Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, dated February 17, 1997, by and between Xxxxxx X. Xxxxxx
("Executive") and EA Engineering, Science, and Technology, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Company desires to employ Executive and to enter into an
agreement embodying the terms of such employment (the "Agreement"); and
WHEREAS, Executive desires to accept such employment and enter into such
an Agreement,
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereby agree as follows:
1. Position.
(a) Executive shall serve as the Chief Executive Officer and President
of the Company and have the general powers and duties of supervision and
management usually vested in the office of Chief Executive Officer of the
Company. In such position, Executive shall have such duties and authority as
shall be determined from time to time by the Board of Directors of the Company
(the "Board") in its sole discretion. The Executive will be appointed to the
Board at the time he assumes his duties; and the Company will use its best
efforts to cause Executive to be elected to the Board at the next annual meeting
of the shareholders of the Company. Executive agrees to serve on the Board and
its committees without additional compensation. In the performance of his
duties, Executive shall comply with the policies and procedures of the Company
(presently in effect or as may be reasonably modified or established hereafter)
and be subject to the direction of the Board.
(b) During the term of his employment hereunder, Executive will devote
all of his business time and best efforts to the performance of his duties
hereunder and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict with the rendition of such
services, either directly or indirectly, without the prior written consent of
the Board. Notwithstanding any provision of this Agreement to the contrary, any
breach of the provisions of this Section l(b) shall permit the Company to
terminate the employment of Executive for Cause.
(c) To the best of Executive's knowledge, Executive represents and
warrants that he is not a party to any agreement, contract, or understanding,
whether of employment or otherwise, which would in any way restrict or prohibit
him from undertaking or performing his employment and other obligations in
accordance with the terms and conditions of this Agreement. Executive further
agrees to indemnify and hold harmless the Company and its past and present
officers, directors, employees, agents, owners, stockholders, representatives,
and attorneys from and against and in respect of any and all claims alleging
that (a) Executive is so restricted or prohibited or (b) the Company has
committed a wrongful act in negotiating with, and employing the services of,
Executive.
2. Term of Employment. The term of Executive's employment under this
Agreement shall commence on the date hereof and shall continue thereafter unless
and until terminated as provided in Section 9 of this Agreement (the "Employment
Term").
3. Compensation. The Company shall pay Executive an annual gross base
salary (the "Base Salary") at the annual initial rate of Two Hundred Seventy-
Five Thousand Dollars ($275,000), payable in accordance with the Company's usual
payment practices. The Executive shall be entitled to such increases in his Base
Salary as may be determined from time to time in the sole discretion of the
Board. At such times and in such manner as is acceptable to the Company,
Executive may elect to defer receipt of up to fifteen percent (15%) of his Base
Salary to future fiscal years. The parties agree to execute such additional
documents as may be necessary to implement this deferral arrangement in
accordance with the U.S. Internal Revenue Code and regulations promulgated
thereunder.
4. Bonus and Stock Options.
(a) With respect to each fiscal year during the Employment Term,
Executive shall be eligible to receive, in addition to his Base Salary, a bonus
for services rendered during such fiscal year, which Bonus shall be determined
by the Board in its sole discretion. Guidelines for the earning of this Bonus
will be agreed to by the Board and the Executive at the beginning of each fiscal
year. In each fiscal year, Executive may be paid a bonus of up to fifty percent
(50%) of Executive's Base Salary in such fiscal year, which bonus shall be paid
in cash. However, for his first fiscal year of service during the Employment
Term, Executive shall be paid a bonus of not less than Fifty Thousand Dollars
($50,000). This bonus, at the company's option, will be paid on August 31, 1997
or September 1, 1997, which bonus will be paid in cash. At such times and in
such manner as is acceptable to the Company, Executive may elect to defer
receipt of all or part of his bonus, if any, in a particular fiscal year to
future fiscal years. The parties agree to execute such additional documents as
may be necessary to implement this deferral arrangement in accordance with the
U. S. Internal Revenue Code and regulations promulgated thereunder.
(b) (i) Upon commencing employment with the company, and subject to the
approval of the Compensation Committee of the Board ("Committee"), Executive
will be awarded options to purchase Two Hundred Thousand (200,000) shares of the
Company's Common Stock ("Common Stock"), which will have an exercise price based
on the per share fair market value of the Common Stock on the date the Committee
approves the award.
(ii) Of these options, Fifty Thousand (50, 000) will be fully
vested upon award by the Committee and the balance will be vested over the next
three years in equal increments of Fifty Thousand (50,000) per year. At the
beginning of the second year of the Employment Term, if Executive is still
employed by the Company under the terms of this Agreement, and subject to the
approval of the Committee, Executive will be awarded options to purchase One
Hundred Fifty Thousand (150,000) shares of Common Stock which options will vest
in accordance with the following schedule as long as Executive is still employed
by the Company on the vesting date:
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(A) twenty-five percent (25%) one (1) year after
the date of the award by the Committee;
(B) twenty-five percent (25%) two (2) years after
the date of the award by the committee;
(C) twenty-five percent (25%) three (3) years after
the date of the award by the Committee; and
(D) twenty-five percent (25%) four (4) years after
the date of the award by the Committee,
and which options will have an exercise price based on the per share fair market
value of the Common stock on the date in the fiscal year in which the Committee
approves the award.
(iii) At the beginning of the third year of the Employment
Term, if Executive is still employed by the Company under the terms of this
Agreement, and subject to the approval of the Committee, Executive will be
awarded options to purchase Fifty Thousand (50,000) shares of Common Stock which
options will vest in accordance with the following schedule as long as Executive
is still employed by the Company on the vesting date:
(A) twenty-five percent (25%) one (1) year after
the date of the award by the Committee;
(B) twenty-five percent (25%) two (2) years after
the date of the award by the committee;
(C) twenty-five percent (25%) three (3) years after
the date of the award by the committee; and
(D) twenty-five percent (25%) four (4) years after
the date of the award by the Committee,
and which options will have an exercise price based on the per share fair market
value of the Common Stock on the date in the fiscal year in which the Committee
approves the award. With respect to the stock options to be awarded at the
beginning of the second and third years of the Employment Term, and subject to
the approval of the Committee, the quantity of stock options to be awarded and
their exercise prices will be adjusted in the event of and to reflect the impact
of any major recapitalization of the Company.
(c) Nothing in Section 4(b) precludes the Committee, in its sole
discretion, from awarding Executive stock options in addition to those stock
options enumerated in Section 4(b).
(d) All stock options awarded to Executive under Section 4(b) are
subject to the terms of the Company's stock option plan pursuant to which the
stock options are awarded; provided, however, that if the Executive's employment
is terminated by the Company in accordance with Section 9(c) hereof, the
Executive will have a period of five (5) years from the date of such termination
within which to exercise any option that has become vested by
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the date of such termination.
5. Housing Allowance. The Company recognizes that the Executive will not
relocate his residence from New Jersey to the Baltimore metropolitan area until
his daughter finishes high school. Hence, the Company will furnish the Executive
at its expense with an appropriate apartment in the Xxxx Valley area of
Maryland. At the time of the Executive's relocation to the Baltimore
metropolitan area, the Company will provide Executive with a relocation package
of expense reimbursement that is appropriate to a person of similar executive
position.
6. Vacation. Executive shall be entitled to four (4) weeks vacation in
each calendar year, which amount will be prorated in those calendar years in
which he is employed by the Company for only part of the calendar year.
7. Employee Benefits. Executive shall be provided employee benefits
(including fringe benefits, pension and profit sharing plan participation and
life, health, accident and disability insurance) (collectively "Employee
Benefits") on the same basis as those benefits are generally made available to
senior executives of the Company. In addition, to the extent not otherwise
provided for in this Agreement, Executive shall be entitled to participate in
all plans providing benefits to the senior executives including incentive
compensation, stock option, stock appreciation, stock bonus and other
compensable plans extended by the Company from time to time to senior corporate
officers.
8. Business Expenses and Perquisites.
(a) Reasonable travel, entertainment and other business expenses
incurred by Executive in the performance of his duties hereunder shall be
reimbursed by the Company in accordance with Company policies.
(b) The Company shall provide to Executive during the term of this
Agreement the use of an automobile for which the Company shall assume the cost
of insurance, taxes, maintenance and business related operating expenses upon
presentation by Executive of documentation supporting such expenses. Executive
shall bear the costs of personal use of the vehicle and such use shall be
governed by the U.S. Tax Code provisions regulating business and personal use of
a Company car.
9. Termination of Employment.
(a) For Cause by the Company. Executive's employment hereunder may be
terminated by the Company for "Cause" at any time during the Employment Term.
For purposes of this Agreement, "Cause" shall mean (i) Executive's willful and
continued failure substantially to perform his duties hereunder (other than as a
result of total or partial incapacity due to physical or mental illness), (ii)
dishonesty or breach of trust in the performance of Executive's duties hereunder
which is materially injurious to the financial condition or business reputation
of the Company or any of its subsidiaries or affiliates, (iii) any act or
omission on Executive's part constituting a felony under the laws of the United
States or any state thereof that has an adverse impact on Executive's character,
suitability, or fitness to remain as the Chief Executive Officer of the Company,
or (iv) any other willful act or omission
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which is materially injurious to the financial condition or business reputation
of the Company or any of its subsidiaries or affiliates. For purposes of this
section 9(a), no act or failure to act on the part of Executive shall be deemed
"willful" unless done, or omitted to be done, by Executive not in good faith and
without reasonable belief that the act or omission of Executive was in, or not
opposed to, the best interest of the Company. If Executive is terminated by the
Company for Cause, he shall be entitled only to receive his Base Salary through
the date of termination. All other benefits due Executive following Executive's
termination of employment pursuant to this Section 9(a) shall be determined in
accordance with the plans, policies and practices of the Company.
(b) Disability or Death. Executive's employment hereunder shall
terminate upon his death and if Executive becomes physically or mentally
incapacitated and is therefore unable for a period of two (2) consecutive months
or for an aggregate of three (3) months in any twelve (12) consecutive month
period to perform his duties (such incapacity is hereinafter referred to as
"Disability"). Any question as to the existence of the Disability of Executive
as to which Executive and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to Executive
and the Company. If Executive and the Company cannot agree as to a qualified
independent physician, each shall appoint such a physician and those two
physicians shall select a third who shall make such determination in writing.
The determination of Disability made in writing to the Company and Executive
shall be final and conclusive for all purposes of the Agreement. Upon
termination of Executive's employment hereunder for either Disability or death,
Executive or his estate (as the case may be) shall continue to receive the
payment to which Executive is entitled pursuant to Section 3 hereof (hereinafter
the "Contract Payments") for a period of twelve (12) months from the date of
termination for either Disability or death. All other benefits due Executive
following Executive's termination for either Disability or death shall be
determined in accordance with the plans, policies and practices of the Company.
(c) Without Cause by the Company. Executive's employment hereunder may
be terminated by the Company without Cause (other than by reason of Disability
or death) at any time during the Employment Term. If Executive is terminated by
the Company without cause (other than by reason of Disability or death),
Executive shall continue to receive the Contract Payments for a period of
eighteen (18) months from the date of Executive's termination pursuant to this
Section 9(c). All other benefits due Executive following Executive's termination
of employment by the Company without Cause (other than by reason of Disability
or death) shall be determined in accordance with the plans, policies and
practices of the Company, except that Executive shall not be entitled to any
separation or severance pay under any such plans, policies and practices.
(d) Termination by Executive.
(i) If Executive terminates his employment with the Company for
any reason (other than the reason set forth in Section 9(d)(ii)), Executive
shall be entitled to the same payment he would have received if his employment
had been terminated by the Company for Cause.
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(ii) If, within thirty (30) days after a "Change of Control,"
Executive terminates his employment with the Company because of the "Change of
Control," Executive shall be entitled to receive the Contract Payments for a
period of two (2) years from the date of Executive's termination pursuant to
this section 9(d)(ii). For purposes of this Agreement, "Change of Control" shall
mean the occurrence of the following event with respect to the Company: a change
of a nature that would be required to be reported, by persons or entities
subject to the reporting requirements of Section 13(d) of the Securities and
Exchange Act of 1934 (the "Exchange Act"), in Schedule 13D of Regulation 13DG,
or any successor provisions thereto, promulgated under the Exchange Act;
provided that a Change of Control shall be deemed to have occurred only if any
"person" (as that term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 issued under the
Exchange Act), directly or indirectly, of securities of the Company representing
forty-five percent (45%) or more of the combined voting power of the Company's
then outstanding securities.
(e) Notice of Termination. Any purported termination of employment by
the Company or by Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 14(g) hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of employment under the provision so
indicated. Executive shall give the Company at least fifteen (15) days advance
written notice of his intention to terminate his employment (under Section 9(d))
and no such termination shall be effective unless that notice has been given. In
the event Executive gives notice of his intention to terminate his employment,
the Company is entitled to accelerate his termination to an earlier date and
such termination shall still be deemed a termination by Executive governed by
Section 9(d).
(f) If during the period of continued payments provided in Section 9(c)
hereof, Executive shall become self-employed or employed by a third party, the
Company shall be responsible only to pay Executive the excess, if any, of the
Contract Payments over the compensation Executive is receiving from other
sources.
10. Confidentiality. Executive will not at any time (whether during or after
his employment with the Company) disclose or use for his own benefit or purposes
or the benefit or purposes of any other person, firm, partnership, joint
venture, association, corporation, or other business organization, entity or
enterprise, other than the Company and any of its subsidiaries or affiliates,
any trade secrets, information, data, or other confidential information relating
to customers, development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of the Company generally,
or of any subsidiary or affiliate of the Company, provided, that the foregoing
shall not apply to information which is not unique to the Company, or which is
generally known to the industry or the public other than as a result of
Executive's breach of this covenant. Executive agrees that upon termination of
his employment with the Company for any reason, he will return to the Company
immediately all memoranda, books, papers, plans, information, letters and other
data, and all copies thereof or
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therefrom, in any way relating to the business of the Company and its
subsidiaries and affiliates, except that he may retain personal notes, notebooks
and diaries. Executive further agrees that he will not retain or use for his
account at any time any trade name, trademark or other proprietary business
designation used or owned in connection with the business of the Company or its
subsidiaries and affiliates.
11. Specific Performance. Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 1(b), Section 10 would be inadequate and, in recognition
of this fact, Executive agrees that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available.
12. Arbitration.
(a) Except as provided in Section 13(b) immediately below, any and all
claims arising out of or relating to (i) this Agreement, (ii) any breach of any
provision of this Agreement, (iii) Executive's employment at any time with the
Company, and/or (iv) the termination of Executive's employment with the Company
shall be settled by arbitration. Such arbitration proceeding shall be conducted
pursuant to the Employment Dispute Resolution Rules of the American Arbitration
Association ("AAA,") then in effect, by a single arbitrator and shall be held in
Baltimore City, Maryland. The cost of the arbitration proceeding and the
reasonable costs and attorneys, fees of the prevailing party shall be paid by
the non-prevailing party, with the dollar amount of these costs and fees to be
fixed by the arbitrator. The judgment upon the award rendered by the arbitrator
may be entered in any court having competent jurisdiction thereof.
(b) Nothing in Section 13(a) immediately above shall be construed or
interpreted to preclude the Company from filing suit in a court of competent
jurisdiction in order to enforce its rights and remedies under Sections 1(b),
10, 11 and/or 12 of this Agreement. In any such suit, the court is empowered to
and shall resolve any dispute as to whether the claims asserted by the Company
are within the scope of Sections 1(b), 10, 11 and/or 12 of this Agreement, and
the court shall not refer such dispute to arbitration under Section 13(a)
immediately above.
(c) With respect to the claims of Executive that are within the scope
of Section 13 (a) above, if Executive has the same, similar, or related claims
against any of the Company's employee benefit plans, trusts, committees, or
boards or against any past or present officers, directors, employees, agents,
owners, stockholders, trustees, fiduciaries, administrators, sponsors,
representatives, or attorneys of the Company, its subsidiaries, or its
affiliates or the Company's employee benefit plans, trusts, committees, or
boards (collectively referred to as the "Other Defendants,"), and if Executive
seeks to litigate such claims against the Other Defendants in a civil action or
any other proceeding including before an administrative agency), Executive
agrees that any or all of said Other Defendants may compel Executive to
arbitrate his claims against them pursuant to the terms of this Section 13.
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(d) The arbitrator selected by the parties pursuant to the AAA rules
shall have expertise in private industry employee relations and shall hear and
determine the case promptly. The burden of persuasion shall at all times be upon
the party seeking relief.
13. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland.
(b) Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the employment of Executive by the
Company and fully supersedes any and all prior restrictions, agreements,
statements, representations, promises, inducements, warranties, covenants or
understandings, written or oral, between Executive and the company with respect
to the subject matter herein. There are no restrictions, agreements, statements,
representations, promises, inducements, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than those
expressly set forth herein. This Agreement may not be altered, modified, or
amended except by written instrument signed by the parties hereto.
(c) No Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a waiver
of such party's rights or deprive such party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement.
(d) Severability. In the event that any one or more of the provisions
of this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable by Executive
and shall be assignable by the Company only with the consent of Executive.
(f) Successors, Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees of the
parties hereto. This Agreement shall also inure to the benefit of the Other
Defendants and their respective heirs, executors, administrators, successors,
assigns, and legal representatives.
(g) Notice. For the purpose of this Agreement notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when telecopied, delivered, or mailed by United
States registered mail, return receipt requested, postage prepaid addressed to
the respective addresses set forth on the execution page of this Agreement,
provided that all notices to the Company shall be directed to the attention of
the Board with a copy to the Secretary of the Company, or to such other address
as either party may have furnished to the other in writing in accordance
herewith except that notice of change of address shall be effective only upon
receipt. Notice by telecopier will be effective only if and when receipt is
confirmed by the sender by telephoning and speaking directly with the intended
recipient or, in the absence of the intended recipient, in the
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case of the Company, the regular secretary of the intended recipient, and in the
case of Executive, a member of his family at his residence.
(h) Withholding Taxes. The Company may withhold from any amounts
payable under this Agreement such federal, state and local taxes as may be
required to be withheld pursuant to any applicable law or regulation.
(i) Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
(j) Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretations of this Agreement.
IN WITNESS WHEREOF, the parties hereto set their hands as of the day and
year first above written.
ENGINEERING, SCIENCE, AND TECHNOLOGY, INC.
00000 XxXxxxxxx Xxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
By /s/ Xxxxx X. Xxxxxx
____________________________________
Xxxxx X. Xxxxxx, Chairman
By /s/ Xxxxxx X. Xxxxxx
____________________________________
Xxxxxx X. Xxxxxx
0 Xxxxxxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
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