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EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") effective as of June 1,
1999 by and between American Eco Corporation, an Ontario, Canada corporation
whose principal executive offices are in Houston, Texas (the "Company"), and
Xxxxxxx X. Xxxx (the "Executive").
R E C I T A L S
Executive will serve as Senior Vice President - Chief Operating
Officer.
The Chief Executive Officer of the Company has determined that it is in
the best interests of the Company to retain the Executive"s services and to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including the Executive, to their assigned duties without
distraction in potentially disturbing circumstances arising from the possibility
of a change in control of the Company or the assertion of claims and actions
against employees.
Both the Company and the Executive recognize the increased risk of
litigation and other claims being asserted against officers and directors of
companies in today"s environment.
The Bylaws of the Company require the Company to indemnify its
directors and officers to the full extent permitted by law.
Costs, limits in coverage and availability of directors" and officers"
liability insurance policies and developments in the application, amendment and
enforcement of statutory and bylaw indemnification provisions generally have
raised questions concerning the adequacy and reliability of the protection
afforded to directors and officers and have increased the difficulty of
attracting and retaining qualified persons to serve as directors and officers.
In recognition of the Executive"s need for substantial protection
against personal liability to enhance and induce the Executive"s continued
service to the Company in an effective manner and the Executive"s reliance on
the Bylaws, and in part to provide the Executive with specific contractual
assurance that the protection promised by the Bylaws will be available to the
Executive (regardless of, among other things, any amendment to or revocation of
the Bylaws or any change in the composition of the Company's Board of Directors
or acquisition transaction relating to the Company), the Company wishes to
provide in this Agreement for the continuing employment of the Executive and the
indemnification of, and the advancing of expenses to, the Executive to the full
extent (whether partial or complete) permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the coverage of the
Executive under the Company's directors" and officers" liability insurance
policies.
The Company wishes to assure itself of the services of the Executive
for the period provided in this Agreement and the Executive wishes to serve in
the employ of the Company on the terms and conditions hereinafter provided.
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A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
ARTICLE I
EMPLOYMENT
1.1 Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment by the Company for the period and upon the
terms and conditions contained in this Agreement.
1.2 Office and Duties.
(a) Position. The Executive shall serve the Company as Senior
Vice President - Chief Operating Officer with authority, duties and
responsibilities not less than the Executive has on the date of this
Agreement, with his actions at all times subject to the direction of
the Chief Executive Officer.
(b) Commitment. Throughout the term of this Agreement, the
Executive shall devote substantially all of his time, energy, skill and
best efforts to the performance of his duties hereunder in a manner
that will faithfully and diligently further the business and interests
of the Company. Subject to the foregoing, the Executive may serve, or
continue to serve, on the boards of directors of, and hold any other
offices or positions in, companies or organizations that are disclosed
to the Board of Directors and that will not materially affect the
performance of the Executive"s duties pursuant to this Agreement.
1.3 Term. The term of this Agreement shall commence on June 1, 1999 and
shall end on the third anniversary of the date on which the Chief Executive
Officer notifies the Executive that the Chief Executive Officer has determined
to discontinue the automatic daily extension of this Agreement (the period of
time between the commencement and the end of this Agreement is referred to
herein as the "Term").
1.4 Compensation.
(a) Base Salary. The Company shall pay the Executive as
compensation an aggregate salary ("Base Salary") of $200,000 per year
during the Term, or such greater amount as shall be approved by the
Compensation Committee of the Company's Board of Directors. The
Compensation Committee shall review the Executive"s Base Salary at
least annually. The Base Salary for each year shall be paid by the
Company in accordance with the regular payroll practices of the
Company.
(b) Annual Bonus. Each year during the Term, the Executive
shall be eligible to participate in an annual bonus pool equal to 5% of
the Company's net income, which shall mean the consolidated net income
of the Company for its fiscal year, calculated in
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accordance with generally accepted accounting principles as applied by
the Company's auditors during their annual audit. The Company shall pay
the Executive such bonus (the "Annual Bonus") no later than 90 days
following the end of the Company's fiscal year. The amount of the
Annual Bonus to which the Executive may be entitled shall be determined
in advance by the Compensation Committee, but shall not exceed 100% of
1.4(a).
(c) Stock Options. The Executive shall be eligible to receive
grants of stock options pursuant to the Company's Employee Stock Option
Plan, as amended May 7, 1997, and as amended hereafter, in amounts (if
any) and on terms and conditions to be determined by the Compensation
Committee of the Company's Board of Directors.
(d) Life Insurance. During the Term and subject to the
Executive"s qualification under normal life insurance underwriting
standards as of the date hereof and at any policy renewal date, the
Company shall provide, at the Company's expense, a term life insurance
policy on the life of the Executive in a face amount equal to
$2,000,000. The proceeds from such policy shall be payable as follows:
50% to the Company and 50% to the Executive"s estate.
(e) Disability Insurance. During the Term and subject to the
Executive"s qualification under normal disability insurance
underwriting standards as of the date hereof and at any policy renewal
date, the Company shall provide, at the Company's expense, a disability
insurance policy that will pay the Executive, pursuant to the terms of
such policy, an annual disability benefit of $200,000 until the
Executive reaches the age of 65.
(f) Fringe Benefits and Perquisites. During the Term, the
Executive shall be entitled to participate in or receive benefits under
any plan or arrangement made available by the Company to its senior
executive officers, including but not limited to any hospitalization,
medical, dental or pension plan, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements. Nothing paid to the Executive under any plan or
arrangement made available to the Executive shall be deemed to be in
lieu of compensation hereunder.
(g) Automobile Allowance. During the Term, the Executive shall
be provided a car or paid a car allowance of $750.00 per month. This
amount shall be paid on the first day of each month, and the Company
shall also reimburse the Executive for all actual expenses associated
with operating and maintaining the Executive"s vehicle. The Executive
shall submit receipts or other evidence of such expenditures, and the
Company shall pay these amounts to the Executive within 30 days of
receipt of such documentation.
(h) Payment and Reimbursement of Expenses. During the Term,
the Company shall pay or reimburse the Executive for all reasonable
travel and other expenses incurred by the Executive in performing his
obligations under this Agreement in accordance with the policies and
procedures of the Company for its senior executive officers, provided
that the Executive properly accounts therefor in accordance with the
regular policies of the Company.
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(i) Vacations. During the Term and in accordance with the
regular policies of the Company, the Executive shall be entitled to the
number of paid vacation days in each calendar year determined by the
Company from time to time for its senior executive officers, but not
less than four weeks in any calendar year (prorated in any calendar
year in which the Executive is employed hereunder for less than the
entire year in accordance with the number of days in such calendar year
during which the Executive is so employed).
(j) Benefits Not in Lieu of Compensation. No benefit or
perquisite provided to the Executive shall be deemed to be in lieu of
Base Salary, Annual Bonus, or other compensation.
1.5 Termination.
(a) Disability. The Company may terminate this Agreement for
Disability. "Disability" shall exist if because of ill health or
physical or mental disability, and notwithstanding reasonable
accommodations made by the Company, the Executive shall have been
unable, unwilling or shall have failed to perform his duties under this
Agreement, as determined in good faith by the Compensation Committee of
the Company's Board of Directors, for a period of 180 consecutive days,
or if, in any 12-month period, the Executive shall have been unable or
unwilling or shall have failed to perform his duties for a period of
270 days, irrespective of whether or not such days are consecutive.
(b) Cause. The Company may terminate the Executive"s
employment for Cause. Termination for "Cause" shall mean termination
because of the Executive"s (i) willful gross misconduct that causes
material economic harm to the Company or that brings substantial
discredit to the Company's reputation, (ii) final, nonappealable
conviction of a felony involving moral turpitude, or (iii) material
breach of any provision of this Agreement. Items (i) and (iii) of this
subsection shall not constitute Cause unless the Company notifies the
Executive thereof in writing, specifying in reasonable detail the basis
therefor and stating that it is grounds for Cause, and unless the
Executive fails to cure such matter within 60 days after such notice is
sent or given under this Agreement. The Executive shall be permitted to
respond and to defend himself before the Board of Directors or any
appropriate committee thereof within a reasonable time after written
notification of any proposed termination for Cause under item (i) or
(iii) of this subsection.
(c) Without Cause. During the Term, the Company may terminate
the Executive"s employment Without Cause, subject to the provisions of
subsection 1.6(d) (Termination Without Cause or for Company Breach).
Termination "Without Cause" shall mean termination of the Executive"s
employment by the Company other than termination for Cause or for
Disability.
(d) Company Breach. The Executive may terminate his employment
hereunder for Company Breach. For purposes of this Agreement "Company
Breach" shall mean:
(i) without his express written consent, any material
reduction in the authority, duties and
responsibilities that the Executive has on the date
of this
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Agreement, or the assignment to the Executive of any
duties inconsistent with his positions, duties,
responsibilities and status with the Company, or a
change in his reporting responsibilities, titles or
offices, or any removal of the Executive from or any
failure to re-elect the Executive to any of such
positions, except in connection with the termination
of his employment for Cause, Disability or retirement
or as a result of his death or by the Executive other
than for Company Breach or Change in Control;
(ii) a reduction in the Executive"s Base Salary as in
effect on the date of this Agreement or as the same
may be increased from time to time;
(iii) a relocation of the Company's principal
executive offices to any county other than Xxxxxx
County or any county contiguous thereto or the
Company's requiring the Executive to be based
anywhere other than Xxxxxx County or any county
contiguous thereto, except for required travel on the
Company's business to an extent substantially
consistent with his present business travel
obligations, or, in the event the Executive consents
to any relocation, the failure by the Company (a) to
retain a real estate broker, at the Company's
expense, and otherwise assist the Executive in
selling the Executive"s principal residence in Xxxxxx
County, (b) to pay (or reimburse the Executive) for
all reasonable moving expenses incurred by him
relating to a change of his principal residence in
connection with such relocation and (c) to indemnify
the Executive against any loss (defined as the
difference between the actual sale price of such
residence and the higher of (1) his aggregate
investment in such residence or (2) the fair market
value of such residence as determined by a real
estate appraiser designated by the Executive and
reasonably satisfactory to the Company) realized on
the sale of the Executive's principal residence in
connection with any such change of residence;
(iv) the failure by the Company to continue in effect
any benefit or compensation plan (including but not
limited to any stock option plan, pension plan, life
insurance plan, health and accident plan or
disability plan) in which the Executive is
participating (or plans providing substantially
similar benefits), the taking of any action by the
Company which would adversely affect the Executive's
participation in or materially reduce his benefits
under any of such plans or deprive him of any
material fringe benefit enjoyed by him, or the
failure by the Company to provide the Executive with
the number of paid vacation days to which he is then
entitled on the basis of years of service with the
Company in accordance with the Company's normal
vacation policy in effect on the date hereof;
(v) any failure of the Company to obtain the
assumption of, or the agreement to perform, this
Agreement by any successor as contemplated in Section
4.13 (Binding Effect, Etc.) hereof; or
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(vi) any material breach of this Agreement by the
Company;
provided, however, that a material breach of this Agreement by the
Company shall not constitute Company Breach unless the Executive
notifies the Company in writing of the breach, specifying in reasonable
detail the nature of the breach and stating that such breach is grounds
for Company Breach, and unless the Company fails to cure such breach
within 60 days after such notice is sent or given under this Agreement.
(e) Change in Control. The Executive may terminate his
employment hereunder within 12 months of a Change in Control (defined
below):
(i) "Change in Control" shall mean any of the
following:
(1) any consolidation or merger of the
Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of
the Company's common stock would be converted into
cash, securities or other property, other than a
merger of the Company in which the holders of the
Company's common stock immediately prior to the
merger have the same proportionate ownership of
common stock of the surviving corporation immediately
after the merger;
(2) any sale, lease, exchange or other
transfer (in one transaction or a series of related
transactions) of all or substantially all of the
assets of the Company;
(3) any approval by the stockholders of the
Company of any plan or proposal for the liquidation
or dissolution of the Company;
(4) the cessation of control (by virtue of
their not constituting a majority of directors) of
the Company's Board of Directors by the individuals
(the "Continuing Directors") who (x) at the date of
this Agreement were directors or (y) become directors
after the date of this Agreement and whose election
or nomination for election by the Company's
stockholders was approved by a vote of at least
two-thirds of the directors then in office who were
directors at the date of this Agreement or whose
election or nomination for election was previously so
approved); or
(5) the acquisition of beneficial ownership
(within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of an
aggregate of 15% of the voting power of the Company's
outstanding voting securities by any person or group
(as such term is used in Rule 13d-5 under such Act)
who beneficially owned less than 10% of the voting
power of the Company's outstanding voting securities
on the date hereof, or the acquisition of beneficial
ownership of an additional 5% of the voting power of
the Company's
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outstanding voting securities by any person or group
who beneficially owned at least 10% of the voting
power of the Company's outstanding voting securities
on the date hereof; provided, however, that
notwithstanding the foregoing, an acquisition shall
not constitute a Change in Control hereunder if the
acquiror is (w) the Executive, (x) a trustee or other
fiduciary holding securities under an employee
benefit plan of the Company and acting in such
capacity, (y) a corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership
of voting securities of the Company or (z) any other
person whose acquisition of shares of voting
securities is approved in advance by a majority of
the Continuing Directors;
(6) subject to applicable law, in a Chapter
11 bankruptcy proceeding, the appointment of a
trustee or the conversion of a case involving the
Company to a case under Chapter 7.
(f) Without Good Reason. During the Term, the Executive may
terminate his employment Without Good Reason. Termination "Without Good
Reason" shall mean termination of the Executive"s employment by the
Executive other than termination for Company Breach or as a result of a
Change in Control.
(g) Explanation of Termination of Employment. Any party
terminating this Agreement shall give prompt written notice ("Notice of
Termination") to the other party hereto advising such other party of
the termination of this Agreement. Within thirty (30) days after
notification that the Agreement has been terminated, the terminating
party shall deliver to the other party hereto a written explanation
(the "Explanation of Termination of Employment"), which shall state in
reasonable detail the basis for such termination and shall indicate
whether termination is being made for Cause, Without Cause or for
Disability (if the Company has terminated the Agreement) or for Company
Breach, upon a Change in Control or Without Good Reason (if the
Executive has terminated the Agreement).
(h) Date of Termination. "Date of Termination" shall mean the
date on which Notice of Termination is sent or given under this
Agreement.
1.6 Compensation During Disability or Upon Termination.
(a) During Disability. During any period that the Executive
fails to perform his duties hereunder because of Disability, he shall
continue to receive his full Base Salary and benefits pursuant to
Section 1.4 (Compensation) until the Date of Termination.
(b) Termination for Disability. If the Company shall terminate
the Executive"s employment for Disability, then the Company shall have
no further obligation to make any payment under this Agreement which
has not already become payable, but has not yet been paid, except that
the Company shall continue to provide the Executive with the benefits
set forth in Section 1.6(f) (Employee Benefits) for the period
described therein. The Company also shall make any additional payments
necessary to provide the disability benefits set forth in Section
1.4(e) (Disability Insurance) above.
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(c) Termination for Cause or Without Good Reason. If the
Company shall terminate the Executive"s employment for Cause or if the
Executive shall terminate his employment Without Good Reason, then the
Company shall have no further obligation to make any payment under this
Agreement which has not already become payable, but has not yet been
paid, except as may otherwise be provided under the terms of any
employee benefit programs in which the Executive is participating.
(d) Termination Without Cause or for Company Breach. If the
Company shall terminate the Executive"s employment Without Cause or if
the Executive shall terminate his employment for Company Breach, then
the Company shall pay to the Executive, as severance pay in a lump sum
no later than the 15th day following the Date of Termination, the
following amounts:
(i) any payment of Base Salary (at the rate in effect
as of the Date of Termination) or Annual Bonus which has
already become payable, but has not yet been paid, through the
Date of Termination;
(ii) his Annual Bonus for the fiscal year in which
the Date of Termination occurs, as pro-rated through the Date
of Termination. If such Annual Bonus is dependent upon
financial results for the fiscal year that are unknown at the
Date of Termination, his Annual Bonus received for the past
fiscal year shall substitute as his Annual Bonus for the
fiscal year in which the Date of Termination occurs; and
(iii) in lieu of any further Base Salary and Annual
Bonus for periods subsequent to the Date of Termination, an
amount equal to the product of (A) the sum of the Executive"s
Base Salary at the rate in effect as of the Date of
Termination, multiplied by (B) the number two (2).
The Company shall also continue to provide the Executive with
the employee benefits set for in Section 1.6(f) (Employee Benefits) for
the period described therein.
If the Executive terminates his employment for Company Breach
based upon a material reduction by the Company of the Executive"s Base
Salary, then for purposes of this Section 1.6(d) (Termination Without
Cause or for Company Breach), the Executive"s Base Salary as of the
Date of Termination shall be deemed to be the Executive"s Base Salary
immediately prior to the reduction that the Executive claims as grounds
for Company Breach.
(e) Termination Upon a Change in Control. If the Executive
terminates his employment after a Change in Control pursuant to Section
1.5(e) (Change in Control), then the Company shall pay to the Executive
as severance pay and as liquidated damages (because actual damages are
difficult to ascertain), in a lump sum, in cash, within 15 days after
termination, an amount equal to the amounts provided in Sections
1.6(d)(i), (ii), and (iii) above. In addition, if the Executive is
liable for the payment of any excise tax (the "Basic Excise Tax")
because of Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor or similar provision, with
respect to any payments or benefits received or to be received from the
Company or its affiliates, or any successor to the
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Company or its affiliates, whether provided under this Agreement or
otherwise, the Company shall pay the Executive an amount (the "Special
Reimbursement") which, after payment by the Executive (or on the
Executive"s behalf) of any federal, state and local taxes applicable
thereto, including, without limitation, any further excise tax under
such Section 4999 of the Code, on, with respect to or resulting from
the Special Reimbursement, equal the net amount of the Basic Excise
Tax. The determination of the amount of the payment described in this
Section 1.6(e) shall be made by the Company's independent auditors.
(f) Employee Benefits. Unless the Company terminates the
Executive"s employment for Cause or the Executive terminates his
employment Without Good Reason, the Company shall maintain in full
force and effect, for the continued benefit of the Executive and, if
applicable, his wife and children, the employee benefits set forth in
Sections 1.4(d) (Life Insurance) and 1.4(e) (Disability Insurance), and
any hospitalization, medical and dental coverage included in Section
1.4(f) (Fringe Benefits and Perquisites) above that he was entitled to
receive immediately prior to the Date of Termination (subject to the
general terms and conditions of the plans and programs under which he
receives such benefits) for the balance of the Term or for the period
provided for under the terms and conditions of such plans and programs,
whichever is longer, with the full amount of any applicable premiums to
be borne by the Company.
(g) No Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in this Section 1.6
(Compensation During Disability or Upon Termination) by seeking other
employment or otherwise.
1.7 Death of Executive. If the Executive dies prior to the expiration
of this Agreement, the obligations under this Agreement shall automatically
terminate and all compensation to which the Executive is or would have been
entitled hereunder (including without limitation under Sections 1.4(a) (Base
Salary) and 1.4(b) (Annual Bonus)) shall terminate as of the end of the month in
which the Executive"s death occurs; provided, however, that (i) the Company
shall pay to the Executive"s estate, as soon as practicable, a prorated Annual
Bonus, if earned in accordance with the Company's annual bonus plan; (ii) for
the balance of the Term, the Executive"s wife and children shall be entitled to
continue participation in the Company's group hospitalization, medical and
dental plans (if any), with the full amount of any premium to be borne by the
Company; and (iii) the Executive"s named beneficiary or beneficiaries shall
receive the benefits payable pursuant to Section 1.4(d) (Life Insurance) hereof
and such reimbursement as may have been due to the Executive pursuant to Section
1.4(h) (Payment and Reimbursement of Expenses) hereof.
ARTICLE 2
NON-COMPETITION AND CONFIDENTIALITY
2.1 Non-Competition.
(a) Description of Proscribed Actions. Throughout the
Executive"s employment during the term of this Agreement and, unless
the Agreement terminates pursuant to Section 1.5(a) (Disability),
Section 1.5(c) (Without Cause), Section 1.5(d) (Company Breach), or
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Section 1.5(e) (Change in Control), for a period of two (2) years after
the termination of the Executive"s employment, in consideration for the
Company's obligations hereunder, including without limitation the
Company's disclosure (pursuant to Section 2.2(b) (Obligation of The
Company) below) of Confidential Information and the Company's agreement
to indemnify the Executive (pursuant to Article 3 (Indemnification)
hereof), the Executive shall not:
(i) directly or indirectly, engage or invest in, own,
manage, operate, control or participate in the ownership,
management, operation or control of, be employed by,
associated or in any manner connected with, or render services
or advice to, any Competing Business (as defined in Section
2.1(d) below); provided, however, that the Executive may
invest in the securities of any enterprise (but without
otherwise participating in the activities of such enterprise)
if (x) such securities are listed on any national or regional
securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934 and (y) the
Executive does not beneficially own (as defined Rule 13d-3
promulgated under the Securities Exchange Act of 1934) in
excess of 5% of the outstanding capital stock of such
enterprise;
(ii) directly or indirectly, either as principal,
agent, independent contractor, consultant, director, officer,
employee, employer, advisor (whether paid or unpaid),
stockholder, partner or in any other individual or
representative capacity whatsoever, either for his own benefit
or for the benefit of any other person or entity, solicit,
divert or take away any suppliers, customers or clients of the
Company or any of its Affiliates (as defined in Section 2.1(e)
below); or
(iii) directly or indirectly, either as principal,
agent, independent contractor, consultant, director, officer,
employee, employer, advisor (whether paid or unpaid),
stockholder, partner or in any other individual or
representative capacity whatsoever, either for his own benefit
or for the benefit of any other person or entity, either (i)
hire, attempt to hire, contact or solicit with respect to
hiring, any employee of the Company or any Affiliate thereof,
(ii) induce or otherwise counsel, advise or encourage any
employee of the Company or any Affiliate thereof to leave the
employment of the Company or any Affiliate thereof, or (iii)
induce any representative or agent of the Company or any
Affiliate thereof to terminate or modify its relationship with
the Company or such Affiliate.
(b) Judicial Modification. The Executive agrees that if a
court of competent jurisdiction determines that the length of time or
any other restriction, or portion thereof, set forth in this Section
2.1 (Non-Competition) is overly restrictive and unenforceable, the
court may reduce or modify such restrictions to those which it deems
reasonable and enforceable under the circumstances, and as so reduced
or modified, the parties hereto agree that the restrictions of this
Section 2.1 (Non-Competition) shall remain in full force and effect.
The Executive further agrees that if a court of competent jurisdiction
determines that any provision of this Section 2.1 (Non-Competition) is
invalid or against public policy, the remaining provisions of this
Section 2.1 (Non-Competition) and the remainder of this Agreement shall
not be affected thereby, and shall remain in full force and effect.
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(c) Nature of Restrictions. The Executive acknowledges that
the business of the Company and its Affiliates is international in
scope and that the Restrictions imposed by this Agreement are
legitimate, reasonable and necessary to protect the Company's and its
Affiliates" investment in their businesses and the goodwill thereof.
The Executive acknowledges that the scope and duration of the
restrictions contained herein are reasonable in light of the time that
the Executive has been engaged in the business of the Company and its
Affiliates, the Executive"s reputation in the markets for the Company's
and its Affiliates" businesses and the Executive"s relationship with
the suppliers, customers and clients of the Company and its Affiliates.
The Executive further acknowledges that the restrictions contained
herein are not burdensome to the Executive in light of the
consideration paid therefor and the other opportunities that remain
open to the Executive. Moreover, the Executive acknowledges that he has
other means available to him for the pursuit of his livelihood.
(d) Competing Business. "Competing Business" shall mean any
individual, business, firm, company, partnership, joint venture,
organization, or other entity engaged in the industrial support
services and specialty fabrication business in any domestic or
international market area in which the Company or any of its Affiliates
does business at any time during the Executive"s employment with the
Company.
(e) Affiliate. When used with reference to the Company,
"Affiliate" shall mean any person or entity that directly or indirectly
through one or more intermediaries controls or is controlled by or is
under common control with the Company.
2.2 Confidentiality. For the purposes of this Section 2.2
(Confidentiality), the term "the Company" shall be construed also to include any
and all Affiliates of the Company.
(a) Confidential Information. "Confidential Information" shall
mean information that is used in the Company's business and
(i) is proprietary to, about or created by the
Company;
(ii) gives the Company some competitive advantage,
the opportunity of obtaining such advantage or the disclosure
of which could be detrimental to the interests of the Company;
(iii) is not typically disclosed to non-employees by
the Company, or otherwise is treated as confidential by the
Company; or
(iv) is designated as Confidential Information by the
Company or from all the relevant circumstances should
reasonably be assumed by the Executive to be confidential to
the Company.
Confidential Information shall not include information publicly known
(other than as a result of a disclosure by the Executive). The phrase
"publicly known" shall mean readily accessible
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to the public in a written publication and shall not include
information that is only available by a substantial searching of the
published literature or information the substance of which must be
pieced together from a number of different publications and sources, or
by focused searches of literature guided by Confidential Information.
(b) Obligation of The Company. During the Term, the Company
shall provide access to, or furnish to, the Executive Confidential
Information of the Company necessary to enable the Executive properly
to perform his obligations under this Agreement.
(c) Non-Disclosure. The Executive acknowledges, understands
and agrees that all Confidential Information, whether developed by the
Company or others or whether developed by the Executive while carrying
out the terms and provisions of this Agreement (or previously while
serving as an officer of the Company), shall be the exclusive and
confidential property of the Company and (i) shall not be disclosed to
any person other than employees of the Company and professionals
engaged on behalf of the Company, and other than disclosure in the
scope of the Company's business in accordance with the Company's
policies for disclosing information, (ii) shall be safeguarded and kept
from unintentional disclosure and (iii) shall not be used for the
Executive"s personal benefit. Subject to the terms of the preceding
sentence, the Executive shall not use, copy or transfer Confidential
Information other than as is necessary in carrying out his duties under
this Agreement.
2.3 Injunctive Relief. Because of the Executive"s experience and
reputation in the industries in which the Company operates, and because of the
unique nature of the Confidential Information, the Executive acknowledges,
understands and agrees that the Company will suffer immediate and irreparable
harm if the Executive fails to comply with any of his obligations under Article
2 (Non-Competition and Confidentiality) of this Agreement, and that monetary
damages will be inadequate to compensate the Company for such breach.
Accordingly, the Executive agrees that the Company shall, in addition to any
other remedies available to it at law or in equity, be entitled to injunctive
relief to enforce the terms of Article 2 (Non-Competition and Confidentiality),
without the necessity of proving inadequacy of legal remedies or irreparable
harm.
ARTICLE 3
INDEMNIFICATION
3.1 Basic Indemnification Arrangement.
(a) Claims Arising from the Executive"s Position with the
Company. In addition to any separate agreements between the Executive
and the Company relating to indemnification, the Company will indemnify
and hold harmless the Executive, to the fullest extent permitted by
applicable law, in respect of any liability, damage, cost or expense
(including reasonable counsel fees) incurred in connection with the
defense of any claim, action, suit or proceeding to which he is a
party, or threat thereof, by reason of his being or having been an
officer or director of the Company or any subsidiary or affiliate of
the Company, or his serving or having served at the request of the
Company as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust,
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business organization, enterprise or other entity, including service
with respect to employee benefit plans. Without limiting the generality
of the foregoing, the Company will pay the expenses (including
reasonable counsel fees) of defending any such claim, action, suit or
proceeding in advance of its final disposition.
(b) Contests of this Agreement. The Company agrees to pay
promptly as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about
the amount of any payment pursuant to this Agreement), plus in each
case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Code.
(c) Liability Insurance. During the Term, the Company agrees
to continue on the Executive"s behalf, directors and officers insurance
or any other indemnity policy presently carried on behalf of the
Executive, and further agrees to supplement any such existing policy to
cover all actions taken by the Executive in connection with his
employment by the Company.
ARTICLE 4
MISCELLANEOUS
4.1 Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or any
Affiliate of the Company against the Executive, the Executive"s spouse, heirs,
executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any claim or cause of
action of the Company or any Affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action within such two-year
period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action such shorter period shall
govern.
4.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
4.3 Indulgences, Etc. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any right, remedy, power or privilege, nor shall any
waiver of any right, remedy, power, or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence.
4.4 Executive"s Sole Remedy. The Executive"s sole remedy shall be
against the Company for any claim, liability or obligation of any nature
whatsoever arising out of or relating to this Agreement or an alleged breach of
this Agreement or for any other claim arising out of the
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Executive"s employment by the Company, his service to the Company, any
indemnification obligation of the Company or the termination of the Executive"s
employment hereunder (collectively, "Executive Claims"). The Executive shall
have no claim or right of any nature whatsoever against any of the Company's
directors, former directors, officers, former officers, employees, former
employees, stockholders, former stockholders, agents, former agents or the
Independent Counsel in their individual capacities arising out of or relating to
any Executive Claim. The Executive hereby releases and covenants not to xxx any
person other than the Company over any Executive Claim. The persons described in
this Section 4.4 (other than the Company and the Executive) shall be third-party
beneficiaries of this Agreement for purposes of enforcing the terms of this
Section 4.4 (Executive"s Sole Remedy) against the Executive.
4.5 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement and the transactions contemplated
herein shall be in writing and shall be deemed to have been duly given, made and
received when sent by telecopy (with a copy sent by mail) or when personally
delivered or one business day after it is sent by overnight service, addressed
as set forth below:
If to the Executive:
Xxxxxxx X. Xxxx
00000 Xxxxxxxxxx
Xxxxxxx, Xxxxx 00000
If to the Company:
American Eco Corporation
00000 Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attn: Chief Executive Officer
Any party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the provisions of
this subsection for the giving of notice, which shall be effective only upon
receipt.
4.6 Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
4.7 Entire Agreement. This Agreement contains the entire understanding
between 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, which shall be deemed terminated effective immediately. 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.
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4.8 Headings; Index. The headings of paragraphs and Index of Defined
Terms herein are included solely for convenience of reference and shall not
control the meaning or interpretation of any of the provisions of this
Agreement.
4.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to
principles of conflict of laws.
4.10 Dispute Resolution. Subject to the Company's right to seek
injunctive relief in court as provided in Section 2.3 (Injunctive Relief) of
this Agreement and the Executive"s right to such a judicial determination that
the Executive should be indemnified by the Company (as provided in Section
3.1(b) (Conditions) of this Agreement), any dispute, controversy or claim
arising out of or in relation to or connection with this Agreement, including
without limitation any dispute as to the construction, validity, interpretation,
enforceability or breach of this Agreement, shall be exclusively and finally
settled by arbitration, and any party may submit such dispute, controversy or
claim, including a claim for indemnification under this Section 4.10 (Dispute
Resolution), to arbitration.
(a) Arbitrators. The arbitration shall be heard and determined
by one arbitrator, who shall be impartial and who shall be selected by
mutual agreement of the parties; provided, however, that if the dispute
involves more than $2,000,000, then the arbitration shall be heard and
determined by three (3) arbitrators. If three (3) arbitrators are
necessary as provided above, then (i) each side shall appoint an
arbitrator of its choice within thirty (30) days of the submission of a
notice of arbitration and (ii) the party-appointed arbitrators shall in
turn appoint a presiding arbitrator of the tribunal within thirty (30)
days following the appointment of the last party-appointed arbitrator.
If (x) the parties cannot agree on the sole arbitrator, (y) one party
refuses to appoint its party-appointed arbitrator within said thirty
(30) day period or (z) the party-appointed arbitrators cannot reach
agreement on a presiding arbitrator of the tribunal, then the
appointing authority for the implementation of such procedure shall be
the Senior United States District Judge for the Southern District of
Texas, who shall appoint an independent arbitrator who does not have
any financial interest in the dispute, controversy or claim. If the
Senior United States District Judge for the Southern District of Texas
refuses or fails to act as the appointing authority within ninety (90)
days after being requested to do so, then the appointing authority
shall be the Chief Executive Officer of the American Arbitration
Association, who shall appoint an independent arbitrator who does not
have any financial interest in the dispute, controversy or claim. All
decisions and awards by the arbitration tribunal shall be made by
majority vote.
(b) Proceedings. Unless otherwise expressly agreed in writing
by the parties to the arbitration proceedings:
(i) The arbitration proceedings shall be held in
Houston, Texas, at a site chosen by mutual agreement of the
parties, or if the parties cannot reach agreement on a
location within thirty (30) days of the appointment of the
last arbitrator, then at a site chosen by the arbitrators;
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(ii) The arbitrators shall be and remain at all times
wholly independent and impartial;
(iii) The arbitration proceedings shall be conducted
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, as amended from time to
time;
(iv) Any procedural issues not determined under the
arbitral rules selected pursuant to item (iii) above shall be
determined by the law of the place of arbitration, other than
those laws which would refer the matter to another
jurisdiction;
(v) The costs of the arbitration proceedings
(including attorneys" fees and costs) shall be borne in the
manner determined by the arbitrators;
(vi) The decision of the arbitrators shall be reduced
to writing; final and binding without the right of appeal; the
sole and exclusive remedy regarding any claims, counterclaims,
issues or accounting presented to the arbitrators; made and
promptly paid in United States dollars free of any deduction
or offset; and any costs or fees incident to enforcing the
award shall, to the maximum extent permitted by law, be
charged against the party resisting such enforcement;
(vii) The award shall include interest from the date
of any breach or violation of this Agreement, as determined by
the arbitral award, and from the date of the award until paid
in full, at 6% per annum; and
(viii) Judgment upon the award may be entered in any
court having jurisdiction over the person or the assets of the
party owing the judgment or application may be made to such
court for a judicial acceptance of the award and an order of
enforcement, as the case may be.
4.11 Survival. The covenants and agreements of the parties set forth in
Article 2 (Non-Competition and Confidentiality), Article 3 (Indemnification) and
Article 4 (Miscellaneous) are of a continuing nature and shall survive the
expiration, termination or cancellation of this Agreement, regardless of the
reason therefor.
4.12 No Duplication of Payments; Subrogation. The Company shall not be
liable under this Agreement to make any payment in connection with any claim
made against the Executive to the extent the Executive has otherwise actually
received payment (under any insurance policy, Bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder. In the event the Executive actually receives
payment (under any insurance policy, Bylaw or otherwise) of any amount with
respect to which the Company has already indemnified or subsequently indemnifies
the Executive, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of the Executive, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
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4.13 Binding Effect, Etc. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns (including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business or assets of the Company), spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business or assets of the
Company, by written agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. The indemnity provisions of this Agreement
shall continue in effect regardless of whether the Executive continues to serve
as an employee of the Company.
4.14 Contribution. If the indemnity contained in this Agreement is
unavailable or insufficient to hold the Executive harmless in a Claim for an
Indemnifiable Event, then separate from and in addition to the indemnity
provided elsewhere herein, the Company shall contribute to Expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by or on behalf of the Executive in connection with such Claim in such
proportion as appropriately reflects the relative benefits received by, and
fault of, the Company on the one hand and the Executive on the other in the
acts, transactions or matters to which the Claim relates and other equitable
considerations.
4.15 This Agreement supercedes and rescinds any existing employment
contracts now in effect between the Company and the Executive.
* * * * * * * *
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officer thereunto duly authorized, and Executive has signed this
Agreement, all as of the day and year first above written.
AMERICAN ECO CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
--------------------------------------
Xxxxxxx X. Xxxx
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INDEX OF DEFINED TERMS
TERM SECTION
---- -------
Affiliate 2.1(e)
Agreement Preamble
Annual Bonus 1.4(b)
Base Salary 1.4(a)
Cause 1.5(b)
Change in Control 1.5(e)
Company Preamble
Company Breach 1.5(d)
Competing Business 2.1(d)
Confidential Information 2.2(a)
Date of Termination 1.5(h)
Disability 1.5(a)
Executive Preamble
Executive Claims 4.4
Explanation of Termination of Employment 1.5(g)
Notice of Termination 1.5(g)
Term 1.3
Without Cause 1.5(c)
Without Good Reason 1.5(f)
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