EXHIBIT 10.29
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day of
October, 1997, between ESI, ENGINEERING SERVICES, INC. ( a wholly owned
subsidiary of The XXXXX COMPANIES, Inc. a California Corporation) ("Employer")
and Xxxxx X. Xxxxx ("Employee"), in contemplation of the following facts:
A. Employer is engaged in the highly specialized business of designing,
developing, conducting, managing and implementing all of the facilities,
policies, procedures, plans and programs for the conduct of a fully
operational consulting engineering business which specializes in the design
of (1) processing systems for various manufacturers, (2) electrical
engineering, (3) instrumentation and (4) systems to dispose of contaminated
waste.
B. Employee is being employed by Employer because of his intellectual
capabilities, character and the extraordinary ability and expertise which
Employee possesses in resolving complex process engineering challenges, and
his exceptional management capabilities. Employee has been employed by
Employer for more than seventeen years, however, concurrent with the
execution of this Agreement, Employer is being acquired by The Xxxxx
Companies, Inc. ("Xxxxx"), and Employee is a selling shareholder.
C. Said employment is primarily of a highly confidential nature involving
duties which require Employer to confide in Employee and to entrust
Employee with the highest degree of faith, trust and confidence.
NOW, THEREFORE, in consideration of the initiation of said employment, of other
good and valuable consideration received by Employee (the receipt of which is
hereby acknowledged) and of the mutual promises and covenants herein,
THE PARTIES HERETO AGREE AS FOLLOWS:
1. Incorporation of Recitals by Reference.
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The recitals hereinbefore set forth as Paragraphs A through C, inclusive,
are hereby incorporated by this reference as part of the agreement made between
Employer and Employee, as though said recitals were again set forth at length
herein. Employer and employee hereby acknowledge and confirm to each other the
truth and correctness of each said recital.
2. Nature of Employment.
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Employer hereby employs Employee as a Senior Vice President - Process
Engineering of Employer initially with the primary responsibility and authority
for the
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management of ESI's Process Engineering Division, and also as the business
manager of ESI, which duties entail, among others, the design and implementation
of the planning, business management and administrative functions of ESI and the
oversight of the Process Engineering segment of ESI's business, and programs
related thereto. In his capacity as business manager of ESI, Employee shall
report to the Chief Financial Officer of Xxxxx.
During the term of this Agreement, Employee shall undertake and discharge
in a competent and professional manner at all times and for the exclusive
benefit of Employer all of Employer's assigned work as delegated to Employee
from time to time, and shall implement such procedures and plans as are prudent
to accomplish such assignments, including without limitation all processes,
policies and procedures, and work product relating thereto or in any way
connected therewith. Employee shall during the term hereof also supervise and
discharge in a like competent and professional manner at all times and for the
exclusive benefit of Employer all managerial responsibilities and duties
relating to the maintenance, improvement and advancement on all levels of
Employer's engineering business. With the concurrence of Employee, Employer may
direct that Employee's duties hereunder be performed for any of Employer's
affiliated engineering offices and Employer may assign this Agreement in its
entirety to any one or more of Employer's divisions, subsidiaries or affiliates,
as they may exist from time to time. However, Employee shall not be required to
change his place of full time employment from the general area of Walnut Creek
without Employee's voluntary concurrence.
During the term of this Agreement, which may be extended as hereinafter
provided, Employee shall devote Employee's full time, energies and skills to the
management and conduct of Employer's business. Except for his ownership interest
in Design Services, Inc., which business is expected to be sold during 1997 or
early 1998, Employee agrees that he will not without Employer's prior written
consent either directly or indirectly, alone or as a member of a partnership or
other association, or as an officer, director or shareholder of any corporation,
be engaged in or concerned with any other duties or pursuits in a business
activity which competes in any manner whatsoever with the business and
activities of Employer. It is agreed that during some or all of the term of this
Agreement, Employee may deem it necessary or advisable to devote a small amount
of time to the management of his outside, personal investments unrelated to
Employer's business. Such time devoted to such investments shall not exceed an
average of ten hours per month.
3. Term of Employment.
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Said employment shall be for an initial period of five (5) years,
commencing as of the date hereof, subject to earlier termination as hereinafter
provided. It is contemplated that the term of this Agreement may be extended in
one year supplements after the end of the initial term hereof by mutual
agreement of the parties hereto, provided that the terms and conditions of any
such extension shall be evidenced by a writing signed by each of the parties
hereto, In the event that a new agreement is not executed among the parties,
Employee shall become an employee at will of Employer. It is further agreed,
that upon the request of Employee, after October 1, 2000, Employee may wish to
be employed as a part
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time consultant, available to Employer for no less than 1,500 hours per year
(including any vacation, holiday and sick pay hours available and utilized by
Employee), with an appropriate adjustment in compensation and benefits based
upon such hours, or based upon Employee's termination of full time employment
and subsequent retention as a consultant.
4. Salary.
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Employer shall pay to Employee a salary of ONE HUNDRED SIX THOUSAND DOLLARS
($106,000.00) per twelve month period during the first twelve months of this
Agreement, payable in bi-weekly installments or on such payroll dates
established from time to time for Employer's senior management level employees.
As of each October 1, commencing October 1, 1998, Employer shall fairly consider
increases in Employee's base pay rate commensurate with his demonstrated
capabilities both technically and considering new business opportunities
developed by Employee. It is anticipated that, as a minimum, the percentage by
which Employee's base salary rate shall be increased as of each October 1st will
be reflective of increases in the Consumer Price Index or some similar measure
of inflation's impact on purchasing power in the geographic area in which
Employee resides.
In the unlikely event that ESI fails to earn Net Income After Provision for
State and Federal Taxes on Income of ten percent of the average book value of
ESI's Shareholders' Equity during any year, Employee's salary may be adjusted
downward, but in no event below Eighty Five Thousand Dollars per annum. The
average book value of Shareholders' Equity for any fiscal year shall be
determined in accordance with generally accepted accounting principals ("GAAP")
by calculating the average of the book value at the beginning of the fiscal
year, the book value at the end of each subsequent three month period during
that fiscal year, and the book value at the end of the fiscal year (the five
amounts are added together, and that result is divided by five).
In the event of a reduction in the salary of Employee due to ESI's failure
to achieve the net income levels required by the preceding paragraph, such
reduction in base salary shall not extend past the end of the fiscal quarter
which immediately follows the fiscal quarter during which the required net
income goals are once again attained.
All salary payments to Employee shall be subject to deduction therefrom of
all payroll taxes, withholdings and assessments as are required by law and by
such voluntary payroll deductions as Employee authorizes in writing, all as
established from time to time pursuant to Employer's payroll policy. Anything
set forth herein to the contrary notwithstanding, said salary shall be prorated
to the actual period of Employee's employment hereunder.
5. Incentive Stock Option Plan of Employer
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During the period of Employee's employment he shall participate in
Employer's Incentive Stock Option Plan. Initially Employer shall grant Employee
options on 40,000 shares, each with an exercise price of one dollar per share.
The terms of the Incentive Stock Option Plan (this explanation is merely a
summary, thus the Plan itself should be examined
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for specific terms and conditions, it is agreed that in the event of any
conflict, the terms of the Plan shall prevail) provide for vesting of 20% of the
total shares granted during each of the first five years of an employee's
employment, and allow up to ten years for an employee to exercise his vested
options . Should Employee become a Consultant to Employer after September, 2000
as provided in Section 3 of this Agreement, Options granted prior to that date
shall continue to vest as if Employee was still a full time employee of
Employer.
Irrespective of any provision of the Stock Option Agreement to the
contrary, in the event of Employee's death or permanent disability (as certified
by a licensed physician) while employed by Employer, all shares granted in
Employee's stock option described in the preceding paragraph shall vest
immediately, and Employee's estate, representative or the Employee, as the case
may be, shall have one year from the date of such event in which to exercise any
or all of the unexercised option.
6. Expenses
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Employer will reimburse Employee from time to time for all necessary
expenses incurred in connection with the performance of Employee's duties under
this Agreement but only upon submission to Employer of good and sufficient
supporting vouchers, receipts and the like for all such expenses for which
Employee desires to receive reimbursement from Employer, and on forms utilized
by Employer. Employee's right to reimbursement shall be subject to such policies
as Employer establishes from time to time for its management employees.
In the event that any applicable federal or state taxing authority denies
for any reason the deduction by Employer for any reimbursed expense (except the
portion of meals and entertainment expense which is not deductible under then
applicable income tax law, currently 50% is not deductible) paid to Employee
hereunder then, upon demand of Employer, Employee shall repay to Employer the
full amount of all such disallowed reimbursed expense, as the case may be.
7. Termination of Employment.
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Anything set forth herein to the contrary notwithstanding, this Agreement
shall terminate and shall be of no further force or effect whatsoever (except
with respect to those provisions set forth in Sections 9 and 10 hereof which
are hereby expressly intended to survive the termination of this Agreement)
immediately upon the occurrence of any of the following events:
(a) The expiration of the term of employment hereunder as provided for
in Section 3 hereof;
(b) The death of Employee;
(c) At the sole option of Employer, if Employee is unable to unwilling
to perform his assigned duties for any reason, including but not limited to
sickness, accident or disability, beyond the period of Employee's accumulated
sick leave, or beyond the time of such other leave of absence as the Employer
customarily grants to its employees under similar circumstances, if any, or upon
the total disability of Employee, as the case may be.
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(d) If Employee fails to carry out his duties faithfully,
conscientiously and competently and does not correct any such failure to
Employer's reasonable satisfaction within ten (10) days after written notice
from Employer to Employee thereof;
(e) At the sole option of Employer, if Employee accepts any employment
by or for any other person, firm or corporation without Employer's prior written
consent.
(f) At sole option of Employer, if Employee should do any act
offensive to decency, morality or social propriety tending to result in scandal,
hatred, proved or admitted allegations of sexual harassment, ridicule or
contempt or if Employee should violate or be charged with a violation of any law
which subjects Employee or Employer to any scandal, hatred, ridicule or
contempt, or a judgment of a court of competent jurisdiction of monetary damages
in excess of $50,000 for sexual harassment or job discrimination, or either
pleads or is found guilty of any felony.
(g) At the sole option of Employer, in the event that Employer ceases
for any reason to conduct its business and activities in the State of
California.
Anything set forth herein to the contrary notwithstanding, Employee
(or Employee's heirs, personal representatives, guardians or conservators, as
the case may be) shall be entitled to receive from Employer any prorated salary,
or other benefit which has accrued to Employee hereunder prior to any such
termination of Employee's employment hereunder.
8. Vacation and Fringe Benefits
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Employee shall be entitled to paid vacations, sick leave and other benefits
as may be established by Employer from time to time as standard for comparable
employees. For purposes of seniority in connection with vacation privileges and
for length of service awards, Employee's hire date shall be considered to be
October 1, 1990. In addition, Employee shall also be entitled to participate in
such fringe benefit programs, if any, as may be provided for by Employer from
time to time for the benefit of comparable employees during the terms of this
Agreement and in which Employee is designated as a participant therein or
beneficiary thereof. All of such programs and policies are hereby expressly made
subject to adjustment, modification or cancellation by Employer from time to
time in order to conform with Employer's managerial policies.
9. Nondisclosure of Information.
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Employee acknowledges that during the course of his employment hereunder he
will be acquiring, making use of and adding to confidential information of
special and unique value to Employer and relating to such matters (by way of
example only and without limitation thereto) as lists of Employer's and its
affiliates' clients and their projects, Employer's pricing of client's projects
and the compensation rates and professional abilities of fellow employees.
Employee agrees that during the term of this Agreement and for the twenty
four (24) month period next following the term hereof (without the prior written
consent of the
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President of Xxxxx, its successors or assigns), he will not as an individual or
as a stockholder, partner, agent, employee, servant or representative of any
person, firm corporation or association, either directly or indirectly divulge,
disclose or communicate to any person, firm, corporation (other than Employer
and its affiliates) or association in any manner whatsoever or take advantage of
for his own economic gain or for the economic gain of others any information of
any kind, nature or description concerning any matters affecting or relating to
Employer's business or affairs, including without limitation the names of any of
its customers, its relations with its employees, including salaries, job
classification and skill levels, its manner of operation, its copyrights, plans,
processes or other data of any kind, nature or description, or any other
information, of, about or concerning Employer's confidential business and
affairs. All of such information is hereby determined and declared to be
important, material, highly confidential, in the nature of trade secrets and
vitally important to the successful conduct of Employer's business and the
maintenance of its goodwill among its clients and employees.
As a separate and distinct covenant hereby made by Employee to Employer,
during the term hereof and within the period of twelve (12) calendar months
thereafter, Employee shall not (as an individual or as a stockholder, partner,
agent, employee or representative of any person, firm, corporation or
association) engage in or have any direct or indirect interest in any business
in competition with one or more of the businesses carried on by Employer or by
any of its affiliates (whether subsequently carried on by the same organization
or by any successors thereto) as presently conducted or as conducted at any time
during the term of this Agreement or within said twelve (12) calendar month
period thereafter in any geographical area within thirty miles of an Engineering
office then operated by ESI or by any affiliate of the Xxxxx Group of Companies,
provided, however, that this paragraph shall not prevent Employee from acquiring
and holding not to exceed two percent (2%) of the outstanding shares of any
corporation engaged in such competitive business if such shares are available to
the general public on a national or regional securities exchange or on the over
the counter market. Employee acknowledges that concurrent with the execution of
this Agreement, Xxxxx is acquiring all of ESI's issued and outstanding capital
stock from ESI's three owners, one of whom is Employee, and that Xxxxx would not
acquire said stock without the agreements not to compete and not to divulge
trade secrets as set forth in this and the preceding two paragraphs.
The various restrictions set forth in this Section 9 shall be deemed
severable and the invalidity of any such restrictions shall not affect the
validity of the remaining such restrictions. In the event of any breach by
Employee of the terms and conditions hereof, Employer shall have the right,
among other rights, to xxx Employee for damages sustained thereby and to seek
injunctive relief to restrain Employee from continuing with such breach.
Employee agrees that this Section 9 shall survive the termination of his
employment for any reason and Employee shall be bound by all of the terms and
conditions hereof subsequent to the termination of his employment and for so
long a period thereafter during said twelve (12) calendar month period as
Employer or its affiliates (or their respective successors in interest
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or assigns, as the case may be) continue to conduct the same or substantially
the same business at some or all of the places and locations within the
continental United States where such business is or will during such period be
conducted. Nothing herein contained shall in any way be deemed to limit,
derogate from, modify or exclude any or all other rights granted by law or in
equity to Employer as against Employee in the event of Employee's breach
hereunder.
10. Possible Cash Bonus
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Employee, who has been one of ESI's executives for many years, has been
informed that ESI may have Net Operating Loss Carryforwards for Federal and/ or
California Income Tax purposes ("NOL's") as of June 30, 1997 which may be
available in future tax years to offset taxable income earned in such future
years. To the extent that the NOL's achieve savings in either Federal or
California Income Taxes that would otherwise be payable, and as reflected on the
appropriate Federal Form 1120 and California Form 100 (or successors to such
forms, if any), Employee shall be paid a cash bonus of 16.6% of said tax
benefit. The cash bonus shall be paid within sixty days of the filing of the
corporate income tax return, and it shall be subject to normal payroll tax
withholdings and deductions which are then applicable to a normal cash bonus.
11. Miscellaneous
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(a) Partial Invalidity. If any term or provision of this Agreement
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or the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons and or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each such term and provision of this Agreement shall be valid and enforced to
the fullest extent permitted by law.
(b) Waivers. No waiver of any breach of any covenant or provision
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herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.
(c) Assignment. Neither party shall assign, transfer or convey,
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voluntarily or involuntarily, it's rights and obligations under this Agreement
without the prior written consent of the other property, which consent may be
withheld in such party's sole discretion.
(d) Successors and Assigns. This Agreement shall be binding upon and
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shall inure to the benefit of the permitted successors and assigns of the
parties hereto.
(e) Professional Fees. In the event of the bringing of any action or
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suit by a party hereto against another party hereunder by reason of any breach
of any of the covenants, agreements or provisions on the part of the other party
arising out of this
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Agreement, then in that event the prevailing party shall be entitled to have and
recover of and from the other party all costs and expenses of the action of
suit, including actual attorneys', accounting and engineering fees, and any
other professional fees resulting therefrom.
(f) Entire Agreement. This Agreement (including all Exhibits
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attached hereto) is the final expression of, and contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior understandings with respect thereto. This Agreement may not be modified,
changed, supplemented or terminated, nor may any obligations hereunder be
waiver, except by a written instrument signed by the party to be charged or by
its agent duly authorized in writing or as otherwise expressly permitted herein.
The parties do not intend to confer any benefit hereunder on any person, firm or
corporation other than the parties hereto.
(g) Time of Essence. The parties hereby acknowledge and agree that
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time is strictly of the essence with respect to each and every term, condition
obligation and provision hereof and that failure to timely perform any of the
terms, conditions, obligations or provisions hereof by either party shall
constitute a material breach of and a non-curable (but waivable) default under
this Agreement by the party so failing to perform.
(h) Construction. Headings at the beginning of each paragraph and
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subparagraph or section are solely for the convenience of the parties and are
not a part of the Agreement. Whenever required by the context of this Agreement,
the singular shall include the plural and the masculine shall include the
feminine and vice versa. This Agreement shall not be construed as if it had been
prepared by one of the parties, but rather as if both parties had prepared the
same. Unless otherwise indicated, all references to paragraphs, sections and
subparagraphs are to this Agreement. All exhibits referred to in this Agreement
are attached and exhibits referred to in this Agreement are attached and
incorporated by this reference. In the event the last date on which any party is
required to take any action under the terms of this Agreement is not a business
day, the action may be taken on the next succeeding business day.
(i) Governing Law. The parties hereto acknowledge that this
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Agreement has been negotiated and entered into in the State of California. The
parties hereto expressly agree that this Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with the laws of the
State of California, and by the Superior Courts of Orange County.
"EMPLOYER"
ESI, ENGINEERING SERVICES, INC.
A wholly owned subsidiary of THE XXXXX COMPANIES, Inc.
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a California Corporation
by /s/ XXXX X. XXXXX
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Xxxx X. Xxxxx, President
by /s/ XXXXX X. XXXX
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Xxxxx X. Xxxx, Secretary
"EMPLOYEE"
by /s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx
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