A. The
Company shall notify you not less than 15 days before the scheduled expiry date
of the letter of credit whether or not the letter of credit has been renewed or
the Company has obtained a substitute letter of credit whose provisions (other
than the expiration terms thereof) are identical to those of the letter of
credit in all material respects and which expires not less than one (1) year
from the date of issuance. The escrow shall be maintained in the State of
Illinois under an escrow agreement with a bank or trust company organized under
the laws of the United States or Canada or a state or province thereof and
having a combined capital and surplus of not less than one hundred million
dollars ($100,000,000), and shall be substantially in the form of that attached
(with its attached Exhibits) to this Agreement as Exhibit B.
(c) No Offset: No Mitigation. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against you or others whether by reason of your
subsequent employment or otherwise. You shall not be obligated to mitigate any
damages you incur by reason of any Qualifying Termination and the amounts
payable hereunder shall not be reduced by any amounts received by you as a
result of your employment or self-employment following your termination
hereunder.
(d) Entire Obligation of Company. In the event your employment
with the Company and any subsidiary of the Company by which you are employed
terminates following a Change of Control, the amounts payable to you hereunder
and any vested amounts or benefits owing to you under the Company's otherwise
applicable employee benefit plans and programs and any accrued vacation pay not
yet paid, shall constitute the entire obligation of the Company and its
affiliates to you. Payment or other satisfaction thereof shall be contingent
upon your execution of a release in favor of the Company substantially in the
form of that attached hereto as Exhibit C, stating that the payments and other
benefits referred to in the immediately preceding sentence constitute full
settlement of any claim under law or in equity that you might otherwise assert
against the Company or any of its subsidiaries on account of such termination.
<PAGE> 31
Page 7
March 4, 1999
(e) Employment at Will. This Agreement shall neither obligate
the Company or any subsidiary of the Company to continue you in its employ (or
to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Company or any
subsidiary of the Company.
(f) Successors. This Agreement shall be binding upon and inure
to the benefit of you, your estate and the Company and any successor of the
Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
(g) Governing Law. This Agreement shall be governed by the
laws of the State of Illinois, applied without reference to principles of
conflict of laws.
(h) Severability. If any provision of this contract as applied
to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
(i) Waiver. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company or a duly authorized Committee thereof. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of any other condition or provision at any
time.
(j) Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. This Agreement specifically supersedes the Change of
Control Severance Agreement between you and the Company dated January 31, 1997.
The express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof. This Agreement may
not be modified or amended other than by an agreement in writing.
<PAGE> 32
Page 8
March 4, 1999
If you are in agreement with the foregoing, please so indicate by
signing and returning to the Company the enclosed copy of this letter, whereupon
this letter shall constitute a binding agreement between you and the Company.
Very truly yours,
CHICAGO BRIDGE & IRON COMPANY
By:
-------------------------------
Agreed:
- -----------------------------
Employee
<PAGE> 33
March 4, 1999
Mr. Stephen P. Crain
1507 Grommon Road
Naperville, Illinois 60565
CHANGE OF CONTROL SEVERANCE AGREEMENT
Dear Mr. Crain:
Chicago Bridge & Iron Company, a Delaware corporation, (the "Company")
is a wholly-owned subsidiary of Chicago Bridge & Iron Company N.V., a
Netherlands corporation (the "Holding Corporation"). The Company recognizes that
members of senior management may become concerned about the effect of a Change
of Control (as defined below) on their job and financial security. The Company
considers the maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and the Holding
Corporation. Accordingly, the Board of Directors of the Company has determined
that the Company should enter into this agreement (your "Agreement") to provide
you with severance benefits in the event your employment with the Company
(including any subsidiary of the Company by which you are then employed)
terminates following a Change of Control under certain circumstances.
The purpose of entering into this Agreement is to induce you to remain
in the employ of the Company pending and after any Change of Control. Therefore,
in consideration of your continued employment with the Company under these
circumstances, the Company and you agree as follows:
1. Termination Benefits.
(a) Basic Benefits. In the event your employment with the
Company and any subsidiary of the Company terminates by reason of a Qualifying
Termination within two years after a Change of Control, you shall receive,
within thirty days after your employment terminates, a lump sum amount equal to
Seven Hundred Fifty Thousand Dollars ($750,000.00). In addition, if your
employment with the Company and any subsidiary by which you are employed is
terminated by the Company or any such subsidiary for any reason (other than your
willful misconduct or gross negligence in the performance of your duties as an
employee which results in a material detriment to either the Company or the
Holding Corporation) within six months prior to the occurrence of a Change of
Control, you shall be paid the lump sum referred to in the immediately preceding
sentence, minus the gross amount of any severance benefits otherwise paid to
you, within ten days following such Change of Control.
<PAGE> 34
Page 2
March 4, 1999
(b) Outplacement. In the event of a Qualifying Termination (or
a termination of your employment prior to a Change of Control with respect to
which you are entitled to receive a payment under Section 1(a) of this
Agreement), the Company agrees that, upon a written request from you, it will
engage on your behalf an outplacement or similar firm of your choice to provide
you with customary services and support in seeking other appropriate employment.
(c) Certain Further Payments.
(i) Additional Payments in Respect of Excise Taxes.
In the event that any amount or benefit paid or distributed to you pursuant to
this Agreement, taken together with any amounts or benefits otherwise paid or
distributed to you (the "Covered Payments"), are or become subject to the tax
(the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any similar tax that may hereafter be imposed,
the Company shall pay you, at the same time as it pays the severance benefit
described above, an additional amount (the "Tax Reimbursement Payment") such
that the net amount retained by you with respect to such Covered Payments, after
deduction of any Excise Tax on the Covered Payments and any Federal, state and
local income or employment tax and Excise Tax on the Tax Reimbursement Payment
provided for by this Section 1(b), but before deduction for any Federal, state
or local income or employment tax withholding on such Covered Payments, shall be
equal to the amount of the Covered Payments.
(ii) Calculation of the Excise Tax. For purposes of
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(A) all "parachute payments" in excess of
the "base amount" (as defined under Section 280G(b)(3)) of the
Code) shall be treated as subject to the Excise Tax, unless,
and except to the extent that, in the good faith judgment of
the Company's independent certified public accountants
appointed prior to the Change of Control or tax counsel
selected by such Accountants (the "Accountants"), the Company
has a reasonable basis to conclude that such Covered Payments
(in whole or in part) represent reasonable compensation for
personal services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the "base
amount," or such "parachute payments" are otherwise not
subject to such Excise Tax, and
<PAGE> 35
Page 3
March 4, 1999
(B) the value of any non-cash benefits or
any deferred payment or benefit shall be determined by the
Accountants in accordance with the principles of Section 280G
of the Code.
(iii) Calculation of the Tax Reimbursement Payment.
For purposes of determining the amount of the Tax Reimbursement Payment, you
shall be deemed to pay:
(A) Federal income taxes at the highest
applicable marginal rate of Federal income taxation for the
calendar year in which the Tax Reimbursement Payment is to be
made, and
(B) any applicable state and local income
taxes at the highest applicable marginal rate of taxation for
the calendar year in which the Tax Reimbursement Payment is to
be made, net of the maximum reduction in Federal income taxes
which could be obtained from the deduction of such state or
local taxes if paid in such year.
(d) Adjustments to Tax Reimbursement Payment. In the event
that the Excise Tax is subsequently determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, you shall repay to the Company, at the time that the amount of
such reduction in the Excise Tax is finally determined, the portion of such
prior Tax Reimbursement Payment that would not have been paid if such Excise Tax
had been applied in initially calculating such Tax Reimbursement Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Tax Reimbursement Payment to be refunded to the Company has been
paid to any Federal, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been made to you.
You and the Company shall mutually agree upon the course of action to be pursued
if your good faith claim for refund or credit is denied, provided that the
Company shall bear the cost of any expenses incurred which are related to
pursuing any recovery of any amount paid in respect of the Excise Tax.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the amount taken into account hereunder at the time
the Tax Reimbursement Payment is made (including, but not limited to, by reason
of any payment the existence or amount of which cannot be determined at the time
of the Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalty
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
<PAGE> 36
Page 4
March 4, 1999
2. Definitions.
(a) Change of Control When the Company or the Holding
Corporation is Public. A "Change of Control" shall be deemed to have taken place
(i) when any "person" or "group" of persons (as such
terms are used in Section 13 of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), other than
Holding Corporation, the Company or any majority owned
subsidiary of the Holding Corporation or the Company, becomes
the "beneficial owner" (as such term is used in Section 13 of
the Exchange Act) of 25% or more of the total voting power of
the Company's or the Holding Corporation's outstanding
securities;
(ii) upon the consummation of (A) any merger or other
business combination of the Company or the Holding Corporation
with or into another company pursuant to which the
stockholders of the Company or the Holding Corporation, as the
case may be, do not own, immediately after the transaction,
more than 50% of the voting power and the value of the stock
of the company that survives, or (B) the sale, exchange or
other disposition of all or substantially all of the assets of
the Company or the Holding Corporation; or
(iii) if, during any period of two years or less,
individuals who at the beginning of such period constituted
the Board of Directors of the Company or the Holding
Corporation, as the case may be, cease for any reason to
constitute at least a majority thereof; provided that any new
director who is elected to, or nominated for election to, the
Board of Directors with the approval of at least 75% of the
directors then still in office who were directors at the
beginning of the period shall be treated as though having been
a director at the beginning of such period.
(b) "Qualifying Termination" means the termination of your
employment with the Company and any of its subsidiaries by which you are
employed (i) by the Company or any such subsidiary for any reason other than
your willful misconduct or gross negligence in the performance of your duties as
an employee which results in a material detriment to the Company or the Holding
Corporation or (ii) by you within 180 days following the occurrence of any of
the following events (without your prior written consent):
<PAGE> 37
Page 5
March 4, 1999
(A) any significant reduction in your
positions, duties, titles, responsibilities and status with
the Company and its subsidiaries from those in effect
immediately prior to such Change of Control;
(B) a reduction in your base salary, a
reduction in your annual bonus opportunity or a material
reduction in the aggregate value of your participation in the
Company's employee benefits programs, as each was in effect
immediately prior to such Change of Control;
(C) your principal place of employment is
moved to a location more than 50 miles from your principal
place of employment immediately prior to such Change of
Control or you are required in the performance of your duties
to travel to an extent substantially more burdensome than your
travel obligations immediately prior to such Change of
Control; or
(D) the letter of credit or escrow referred
to in Section 3.1(b) fail for any reason to be in force in
accordance with Section 3.1(b).
Notwithstanding anything else contained herein to the contrary, a Qualifying
Termination shall not be deemed to have occurred by reason of (i) your death,
(ii) any termination of your employment due to your inability to perform the
duties of your position for a period of at least 180 days on account of any
physical or mental impairment, or (iii) your voluntary retirement at or after
your normal retirement date under any of the Company's employee pension plans in
which you participate.
3. Miscellaneous.
(a) Arbitration: Related Expenses. Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration held in accordance with the rules of the American Arbitration
Association pertaining to the resolution of employment disputes. Any such
arbitration shall be held in Chicago, Illinois or such other location which the
parties have mutually agreed to in writing. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall pay on a
current basis all legal expenses (including attorneys' fees) incurred by you in
connection with such arbitration, subject to your obligation to repay such
amounts, plus interest at the short-term annual Applicable Federal Rate (as
determined under Section 1274(b) of the Code as in effect on the date your
employment terminates), if you should not prevail as to at least one material
issue adjudicated in such proceeding.
<PAGE> 38
Page 6
March 4, 1999
(b) Letter of Credit: Escrow. To secure its obligations under
Section 3.1(a), the Company shall procure and maintain in force until at least
one year after your termination of employment a letter of credit and an escrow
in favor of you (together with other senior management executives similarly
situated). The letter of credit shall be issued by a bank or trust company
organized under the laws of the United States or Canada or a state or province
thereof and having a combined capital and surplus of not less than one hundred
million dollars ($100,000,000), shall be in the aggregate amount of two million
dollars ($2,000,000), and shall be substantially in the form of that attached
(with its attached Annexes and Exhibits) to this Agreement as Exhibit A. The
Company shall notify you not less than 15 days before the scheduled expiry date
of the letter of credit whether or not the letter of credit has been renewed or
the Company has obtained a substitute letter of credit whose provisions (other
than the expiration terms thereof) are identical to those of the letter of
credit in all material respects and which expires not less than one (1) year
from the date of issuance. The escrow shall be maintained in the State of
Illinois under an escrow agreement with a bank or trust company organized under
the laws of the United States or Canada or a state or province thereof and
having a combined capital and surplus of not less than one hundred million
dollars ($100,000,000), and shall be substantially in the form of that attached
(with its attached Exhibits) to this Agreement as Exhibit B.
(c) No Offset: No Mitigation. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against you or others whether by reason of your
subsequent employment or otherwise. You shall not be obligated to mitigate any
damages you incur by reason of any Qualifying Termination and the amounts
payable hereunder shall not be reduced by any amounts received by you as a
result of your employment or self-employment following your termination
hereunder.
(d) Entire Obligation of Company. In the event your employment
with the Company and any subsidiary of the Company by which you are employed
terminates following a Change of Control, the amounts payable to you hereunder
and any vested amounts or benefits owing to you under the Company's otherwise
applicable employee benefit plans and programs and any accrued vacation pay not
yet paid, shall constitute the entire obligation of the Company and its
affiliates to you. Payment or other satisfaction thereof shall be contingent
upon your execution of a release in favor of the Company substantially in the
form of that attached hereto as Exhibit C, stating that the payments and other
benefits referred to in the immediately preceding sentence constitute full
settlement of any claim under law or in equity that you might otherwise assert
against the Company or any of its subsidiaries on account of such termination.
<PAGE> 39
Page 7
March 4, 1999
(e) Employment at Will. This Agreement shall neither obligate
the Company or any subsidiary of the Company to continue you in its employ (or
to employ you in any particular office or to perform any specified
responsibility) nor obligate you to continue in the employ of the Company or any
subsidiary of the Company.
(f) Successors. This Agreement shall be binding upon and inure
to the benefit of you, your estate and the Company and any successor of the
Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by you.
(g) Governing Law. This Agreement shall be governed by the
laws of the State of Illinois, applied without reference to principles of
conflict of laws.
(h) Severability. If any provision of this contract as applied
to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
(i) Waiver. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and such officer as may be specifically designated by
the Board of Directors of the Company or a duly authorized Committee thereof. No
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of any other condition or provision at any
time.
(j) Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
<PAGE> 40
Page 8
March 4, 1999
If you are in agreement with the foregoing, please so indicate by
signing and returning to the Company the enclosed copy of this letter, whereupon
this letter shall constitute a binding agreement between you and the Company.
Very truly yours,
CHICAGO BRIDGE & IRON COMPANY
By:
----------------------------------
Agreed:
- --------------------------------
Employee
<PAGE> 1
EXHIBIT 10.20
ISDA
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of June 10, 1999
CHICAGO BRIDGE & IRON COMPANY NV and BANK OF MONTREAL
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of this Master Agreement,
the Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant
Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this "Agreement"),
and the parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of
this Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is,
other than by payment), such delivery will be made for receipt on the
due date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination
Date in respect of the relevant Transaction has occurred or been
effectively designated and (3) each other applicable condition
precedent specified in this Agreement.
Copyright (C) 1992 by International Swap Dealers Association, Inc.
<PAGE> 2
(b) CHANGE OF ACCOUNT. Either party may change its account for receiving
a payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable: --
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without
any deduction or withholding for. or on account of any Tax unless
such deduction or withholding is required by any applicable law, as
modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or
withhold, then that party ("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to
be deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y
under this Section 2(d)) promptly upon the earlier of determining
that such deduction or withholding is required or receiving
notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified
copy), or other documentation reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this
Agreement, such additional amount as is necessary to ensure that
the net amount actually received by Y (free and clear of
Indemnifiable Taxes, whether assessed against X or Y) will equal
the full amount Y would have received had no such deduction or
withholding been required. However, X will not be required to pay
any additional amount to Y to the extent that it would not be
required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure
would not have occurred but for (I) any action taken by a
taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (II) a
Change in Tax Law.
2 ISDA(R)1992
<PAGE> 3
(ii) LIABILITY. If: --
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to
make any deduction or withholding in respect of which X
would not be required to pay an additional amount to Y
under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount
of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:--
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organised and validly existing under the laws of
the jurisdiction of its organisation or incorporation and, if relevant
under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it has
under any Credit Support Document to which it is a party and has taken
all necessary action to authorise such execution, delivery and
performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment of
any court or other agency of government applicable to it or any of its
assets or any contractual restriction binding on or affecting it or any
of its assets;
(iv) CONSENTS. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in
full force and effect and all conditions of any such consents have been
complied with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganisation,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
3 ISDA(R)1992
<PAGE> 4
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is accurate
and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party
or, in certain cases under subparagraph (iii) below, to such government or
taxing authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to
allow such other party or its Credit Support Provider to make a payment
under this Agreement or any applicable Credit Support Document without
any deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would nor materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and
completed in a manner reasonably satisfactory to such other party and
to be executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to
maintain in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this Agreement
or any Credit Support Document to which it is a party and will use all
reasonable efforts to obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
4 ISDA(R)1992
<PAGE> 5
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organised, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirtieth day after
notice of such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document
or the failing or ceasing of such Credit Support Document to be
in full force and effect for the purpose of this Agreement (in
either case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without
the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms.
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made
or repeated by the party or any Credit Support Provider of such party
in this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated
or deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(I) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early
termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making
any payment or delivery due on the last payment. delivery or exchange
date of. or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local
Business Days if there is no applicable notice requirement or grace
period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
or in part, a Specified Transaction (or such action is taken by any
person or entity appointed or empowered to operate it or act on its
behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however
described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified
5 ISDA(R)1992
<PAGE> 6
Entity of such party under one or more agreements or instruments
relating to Specified Indebtedness of any of them (individually or
collectively) in an aggregate amount of not less than the applicable
Threshold Amount (as specified in the Schedule) which has resulted in
such Specified Indebtedness becoming, or becoming capable at such time
of being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or (2)
a default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments on
the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after
giving effect to any applicable notice requirement or grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditors' rights, or a
petition is presented for its winding-up or liquidation, and, in
the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (A) results in
a judgment of insolvency or bankruptcy or the entry of an order
for relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or
restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than
pursuant to a consolidation, amalgamation or merger); (6) seeks
or becomes subject to the appointment of an administrator,
provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for it or for all or substantially all
its assets; (7) has a secured party take possession of all or
substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced
or sued on or against all or substantially all its assets and
such secured party maintains possession, or any such process is
not dismissed, discharged, stayed or restrained, in each case
within 30 days thereafter; (8) causes or is subject to any event
with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events
specified in clauses (1) to (7) (inclusive); or (9) takes any
action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the foregoing acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:--
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it
or its predecessor was a party by operation of law or pursuant to
an agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by
such resulting, surviving or transferee entity of its obligations
under this Agreement.
(h) TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below or an Additional Termination Event if the event
is specified pursuant to (v) below:--
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdiction
of any applicable law after such date, it
6 ISDA(R)1992
<PAGE> 7
becomes unlawful (other than as a result of a breach by the party of
Section 4(b)) for such party (which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other material
provision of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party
(or such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will,
or there is a substantial likelihood that it will, on the next
succeeding Scheduled Payment Date (1) be required to pay to the other
party an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is
required to be deducted or withheld for or on account of a Tax (except
in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no
additional amount is required to be paid in respect of such Tax under
Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or
(B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
either case as a result of a party consolidating or amalgamating with,
or merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section 5(a)(vii)
but the creditworthiness of the resulting, surviving or transferee
entity is materially weaker than that of X, such Credit Support
Provider or such Specified Entity, as the case may be, immediately
prior to such action (and, in such event, X or its successor or
transferee, as appropriate, will be the Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination Event"
is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the
7 ISDA(R)1992
<PAGE> 8
presentation of the relevant petition upon the occurrence with respect to such
party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent
analogous thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is
the Affected Party, the Affected Party will, as a condition to its
right to designate an Early Termination Date under Section 6(b)(iv),
use all reasonable efforts (which will not require such party to incur
a loss, excluding immaterial, incidental expenses) to transfer within
20 days after it gives notice under Section 6(b)(i) all its rights and
obligations under this Agreement in respect of the Affected
Transactions to another of its Offices or Affiliates so that such
Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the other
party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)( 1)
or a Tax Event occurs and there are two Affected Parties, each party
will use all reasonable efforts to reach agreement within 30 days after
notice thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) RIGHT TO TERMINATE. If:--
(l) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, by not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then continuing, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all
Affected Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in
8 ISDA(R)1992
<PAGE> 9
respect of an Early Termination Date shall be determined pursuant to
Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is to
be paid. In the absence of written confirmation from the source of a
quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment) in the Termination Currency, from (and including)
the relevant Early Termination Date to (but excluding) the date such
amount is paid, at the Applicable Rate. Such interest will be
calculated on the basis of daily compounding and the actual number of
days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default: --
(1) FIRST METHOD AND MARKER QUOTATION. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Non-defaulting Party over (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party.
(2) FIRST METHOD AND LOSS. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) SECOND METHOD AND MARKET QUOTATION. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A)
the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the Defaulting
Party. If that amount is a positive number, the Defaulting Party
will pay it to the Non-defaulting Party; if it is a negative
number, the Non-defaulting Party will pay the absolute value of
that amount to the Defaulting Party.
(4) SECOND METHOD AND LOSS. If the Second Method and Loss apply,
an amount will be payable equal to the Non-defaulting Party's
Loss in respect of this Agreement. If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will
pay the absolute value of that amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event: --
9 ISDA(R)1992
<PAGE> 10
(1) ONE AFFECTED PARTY. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
if Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed
to be references to the Affected Party and the party which is not
the Affected Party, respectively, and, if Loss applies and fewer
than all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) TWO AFFECTED PARTIES. If there are two Affected Parties:--
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the party with
the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X;
if it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted by
law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent
10 ISDA(R)1992
<PAGE> 11
such tender results in the actual receipt by the party to which payment is owed,
acting in a reasonable manner and in good faith in converting the currency so
tendered into the Contractual Currency, of the full amount in the Contractual
Currency of all amounts payable in respect of this Agreement. If for any reason
the amount in the Contractual Currency so received falls short of the amount in
the Contractual Currency payable in respect of this Agreement, the party
required to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in the
Contractual Currency so received exceeds the amount in the Contractual Currency
payable in respect of this Agreement, the party receiving the payment will
refund promptly the amount of such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the ocher
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment
11 ISDA(R)1992
<PAGE> 12
they agree to those terms (whether orally or otherwise). A Confirmation
shall be entered into as soon as practicable and may be executed and
delivered in counterparts (including by facsimile transmission) or be
created by an exchange of telexes or by an exchange of electronic
messages on an electronic messaging system, which in each case will be
sufficient for all purposes to evidence a binding supplement to this
Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date
it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
12 ISDA(R)1992
<PAGE> 13
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably: --
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objection which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any reason any party's
Process Agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in
the manner provided for notices in Section 12. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement: --
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or
13 ISDA(R)1992
<PAGE> 14
Tax Event Upon Merger, all Transactions affected by the occurrence of such
Termination Event and (b) with respect to any other Termination Event, all
Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:--
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"LLLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business
14 ISDA(R)1992
<PAGE> 15
(including dealings in foreign exchange and foreign currency deposits) (a) in
relation to any obligation under Section 2(a)(i), in the place(s) specified in
the relevant Confirmation or, if not so specified, as otherwise agreed by the
parties in writing or determined pursuant to provisions contained, or
incorporated by reference, in this Agreement, (b) in relation to any other
payment, in the place where the relevant account is located and, if different,
in the principal financial centre, if any, of the currency of such payment, (c)
in relation to any notice or other communication, including notice contemplated
under Section 5(a)(i), in the city specified in the address for notice provided
by the recipient and, in the case of a notice contemplated by Section 2(b), in
the place where the relevant new account is to be located and (d) in relation to
Section 5(a)(v)(2), in the relevant locations for performance with respect to
such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(l) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction would
be subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to different
time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more
than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it
will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's head or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would
15 ISDA(R)1992
<PAGE> 16
constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of: --
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not Cm
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in
16 ISDA(R)1992
<PAGE> 17
effect immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
delivered as of the originally scheduled date for delivery, in each case
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the Termination Currency Equivalents of the fair market
values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
CHICAGO BRIDGE & IRON COMPANY NV BANK OF MONTREAL
- -------------------------------- -----------------------
(Name of Party) (Name of Party)
By: CHICAGO BRIDGE & IRON COMPANY B.V.
Its: Managing Director
By: /s/ Timothy J. Wiggins By: /s/ Kevin R. Holme
---------------------- ------------------
Name: Timothy J. Wiggins Name: Kevin R. Holme
Title: Managing Director Title: Managing Director
Date: June 11, 1999 Date: June 11, 1999
17 ISDA(R)1992
<PAGE> 18
(Multicurrency - Cross Border)
ISDA
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of June 10, 1999
between CHICAGO BRIDGE & IRON COMPANY N.V. (`Party A")
and
BANK OF MONTREAL ("Party B")
PART 1
TERMINATION PROVISIONS
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:-
Section 5(a)(v), Material Subsidiaries (as defined in the Credit
Agreement)
Section 5(a)(vi), Material Subsidiaries (as defined in the Credit
Agreement)
Section 5(a)(vii), Material Subsidiaries (as defined in the Credit
Agreement)
Section 5(b)(iv), Material Subsidiaries (as defined in the Credit
Agreement)
and in relation to Party B for the purpose of:-
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable.
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14
of this Agreement.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party
A and Party B.
"SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14,
provided that it will also include any obligation (whether present or
future, contingent or otherwise, as principal or surety or otherwise)
in respect of any Swap Transaction (as defined in the ISDA Definitions)
and will not include indebtedness in respect of deposits received or
any payment obligation not made because of any event similar to
Illegality.
"THRESHOLD AMOUNT" means in relation to Party A (i) zero with respect
to Specified Indebtedness to Party B and (ii) US$5,000,000 with respect
to any other Specified Indebtedness.
19
<PAGE> 19
"THRESHOLD AMOUNT" means in relation to Party B 2% of stockholders' equity
(including retained earnings) of Party B.
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will apply
to Party A and Party B.
(e) The "AUTOMATIC EARLY TERMINATION" provisions of Section 6(a) will apply to
Party A and Party B.
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means the currency selected by the Non-defaulting
Party or the non-Affected Party, as the case may be, provided that the
Termination Currency shall be one of the currencies in which payments in
respect of at least one Terminated Transaction are required to be made
pursuant to the related Confirmation if such specified currency is freely
transferable, failing which the Termination Currency shall be U.S.
Dollars. If there are two Affected Parties the Termination Currency shall
be U.S. Dollars.
(h) ADDITIONAL TERMINATION EVENT will not apply.
(i) "CREDIT AGREEMENT" means the Credit Agreement dated as of March 6, 1997,
as amended October 31, 1997 and March 5, 1998, among Party A, the
Borrowing Subsidiaries party thereto, the Lenders party thereto (including
Party B) and The Chase Manhattan Bank as Administrative Agent, (without
giving effect to any amendments thereto, or waivers or consents granted
thereunder, not consented to by Party B).
(j) ADDITIONAL EVENT OF DEFAULT. In addition to the Events of Default
contained in Section 5, it shall be an Event of Default hereunder, with
Party A as the Defaulting Party, if, under the Credit Agreement, an "Event
of Default" (as defined in the Credit Agreement) shall occur, whether or
not the Credit Agreement remains in effect, without giving effect to any
requirement contained in the Credit Agreement that notice of the relevant
circumstance be provided by any party, but only requiring that any such
notice be provided by Party B.
(k) ADDITIONAL COVENANTS AND AGREEMENTS. In addition to the agreements set
forth in Section 4, Party A agrees to observe, perform and comply with all
the covenants and agreements set forth in the Credit Agreement whether or
not the Credit Agreement remains in effect, and such covenants and
agreements will be deemed to continue in effect for the benefit of Party B
whether or not any commitment remains in effect, or any sum remains
payable, under the Credit Agreement provided that any documentation to be
delivered to any Lender under the Credit Agreement shall be delivered to
Party B.
PART 2
TAX REPRESENTATIONS
(a) PAYER REPRESENTATION. For the purpose of Section 3(e) of this Agreement,
Party A and Party B will each make the following representation:- It is
not required by any applicable law, as modified by the practice of any
relevant governmental revenue authority, of any Relevant Jurisdiction to
make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
Agreement) to be made by it to the other party under this Agreement. In
making this representation, it may rely on:-
(i) the accuracy of any representations made by the other party pursuant
to Section 3(f) of this Agreement;
20
<PAGE> 20
(ii) the satisfaction of the agreement contained in Section 4(a)(i)
or 4(a)(iii) of this Agreement and the accuracy and
effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement;
and
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d) of this Agreement;
provided that it shall not be a breach of this representation where
reliance is placed on clause (ii) and the other party does not deliver
a form or document under Section 4(a)(iii) by reason of material
prejudice to its legal or commercial position.
(b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the representations specified
below, if any:-
(i) The following representation will apply to Party A and Party
B:-
Each payment received or to be received by it in connection
with this Agreement will be effectively connected with its
conduct of a trade or business in the Specified Jurisdiction.
If such representation applies, then:-
"SPECIFIED JURISDICTION" means with respect to Party A: the Netherlands
"SPECIFIED JURISDICTION" means with respect to Party B: Canada
(ii) The following representations will apply to Party A and Party
B, respectively:-
Party A has been duly incorporated, created or organized under
the laws of the Netherlands and it is validly existing under
those laws.
Party B has been duly created and organized under the laws of
Canada.
(iii) Other Payee Representations:- None made.
PART 3
AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party agrees
to deliver the following documents, as applicable:-
(a) Each party shall, as soon as practicable after demand, deliver to the
other party any form or document reasonably requested by the other
party, including without limitation, any form or document required to
enable such other party to make payments hereunder without withholding
for or on account of Taxes or with such withholding at a reduced rate.
(b) Other documents to be delivered by each party concurrently with the
execution and delivery of this Agreement are:
21
<PAGE> 21
<TABLE>
<S> <C> <C> <C>
PARTY FORM/DOCUMENT/ DATE BY WHICH TO BE COVERED BY
REQUIRED TO CERTIFICATE DELIVERED SECTION 3(D)
DELIVER REPRESEN-
DOCUMENT TATION
Party A and Certificate of incumbency containing specimen Upon execution of this Yes
Party B signatures of each person executing the Agreement, and if
Agreement. requested, each
Confirmation.
Party A Legal opinion of Netherlands counsel Upon execution of this No
substantially in the form of Exhibit I Agreement.
attached hereto.
Party A Credit Support documents referenced in Part 4 Promptly following Yes
of this Schedule. execution of this Agreement.
Party B Certified copy of a resolution of the Upon execution of this Yes
directors authorizing the execution and Agreement.
delivery of the Agreement.
</TABLE>
PART 4
MISCELLANEOUS
(a) ADDRESSES FOR NOTICES. For the purposes of Section 12(a) of this
Agreement:-
ADDRESS(ES) FOR NOTICES OR COMMUNICATIONS TO PARTY A:-
Address: Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
1501 North Division Street
Plainfleld, ll. 60544
Attention: Treasurer
Facsimile:
Telephone: (815) 439-4072
ADDRESS(ES) FOR NOTICES OR COMMUNICATIONS TO PARTY B:-
Address: EMFISYS - Derivatives Operations
130 Adelaide Street West
Suite 500
Toronto, Ontario M5H 4E 1
Canada
Attention: Manager, Confirmations
Facsimile: (416) 867-4778/6827
Telephone: (416) 867-7173
Swift ID No.: BOFMCAM3
22
<PAGE> 22
Any notice sent to Party B in connection with Sections 5, 6 or 9(b) shall
be sent to the following address:
Address: Bank of Montreal
Treasury Credit
22nd Floor
First Canadian Place
Toronto, Ontario M5X 1A1
Attention: Senior Manager, Documentation
Telephone: (416) 867-4178
(b) PROCESS AGENT. For purposes of Section 13(c) of this Agreement:-
Party A appoints as its Process Agent: Robert H. Wolfe
Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
1501 North Division Street
Plainfleld, ll. 60544
Party B appoints as its Process Agent its Office at 430 Park Avenue, New
York, N.Y. 10022.
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:-
Party A is not a Multibranch Party.
Party B is a Multibranch Party and, for purposes of this Agreement and
each Transaction entered into pursuant hereto, may act through its
Toronto, Chicago or London Office.
(e) CALCULATION AGENT. The Calculation Agent is Party B, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) CREDIT SUPPORT DOCUMENTS means, in relation to Party A: Guarantees from
each of the Subsidiary Guarantors (as defined in the Credit Agreement) of
Party A's obligations under this Agreement.
CREDIT SUPPORT DOCUMENT means, in relation to Party B: Not applicable.
(g) CREDIT SUPPORT PROVIDERS means, in relation to Party A: each of the
Subsidiary Guarantors (as defined in the Credit Agreement).
CREDIT SUPPORT PROVIDER means, in relation to Party B: Not applicable.
(h) GOVERNING LAW. This Agreement will be governed by and consirued in
accordance with the laws of the State of New York (without reference to
choice of law doctrine).
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this Agreement
will apply to all Transactions.
(j) "AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
23
<PAGE> 23
PART 5
OTHER PROVISIONS
(a) 1991 ISDA DEFINITIONS. The provisions of the 1991 ISDA Definitions (the
"Definitions"), published by the International Swaps and Derivatives
Association, Inc., are incorporated by reference in, and will be deemed
to be part of, this Agreement and each Confirmation as if set forth in
full in this Agreement or in such Confirmation, without regard to any
revision or subsequent edition thereof. In the event-of any
inconsistency between the provisions of this Agreement and the
Definitions, this Agreement will prevail. In the event of any
inconsistency between the provisions of any Confirmation and this
Agreement or the Definitions, such Confirmation will prevail for the
purpose of the relevant Transaction.
(b) SUPERVENING ILLEGALITY. Without prejudice to a party's right to
terminate in the event of Illegality, a party shall not be excused~from
performance hereunder by supervening illegality (whether by reason of
passage or promulgation of a new law, regulation or interpretation or
of failure to obtain any required govenmental consent or approval),
impossibility or frustration, with the effect that, while neither party
shall be obligated to violate any applicable law by reason of this
Section, each party shall retain its right to payment pursuant to
Section 6(e) if the other party does not perform because of supervening
illegality, impossibility or frustration.
(c) CONDITIONS TO CERTAIN PAYMENTS. Notwithstanding the provisions of
Section 6(e)(i)(3) and (4), as applicable, if the amount referred to
therein is a positive number, the Defaulting Party will pay such amount
to the Non-defaulting Party, and if the amount referred to therein is a
negative number, the Non-defaulting Party shall have no obligation to
pay any amount thereunder to the Defaulting Party unless and until the
conditions set forth in (i) and (ii) below have been satisfied at which
time there shall arise an obligation of the Non-defaulting Party to pay
to the Defaulting Party an amount equal to the absolute value of such
negative number less any and all amounts which the Defaulting Party may
be obligated to pay under Section 11:
(i) the Non-defaulting Party shall have received confirmation
satisfactory to it in its sole discretion (which may include
an unqualified opinion of its counsel) that (1) no further
payments or deliveries under Section 2(a)(i) or 2(e) in
respect of Terminated Transactions will be required to be made
in accordance with Section 6(c)(ii); and (2) each Specified
Transaction shall have terminated pursuant to its specified
termination date or through the exercise by a party of a right
to terminate and all obligations owing under each such
Specified Transaction shall have been fully and finally
performed; and
(ii) all obligations (contingent or absolute, matured or unmatured)
of the Defaulting Party and any Affiliate of the Defaulting
Party to make any payment or delivery to the Non-defaulting
Party or any Affiliate of the Non-defaulting Party shall have
been fully and finally performed.
(d) RELATIONSHIP BETWEEN THE PARTIES. Each party will be deemed to
represent to the other party on the date on which it enters into a
Transaction that (absent a written agreement between the parties that
expressly imposes affirmative obligations to the contrary for that
Transaction):
NON-RELIANCE. It is acting for its own account, and it has made its own
independent decisions to enter into that Transaction and as to whether
that Transaction is appropriate or proper for it based upon its own
judgment and upon advice from such advisors as it has deemed necessary.
It is not relying on any communication (written or oral) of the other
party as investment advice or as a recommendation to enter into that
Transaction; it being understood that information and explanations
related to the terms and conditions of a Transaction shall not be
considered investment advice or a recommendation to enter into that
Transaction. No communication
24
<PAGE> 24
(written or oral) received from the other party shall be deemed to be
an assurance or guarantee as to the expected results of that
Transaction.
ASSESSMENT AND UNDERSTANDING. It is capable of assessing the merits of
and understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms,
conditions and risks of that Transaction. It is also capable of
assuming, and assumes, the risks of that Transaction.
STATUS OF PARTIES. The other party is not acting as a fiduciary for or
an advisor to it in respect of that Transaction.
(e) BANKRUPTCY CODE REPRESENTATION. The parties hereto intend that this
Agreement shall be a "master agreement" for purposes of 11 U.S.C. ss.
l0l(53B) and 12 U.S.C. ss. 1821(e)(8)(D)(vii), or any successor
provisions.
(f) CFTC REPRESENTATION. (i) Each party represents and warrants that (A) it
is an "eligible swap participant" as that term is defined by the
Commodity Futures Trading Commission at 17 C.F.R. ss. 35.l(b)(2); and
(B) this Agreement and the Transactions hereunder are entered into in
connection with its business or a line of business, and have been
individually tailored and negotiated.
(ii) With respect to any Transaction that is a commodity option, each
party when it is the offeree represents that (A) it is a producer,
processor, commercial user of or merchant handling the commodity; and
(B) it is entering into such Transaction solely for purposes relating
to its business as such.
(g) FEES AND EXPENSES. Party A agrees to (i) pay Party B, upon execution of
this Agreement (whether or not any Transactions hereby contemplated
shall be consummated) a fee of U.S.$75,000, and (ii) reimburse Party B
for its out-of-pocket legal fees and expenses incurred in connection
with the preparation of this Agreement, up to a maximum amount of U.S.$
10,000.
CHICAGO BRIDGE & IRON COMPANY N.V. BANK OF MONTREAL
By: CHICAGO BRIDGE & IRON COMPANY B.V. By: /s/ Kevin Holme
---------------
Its: Managing Director Name: Kevin Holme
Title: Managing Director
By: /s/ Timothy J. Wiggins Date: June 11, 1999
----------------------
Timothy J. Wiggins, Managing Director
Date: June 11, 1999
25
<PAGE> 25
EXHIBIT I
[Letterhead of Netherlands Counsel]
[Date]
Bank of Montreal
First Canadian Place
Toronto, Ontario
M5X 1A1
Attention: Senior Counsel
Dear Sirs:
This opinion is furnished to you in connection with the ISDA
Master Agreernent dated as of [DATE] (the "Agreement") between Chicago Bridge &
Iron Company N.y. ("Counterparty") and Bank of Montreal (the "Bank"), and the
Equity Forward Transaction dated as of [DATE] (the "Transaction") entered into
by the Counterparty and the Bank pursuant to the Agreement. Terms defined in the
Agreement and used but not defined herein have the meanings given to them in the
Agreement.
We have acted as counsel to the Counterparty in connection
with the execution and delivery of the Agreement and in connection with the
Transaction. We have examined the Agreement, including the Confirmation for the
Transaction (the "Confirmation"), the Counterparty's constating documents and
such other documents as we have deemed necessary or appropriate for purposes of
the opinions expressed herein. We have also made such investigations and
considered such questions of law as we have considered necessary for the
purposes of rendering this opinion. In such examination we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to original documents of all documents submitted
to us as copies, certified or otherwise.
We express no opinion with respect to the laws of any
jurisdiction other than the laws of the Netherlands.
Based on the foregoing we are of the opinion that:
1. The Counterparty has been duly incorporated and organized and is
validly existing and in good standing under the laws of the
Netherlands.
2. The execution and delivery of the Agreement and the Confirmation
by the Counterparty and the performance by the Counterparty of its
obligations thereunder are within the corporate power of the
Counterparty and do not conflict with or result in a breach of the
constating documents of the Counterparty or of any law or
regulation or of any agreement, decree, order, judgment,
injunction or other instrument binding on or affecting the
Counterparty.
3. All necessary and proper proceedings have been taken by the
Counterparty to duly authorize the execution and delivery of the
Agreement and the Confirmation to the Bank, including for the
avoidance of doubt, all corporate action required pursuant to
Section 2:98 Dutch Civil Code.
26
<PAGE> 26
4. No action by, notice to or filing with, or consent, authorization
or approval of, any governmental authority or regulatory body is
required in connection with the Counterparty's execution, delivery
and performance of the Agreement and the Confirmation.
5. The governing law clause, subjecting the Agreement to New York
law, is valid under the laws of the Netherlands. Under the laws of
the Netherlands, New York law will be applied to the Agreement,
provided that such choice of law is bona fide and provided that
such choice of law is not contrary to public policy, as that term
is understood under the laws of the Netherlands. To the best of
our knowledge, having made due inquiry, public policy would not be
breached by application of the chosen law.
6. Assuming that the Agreement and the Confirmation are legal, valid
and binding and enforceable under New York law, the Agreement and
the Confirmation constitute legal, valid and binding obligations
of the Counterparty enforceable in accordance with their terms and
the laws of the Netherlands.
The foregoing opinions are subject to the following qualifications:
1. The enforceability of the Agreement and the Confirmation against
the Counterparty is subject to applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws and equitable
principles of general application affecting the rights of
creditors, as well, as to the availability of specific
performance, injunctive relief or any other equitable remedy; and
2. The assumption that the Agreement and the Confirmation have been
authorized, executed and delivered by, and constitutes a legal,
valid and binding obligation of the Bank.
This opinion is provided solely for your benefit and is not to be
relied upon for any purpose other than in respect of the Agreement and the
Confirmation, or by any other person.
Yours very truly,
27
<PAGE> 27
[GRAPHIC OMITTED]
BANK OF MONTREAL
EMFISYS - DERIVATIVES OPERATIONS
130 Adelaide Street West
Suite 500
Toronto, Ontario
M5H 4E1
Telephone No. (416) 867-7173
Fax No. (416) 867-6827
June 11, 1999
Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
1501 North Division Street
Plainfield, Il 60544
ATTENTION: MS. JEAN BROWN, TREASURER
Dear Sirs:
RE: EQUITY FORWARD TRANSACTION
OUR REFERENCE NO. 196672/235431
The purpose of this letter agreement (this "Confirmation") is to
confirm the terms and conditions of the Transaction entered into between us on
the Trade Date specified below (the "Transaction"). This Confirmation
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
The definitions and provisions contained in the 1991 ISDA Definitions
(the "1991 Definitions") and in the 1996 ISDA Equity Derivatives Definitions
(the "Equity Definitions", and together with the 1991 Definitions, the
"Definitions"), in each case as published by the International Swaps and
Derivatives Association, Inc., are incorporated into this Confirmation. In the
event of any inconsistency between the 1991 Definitions and the Equity
Definitions, the Equity Definitions will govern. In the event of any
inconsistency between either set of Definitions and this Confirmation, this
Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement dated as of June 10, 1999, as amended and supplemented from
time to time (the "Agreement"), between Chicago Bridge & Iron Company N.V.
("Party A") and Bank of Montreal ("Party B"). All provisions contained in the
Agreement govern this Confirmation except as expressly modified below.
<PAGE> 28
2
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: June 11, 1999
Forward Settlement
Date: August 17, 1999, and any Partial
Termination Date that may be designated in
accordance with the Partial Termination
provisions set forth herein.
Seller: Party B
Buyer: Party A
Shares: Common shares with a par value of 0.01 NLG
of Chicago Bridge & Iron Company N.V. (the
"Issuer")
Number of Shares
to be Delivered: 349,100 shares, subject to adjustment in
accordance with the Partial Termination
provisions set forth herein
Forward Price: USD 11.83 per Share
Exchange: New York Stock Exchange
Clearance System(s): Depository Trust Company
Business Days: New York
Settlement Terms:
Physical Settlement: Applicable
On the Settlement Date, Party A will pay
Party B an amount equal to the Number of
Shares to be Delivered multiplied by the
Forward Price, and Party B will deliver to
Party A the Number of Shares to be
Delivered
Settlement Date: "Settlement Date" means, in relation to
Shares to be delivered in respect of the
Forward Settlement Date, the first day on
which settlement of a sale of such Shares
executed on that Forward Settlement Date
customarily would take place through the
relevant Clearance System, unless a
Settlement Disruption Event prevents
delivery of such Shares on that
<PAGE> 29
3
day. If a Settlement Disruption Event does
prevent delivery on that day, then the
Settlement Date will be the first
succeeding day on which delivery of the
Shares can take place through the relevant
Clearance System unless a Settlement
Disruption Event prevents settlement on
each of the 10 relevant Clearance System
Business Days immediately following the
original date that, but for the Settlement
Disruption Event, would have been the
Settlement Date. In that case, (a) if such
Shares can be delivered in any other
commercially reasonable manner, then the
Settlement Date will be the first day on
which settlement of a sale of Shares
executed on that 10th relevant Clearance
System Business Day customarily would take
place using such other commercially
reasonable manner of delivery (which other
manner of delivery will be deemed the
relevant Clearance System for the purposes
of delivery of the relevant Shares), and
(b) if such Shares cannot be delivered in
any other commercially reasonable manner,
then the Settlement Date will be postponed
until delivery can be effected through the
relevant Clearance System or in any other
commercially reasonable manner.
Dividends: (a) "Dividend Payment Date" means March
30, June 30, September 30 and December
30 of each calendar year during the
term of this Transaction, subject to
adjustment in accordance with the
Following Business Day Convention.
(b) "Dividend Amount" means, in respect of
each Dividend Payment Date, an amount
calculated by the Calculation Agent,
equal to $0.06 minus the amount of any
dividend per Share declared to be
payable by the Issuer for such
Dividend Payment Date, multiplied by
the Number of Shares to be Delivered.
(c) If the Dividend Amount so calculated
is a positive number, then Party A
will pay such Dividend Amount to Party
B on the Dividend Payment Date. If the
Dividend Amount so calculated by the
Calculation Agent is a negative
number, then Party B will pay the
absolute value of such Dividend Amount
to Party A on the Dividend Payment
Date.
Adjustments: Upon the occurrence of an event having, in
the determination of the Calculation Agent,
a diluting or concentrative effect on
<PAGE> 30
4
the theoretical value of the Shares, then
following the declaration by the Issuer of
the Shares of the terms of any Potential
Adjustment Event, the Calculation Agent
will make the corresponding adjustments to
the Forward Price and Number of Shares to
be Delivered, and to any other variable
relevant to the settlement or payment terms
of the Transaction as the Calculation Agent
determines appropriate to account for that
diluting or concentrative effect, and will
determine the effective date(s) of the
adjustment(s).
Extraordinary Events:
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation
(b) Share-for-Other: Alternative Obligation
(c) Share-for-Combined: Alternative Obligation
Nationalization or Insolvency: Not applicable
Amendment of
Equity Definitions: For the purposes of this Transaction, the
Equity Definitions are amended as follows:
(A) A new Section 1.3A is added after
Section 1.3:
"SECTION 1.3A. SHARE FORWARD TRANSACTION.
"Share Forward Transaction" means an OTC
equity forward transaction relating to a
single share or other security."
(B) Section 1.5 is amended to read:
"SECTION 1.5. SHARE TRANSACTION. "Share
Transaction" means a Share Option
Transaction, a Share Swap Transaction, and
for the purposes of Article 9, a Share
Forward Transaction."
(C) A new clause (E) is added to Section
9.1(c):
"(E) in respect of a Share Forward
Transaction, the Forward Price per Share
and the Number of Shares to be Delivered,
as these are set forth in the Confirmation
of the Transaction;"
(D) Clause (vi) of Section 9.1(e) is
amended to read:
<PAGE> 31
5
"(vi) any other similar event that, in the
reasonable judgment of the Calculation
Agent, may have a diluting or concentrative
effect on the theoretical value of the
relevant Shares."
(E) A new clause (E) is added at the end of
Section 9.3(b)(i):
and (E) in the case of a Share Forward
Transaction, the number of New Shares to
which a holder of the number of Shares
equal to the Number of Shares to be
Delivered would be entitled upon
consummation of the Merger Event will be
deemed the "Number of Shares to be
Delivered" and the New Shares and their
issuer will be deemed to be "Shares" and
the "Issuer", respectively, and, if
necessary, the Calculation Agent will
adjust any relevant terms accordingly;
(F) A new clause (E) is added at the end of
Section 9.3(c)(i):
and (E) in the case of a Share Forward
Transaction, the amount of Other
Consideration (as subsequently modified in
accordance with any relevant terms) to
which a holder of the number of Shares
equal to the Number of Shares to be
Delivered would be entitled upon
consummation of the Merger Event will be
deemed the "Number of Shares to be
Delivered" and, if necessary, the
Calculation Agent will adjust any relevant
terms accordingly;
(G) A new clause (E) is added at the end of
Section 9.3(d)(i):
and (E) in the case of a Share Forward
Transaction, the number of New Shares and
the amount of Other Consideration (as
subsequently modified in accordance with
any relevant terms) to which a holder of
the number of Shares equal to the Number of
Shares to be Delivered would be entitled
upon consummation of the Merger Event will
be deemed the "Number of Shares to be
Delivered" and the New Shares and their
issuer will be deemed to be "Shares" and
the "Issuer", respectively, and, if
necessary, the Calculation Agent will
adjust any relevant terms accordingly.
3. Calculation Agent: Bank of Montreal
4. Condition Precedent: Party B's obligations under this Transaction are
subject to the condition precedent that Party A shall have caused each
Subsidiary Guarantor, as defined in the Credit Agreement, to execute
and deliver to Party B, prior to or promptly following the Trade Date
of this Transaction, a guarantee (in form and substance reasonably
satisfactory to Party B and its legal advisors) of the obligations of
Party A under the Agreement,
<PAGE> 32
6
including without limitation, under this Transaction.
5. Account Details. Account for delivery of Shares to Party A:
Chicago Bridge & Iron Company N.V.
Treasury Stock Account No. 737
Bank of New York
Account for Payments to Party B:
Harris Bank International Corporation New York
ABA 026-007-760
A/C number 210-77777
In favour of Bank of Montreal, Toronto,
Derivatives Operations
6. Offices:
(a) The Office of Party A for the Transaction is Hoofddorp, the
Netherlands; and
(b) The Office of Party B for the Transaction is Toronto
7. Partial Termination: (a) If Party B determines that (i) the Number of
Shares to be Delivered in respect of this Transaction, plus the Number
of Shares to be Delivered in respect of any other Transaction between
Party A and Party B, constitutes five (5) percent or more of any class
(as that term is used for purposes of the U.S. Bank Holding Company Act
of 1956, as amended) of outstanding voting securities of the Issuer or
(ii) the sum of the aggregate value of Shares of the Issuer included in
this Transaction, plus the aggregate value of Shares of the Issuer
included in any other Transaction between the parties, exceeds 24.9% of
the shareholders' equity of such Issuer, Party B may elect to terminate
this Transaction in part on any Business Day prior to the Termination
Date (the "Partial Termination Date") by giving irrevocable notice to
Party A (the "Partial Termination Notice") on a Business Day that is
not less than ten (10) calendar days prior to the Partial Termination
Date, designating such Partial Termination Date and the portion of the
Number of Shares to be Delivered to be terminated (the "Terminated
Share Amount").
(b) In such event, (i) the Number of Shares to be Delivered shall be
reduced by the Terminated Share Amount, and (ii) an Additional
Termination Event under the Agreement shall be deemed to occur with
Party B the sole Affected Party and this Transaction (after
consideration of any partial delivery) the Sole Affected Transaction;
and Loss will be deemed to apply for the purpose of determining if any
payment will be made in respect of the Affected Transaction. In all
other respects this Confirmation shall remain in full force and effect
and the Transaction shall remain outstanding.
8. Hedging Activity: (a) Party A acknowledges that Party B may (but is not
required to) hedge its risk exposure by investing in Shares or other
assets in respect of this Transaction and its obligations hereunder and
Party B makes no representations or warranties regarding the level
<PAGE> 33
7
of such investment or the extent of its hedging activities (if any).
(b) If Party B elects to hedge its position by acquiring Shares, the
following provisions shall apply:
Transacting Period: The period of time during which Party A is
prepared to enter into successive Share
Forward Transactions on the Shares similar
to this Transaction, which period shall
commence on the Trade Date and end (i) at
the close of the first Exchange Business
Day following the date on which Party A
notifies Party B that Party A does not
intend to enter into any additional Share
Forward Transactions for the time being or
(ii) on the Transacting Period Termination
Date, whichever first occurs, provided that
if, pursuant to a request by Party A to
enter into a Share Forward Transaction,
Party B has acquired Shares in excess of
Party B's hedging requirements for Share
Forward Transactions then outstanding and
is holding such Shares on the date that
Party A gives a notice under subclause (i),
Party A and Party B shall immediately enter
into a Share Forward Transaction similar to
this Transaction in respect of a like
number of Shares.
Exchange Business
Day: Any day on which the Exchange is open for
regular trading during regular trading
hours.
Transacting Period
Termination Date: August 17, 1999.
Party B Purchases: Party B's purchases of Shares during the
Transacting Period will be made in
accordance with Rule 10b-18 under the
Securities Exchange Act of 1934, as amended
("Rule 10b-18"), as if it were applicable
to this Transaction.
Party A Purchases: Party A shall not, and shall cause its
affiliated purchasers (as defined in Rule
10b-18) not to, purchase Shares during the
Transacting Period.
9. Chicago Branch as Agent: Each party agrees that with respect to this
Transaction Bank of Montreal, Chicago Branch ("Chicago Branch") has
acted as "agent" for Party A and Party B within the meaning of Rule
15a-6 under the U.S. Securities Exchange Act of 1934, as amended, and
Party A shall address all communications to Party B in connection with
this Transaction to its Chicago Branch, 115 South LaSalle Street,
Chicago, Illinois 60603, Attention: Managing Director, Global Financial
Products.
<PAGE> 34
8
10. Additional Representations and Covenants:
(a) In addition to the representations set forth in the Agreement,
Party A further represents to Party B that:
(i) it is not a resident of Canada and is not acting on behalf
of any resident of Canada;
(ii) its total assets, as shown on its last audited balance
sheet, exceeded CAD 100 million, or its equivalent in
another currency;
(iii) at the time of entering into this Transaction, it is in
compliance with the covenants set out in subsections
10(b)(ii)(A) to (E) of this Confirmation;
(iv) in entering into the Agreement and this Transaction, it is
in compliance with all applicable insider-trading laws and
regulations, including without limitation, the laws and
regulations of the Netherlands and the United States; and
(v) at the time of Party A's entry into this Transaction and on
the Settlement Date, no "restricted period" for purposes of
Rule 102 of Regulation M under the Securities Exchange Act
of 1934 ("Regulation M") and no tender offer for Shares
(whether by Party A or a third party) is in effect, and no
Party A tender offer has been in effect within the preceding
10 (ten) business days.
(b) In addition to the covenants set forth in the Agreement, Party A
further covenants and agrees that:
(i) this Transaction shall not be assigned by Party A to any
resident of Canada; and
(ii) at the time (the "Delivery Date") at which the Shares must
be or are delivered by Party B to Party A pursuant to this
Transaction:
(A) the Shares are fully paid;
(B) the articles of association of the Company (as in
force at the Delivery Date) allow for the acquisition
by the Company of the Shares;
(C) an authorization of Party A's General Meeting of
Shareholders for the acquisition by Party A of shares
in its own share capital, as referred to in Section
2:98 subsection 4 Dutch Civil Code is in full force
and effect and the Transaction (including the
acquisition by Party A of the Shares and the
acquisition price therefor) is within the limitations
set forth in such authorization;
<PAGE> 35
9
(D) Party A's shareholders' equity (calculated in
accordance with Section 2:98 subsection 3 Dutch Civil
Code), less the acquisition price for the Shares,
will not be less than the sum of (x) the paid and
called for part of Party A's share capital, and (y)
the reserves which must be maintained by law or under
Party A's articles of association (as in force at the
Delivery Date), as required under Section 2:98
subsections 2 and 3 Dutch Civil Code;
(E) not more than six months have elapsed since the end
of Party A's last financial year without the adoption
and, if necessary, the approval of its annual
accounts; and
(F) the sum of (X) the nominal amount of the shares in
Party A's share capital which it or a subsidiary
company (as defined in Section 2:24a Dutch Civil
Code) holds or holds as pledgee, and (Y) the nominal
amount of the Shares to be Delivered, is not more
than one-tenth of Party A's issued share capital.
(iii) if Party A commences a "distribution" (as defined in
Regulation M) during the Transacting Period, Party A shall
so notify Party B no later than the business day preceding
the first day of the restricted period applicable to Party A
under Regulation M and shall further notify Party B promptly
when the restricted period has ended.
(c) In addition to the representations and agreements set forth in the
Agreement, (i) Party A and Party B each represents to the other
that it is not entering into this Transaction while in possession
of material non-public information with respect to Party A; (ii)
Party A agrees that it will not disclose any material non-public
information with respect to itself to Party B without Party B's
prior consent; (iii) Party A agrees that if at any time during the
Transacting Period it comes to have possession of material
non-public information with respect to itself, it will immediately
notify Party B that a blackout period is in effect, and when Party
A ceases to be in possession of material non-public information,
Party A will promptly notify Party B that the blackout period has
ended; and (iv) Party B agrees that it will not purchase or sell,
nor make any offers to purchase or sell, Shares during any such
blackout period.
(d) Party B shall make no purchases of Shares during any restricted
period applicable to Party A under Regulation M that may occur
during the Transacting Period.
11. Additional Termination Events:
(a) In addition to the Termination Events set forth in the Agreement,
it shall be a Termination Event, with Party B as the sole Affected
Party and this Transaction (after consideration of any partial
delivery) the sole Affected Transaction, if Party B
<PAGE> 36
10
is unable to deliver the requisite number of Shares due to
illiquidity in the market for such Shares. Party B will (a) notify
Party A within one Clearance System Business Day of the Settlement
Date to that effect and (b) deliver on the Settlement Date such
number of Shares, if any, as it can deliver on that date. In such
case, irrespective of the payment measure elected by the parties
under the Agreement, Loss will be deemed to apply for the purpose
of determining if any payment will be made in respect of the
Affected Transaction.
(b) In addition to the Termination Events set forth in the Agreement,
it shall be a Termination Event, with Party A as the sole Affected
Party and this Transaction the sole Affected Transaction, if
delivery of Shares by Party B to Party A on the Settlement Date or
on any Partial Settlement Date would violate any applicable law or
regulation, including but not limited to Regulation M and Rules
10b-13, 13e-1 and 13e-4 under the Securities Exchange Act of 1934,
or Section 2:98 of the Dutch Civil Code. If a violation of the
kind referred to in the preceding sentence would otherwise
constitute an Event of Default under the Agreement, the preceding
sentence shall apply and the violation shall not constitute an
Event of Default. In addition, irrespective of the payment measure
elected by the parties under the Agreement, Loss will be deemed to
apply for the purpose of determining if any payment will be made
in respect of the Affected Transaction.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Yours sincerely,
Confirmed as of the date
BANK OF MONTREAL first above written :
Chicago Bridge & Iron Company N.V.
By : Chicago Bridge & Iron Company B.V.
By: /s/ Rianna Yam Its :Managing Director
----------------------
Rianna Yam
Manager, Confirmations
By: /s/ Timothy J. Wiggins
Timothy J. Wiggins, Managing Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1999, AND THE INCOME STATEMENT FOR THE SIX MONTHS ENDED
JUNE 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 8,390
<SECURITIES> 0
<RECEIVABLES> 138,147
<ALLOWANCES> 2,042
<INVENTORY> 1,939
<CURRENT-ASSETS> 207,352
<PP&E> 156,462
<DEPRECIATION> (48,296)
<TOTAL-ASSETS> 345,273
<CURRENT-LIABILITIES> 145,894
<BONDS> 26,000
0
0
<COMMON> 74
<OTHER-SE> 104,584
<TOTAL-LIABILITY-AND-EQUITY> 345,273
<SALES> 0
<TOTAL-REVENUES> 351,883
<CGS> 0
<TOTAL-COSTS> 315,008
<OTHER-EXPENSES> (1,051)
<LOSS-PROVISION> (8)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13,189
<INCOME-TAX> 3,957
<INCOME-CONTINUING> 8,592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,592
<EPS-BASIC> 0.76
<EPS-DILUTED> 0.75
</TABLE>
