EXHIBIT 10.12.2
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (the "Agreement") effective as of
January 1, 1998 by and between American Eco Corporation, an Ontario,
Canada corporation whose principal executive offices are in Houston,
Texas (the "Company"), and Xxxxx X. Xxxxxxxxx (the "Executive").
R E C I T A L S
- - - - - - - -
Executive has served Vice President and Treasurer of the
Company since January 1, 1998.
The Board of Directors 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.
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 1
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 Vice
--------
President and Treasurer, 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 Board of Directors of the Company.
(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
tile Executive's duties pursuant to this Agreement. The Executive
has, by prior agreement, agreed to cooperate from time-to-time
with his former employer, in the event that he is needed to
assist in litigation or regulatory matters, the Company agrees to
allow the Executive to cooperate if he is needed to fulfill his
prior agreement as long as his commitment does not materially
effect the performance of the Executive's duties. The Executive
will not be paid during the time he is absent from the Company in
fulfillment of this obligation.
1.3 Term. The term of this Agreement shall commence on January 1,
----
1998 and shall end on the third anniversary of the date on which the
Board of Directors of the Company notifies the Executive that the
Board of Directors has determined to discontinue 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 $250,000 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
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 each 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 and shall be described on Appendix A, which shall be
attached to this Agreement. Appendix A shall be revised from time
to time to reflect the Annual Bonus to which the Executive may be
entitled in future years, and a copy of such revised Appendix A
shall be provided to the Executive prior to the start of the year
for which an Annual Bonus is payable; provided, however, that the
amount of the Annual Bonus and the conditions for the payment of
such amount may not be changed after the start of the fiscal year
for which such Annual Bonus is payable.
(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. For 1998, the Executive shall be
granted an option to purchase 50,000 shares of the common stock
of the Company.
(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) 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.
(f) 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.
(g) 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.
(h) 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).
(i) 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.
(j) The Company agrees to relocate the Executive and his
spouse from Lisle, IL to Houston, TX. The Company will reimburse
the Executive for all of his out-of-pocket relocation expenses
including temporary living in Houston, commuting during
reasonable transition period, two house-hunting trips to Houston,
realtor's commission on sale of the Lisle House, expenses of
closing and attorneys fees. Furthermore any expenses of acquiring
a new house including mortgage points, closing costs, and
attorney's fees. Finally, the moving cost of household effects
including the automobile will be reimbursed. Any taxes associated
with the moving expense will be reimbursed by the Company.
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 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
(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 with 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
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 nor 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.
(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 With 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 prorated 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. plus the average Annual Bonus paid to the
Executive during the preceding two (2) years (or such
shorter period for which any Annual Bonus has been paid),
multiplied by (B) the number three (3).
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 1.5(e) (Change in Control), then the
Company shall pay to the Executive as severance pay and as
liquidated damages (because actual damages ire 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 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
citation 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 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, diver 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 entire,
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.
(c) Nature of Restriction. 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, point venture,
organization, or other entity engaged in the industrial support
services, specialty fabrication, or environmental remediation
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 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 ocher 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, 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 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:
Xxxxx X. Xxxxxxxxx
0000 Xxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
If to the Company:
American Eco Corporation
00000 Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attn: President
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.
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 our 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 this (30) days of the appointment of the
last arbitrator, then at a site chosen by the arbitrators;
(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 arty 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 indemnities
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.
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.
* * * * * * * *
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:/s/ Xxx. Xxxxxx X. Getty
-----------------------------
Name: Xxx. Xxxxxx X. Getty
--------------------------
Title: Director
--------------------------
/s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxx
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)
APPENDIX A
----------
EXECUTIVE'S BONUS CALCULATION FOR FISCAL YEAR 1997
--------------------------------------------------
The Executive is not eligible for a bonus for fiscal year 1997.
