EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is dated as of June ___, 1997
and made by and among CRC Holdings, Corp., a Delaware corporation (the "Holding
Company"), CEPI Holdings, Inc., a Delaware corporation (the "Company"), and D.
Xxxx Xxxx ("Employee").
WHEREAS, the Holding Company and the Company have been recently created
and organized in connection with a proposed transaction (the "Proposed
Transaction") in which Employee, Natural Gas Partners IV, L.P., a Delaware
limited partnership ("NGP"), and Equus II Incorporated, a Delaware corporation
("Equus"), will each purchase shares of the Holding Company's common stock, par
value $.01 per share ("Common Stock") with the proceeds of such investments to
be used to make an investment in the Company, which the Company will use,
together with other available funds, to acquire substantially all of the assets
and the business of CRC-Xxxxx Pipeline International, Inc. and affiliated
companies (the "Acquired Companies");
WHEREAS, Employee has had a previous association with the Acquired
Companies (either as an employee, officer or consultant), and the Holding
Company and the Company desire to, promptly after the consummation of the
Proposed Transaction, employ Employee, who desires to be employed by the Holding
Company and the Company, upon the terms and conditions hereinafter set forth;
and
WHEREAS, it is a condition to the (consummation of the Proposed
Transaction that Employee enter into this Agreement;
NOW, THEREFORE, in consideration of, and as a material inducement to, the
consummation of the Proposed Transaction, the Holding Company, the Company and
Employee intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT; POSITION. Employee shall be employed by the Holding Company
and the Company, as Chairman of the Board (the "Position").
2. TERM. The term of this Agreement shall be for a period of __ years (the
"Term"), unless earlier terminated in accordance with the terms of this
Agreement.
3. DUTIES. Employee shall have such duties, functions, responsibilities,
and authority customarily pertaining to the Position, subject however, to the
bylaws and the directives of the Board of Directors of the Holding Company and
the Company; provided, that in no event shall Employee be required to relocate
outside of the Houston metropolitan area. During the Term, Employee shall devote
the time, skill, and attention necessary to fulfill his duties hereunder to the
business and affairs of the Holding Company and the Company, and in furtherance
of the business and affairs of the Holding Company, the Company and their
respective subsidiaries, if any, (collectively the "RELATED PARTIES").
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. During the Term, Employee shall be paid a base
salary at the rate of $120,000 per annum. This base salary may be reviewed
periodically and increases in such base salary may be granted at the sole
discretion of the Board of Directors of the Holding Company or the Company.
(b) BENEFITS. Employee shall be eligible to participate in such
insurance, medical and other employee benefit plans of the Holding Company or
the Company that may be in effect, from time to time, to the extent such plans
are generally available to other executive officers of the Holding Company or
the Company.
(c) PROFESSIONAL ORGANIZATION DUES. During the Term, the Holding
Company or the Company shall pay the initiation fees and periodic dues for
membership in any professional organizations in which Employee is currently a
member, or which are otherwise approved by the Board of Directors of the Holding
Company or the Company, and the Holding Company or the Company shall pay all
charges and expenses, including reasonable travel expenses, incurred by Employee
in connection with membership in such organizations.
(d) VACATIONS. Employee shall be entitled to take such vacations as
he may desire, with pay, provided that such vacations do not interfere with the
performance of his duties and services hereunder.
(e) EXPENSES. Employee will be reimbursed for reasonable expenses
incurred in the performance of his duties and services hereunder and in
furtherance of the business of the Related Parties upon presentation by Employee
of an itemized account, accompanied by appropriate receipts satisfactory to the
Holding Company or the Company, as the case may be, in substantiation of such
expenses.
5. TERMINATION OF EMPLOYMENT.
(a) Employee's employment hereunder:
(i) shall automatically terminate upon the occurrence of any
of the following: (A) the mental or physical incapacity or inability
of Employee to perform his duties for a consecutive period of one
hundred twenty (120) days or a non-consecutive period of one hundred
eighty (180) days during any twelve month period; (B) the death of
Employee; or (C) the voluntary resignation or retirement of
Employee; and
(ii) may be terminated by the Holding Company or the Company,
at any time, for "CAUSE", which shall mean by reason of any of the
following: (A) Employee's conviction of, or plea of nolo contendere
to, any felony or to any crime or offense causing substantial harm
to any of the Related Parties or involving acts of theft, fraud,
embezzlement, moral turpitude or similar conduct; (B) malfeasance in
the conduct of Employee's duties, including, but not limited to, (1)
willful and intentional misuse or diversion of funds of any of the
Relate Parties, (2) embezzlement, or (3)
fraudulent or willful and material misrepresentations or
concealments on any written reports submitted to the Related
Parties; (C) Employee's material breach of the provisions of this
Agreement or material failure to follow or comply with the
reasonable and lawful written directives of the Board of Directors
of the Holding Company or the Company, PROVIDED, HOWEVER, that
Employee shall have been informed, in writing, of such material
breach or failure and given a period of sixty (60) days to remedy
same.
(b) Upon any termination of Employee's employment pursuant to this
Section 5, all obligations (of the Holding Company and the Company under this
Agreement shall terminate; PROVIDED, HOWEVER, that if Employee's employment
hereunder is involuntarily terminated without "cause", as defined above, or if
Employee's employment is terminated (whether voluntarily or involuntarily)
following any "Change in Control" (as defined below), then the Company shall
continue to pay to Employee his then-current monthly salary and to provide his
then-current benefits ("SEVERANCE Payments") during the lesser of (i) the 24
month period following the date of termination of Employee's employment, or (ii)
the remainder of the Term (the "SEVERANCE PERIOD"); provided that, the Company's
obligation to make Severance Payments shall automatically terminate upon any
breach by Employee of the provisions in Sections 8, 9 and 10.
For purposes hereof, a "Change in Control" is any change in the ownership
of the capital stock of the Holding Company (whether resulting from a merger,
consolidation, sale of capital stock or otherwise) which causes, by reason other
than the completion of a public offering of the Common Stock pursuant to an
effective registration statement filed with the Securities and Exchange
Commission, the owners of the capital stock of the Holding Company as of the
date of this Agreement to no longer have the right to elect a majority of
members of the Board of Directors of the Holding Company.
6. BUSINESS OPPORTUNITIES AND INTELLECTUAL PROPERTY.
(a) Employee hereby assigns and agrees to assign to the Related
Parties, their successors, assigns, or designees, all of the Employee's right,
title, and interest in and to all Business Opportunities and Intellectual
Property (both as defined below) and further acknowledges and agrees that all
Business Opportunities and Intellectual Property constitute the exclusive
property of the Related Parties. Employee has and shall continue to promptly
disclose to the Company all Business Opportunities and Intellectual Property.
(b) For purposes hereof "Business Opportunities" shall mean all
business ideas, prospects, proposals or other opportunities pertaining to: (i)
any business in which the Acquired Companies were regularly engaged or the
Related Parties are to be regularly engaged (referred to herein as the "Current
Business") and (ii) any other aspect of the oil and gas service business, that
were developed by Employee during that period that Employee provided services to
the Acquired Companies or that are developed by Employee during the period that
Employee provides services to any of the Related Parties (whether as an
employee, officer or consultant) (such periods are referred to herein as the
"Opportunity Term") or originated by any third party and brought to the
attention of Employee during the Opportunity Term, together with
2
information relating thereto. It is acknowledged that the "Current Business"
includes, without limitation, the following: (A) the design, manufacture, sales
and rental of right-of-way pipeline construction and rehabilitation equipment
and services provided in connection therewith, (B) the design, manufacture, sale
and commissioning of pipe handling, cleaning and coating equipment, (C) the
design, manufacture, sale and rental of automatic (mechanized) pipeline welding
systems and ancillary sales and services provided in connection therewith, and
(D) pipeline field joint coating services and related equipment rentals and
sales, the manufacture and sale of pipeline induction heating systems, and
pipeline coating rehabilitation services.
(c) For purposes hereof "Intellectual Property" shall mean all
ideas, inventions, discoveries, processes, designs, methods, substances,
articles, computer programs, and improvements (including, without limitation,
enhancements to, or further interpretation or processing of, information that
was in the possession of Employee prior to the date of this Agreement), whether
or not patentable or copyrightable, that do not fall within the definition of
Business Opportunities, that Employee discovered, conceived, invented, created,
or developed, alone or with others during the course of his service as an
officer, employee or consultant for the Acquired Companies or that Employee
discovers, conceives, invents, creates, or develops, alone or with others,
during the Term, if such discovery, conception, invention, creation, or
development (A) occurred or occurs in the course of Employee's performance of
services (whether as a director, officer, employee or consultant) for the
Acquired Companies or for the Related Parties, or (B) occurred or occurs with
the use of any of the Acquired Companies' or the Related Parties' time,
materials, or facilities, or (C) relates or pertains in any way to the Related
Parties' purposes, activities, or affairs.
7. NON-COMPETE OBLIGATIONS DURING TERM. Employee agrees that during the
Term:
(i) Employee will not, other than through the Related Parties,
engage or participate in any manner, whether directly or indirectly
through any family member or as an employee, employer, consultant,
agent, principal, partner, more than three percent (3%) shareholder,
officer, director, licensor, lender, lessor or in any other
individual or representative capacity, in any business, or activity
that is the same as or similar to the Current Business or to any
other business or activity in which the Related Parties become
engaged during the Term; and
(ii) all investments made by Employee (whether in his own name
or in the name of any family members or made by Employee's
controlled affiliates) that relate to the businesses conducted by
the Related Parties shall be made solely through the Related
Parties; and Employee will not (directly or indirectly through any
family members), and will not permit any of his controlled
affiliates to invest or otherwise participate alongside the Related
Parties in any Business Opportunities, or invest or otherwise
participate in any business or activity relating to a Business
Opportunity;
provided that, if the Company expands its business activities after the date
hereof, then this Section 7 shall not apply to any personal investments owned by
Employee, his family members and his controlled affiliates in business
activities outside of the Current Business if (i) the
3
Related Parties were not engaged in such business or activity at the time of
such investment, (ii) Employee does not expend any significant time in
connection with the monitoring, maintaining or administering such investment in
conflict with Employee's duties under Section 3 of this Agreement, and (iii) to
the extent that such business or activity relates to the oil and gas service
business (A) Employee fully informs the Company of the terms of such investment
and provides all available information requested by the CompanY, (B) the
opportunity to make such investment is first offered to, and subsequently
declined by, the Company, and (C) Employee, his family members and his
controlled affiliates agree not to increase their respective ownership interests
in investment after the Company becomes engaged in such business activity and
grant to the Company a right of first refusal upon any disposition of such
investment.
8. CONFIDENTIALITY OBLIGATIONS.
(a) Employee hereby acknowledges that all trade secrets and
confidential or proprietary information of the Acquired Companies and the
Related Parties (collectively referred to herein as ("Confidential Information")
constitute valuable, special and unique assets of the Related Parties' business,
and that access to and knowledge of such Confidential Information is essential
to the performance of Employee's duties. Employee agrees that during the Term
and during the two (2) year period following the date of termination of
Employee's employment or engagement, as applicable (the "Termination Date"),
Employee will hold the Confidential Information in strict confidence and will
not publish, disseminate or otherwise disclose, directly or indirectly, to any
person other than the Related Parties and their respective officers, directors
and employees, any Confidential Information or use any Confidential Information
for Employee's own personal benefit or for the benefit of anyone other than the
Related Parties.
(b) For purposes of this Section 8, it is agreed that Confidential
Information includes, without limitation, any information heretofore or
hereafter acquired, developed or used by any of the Acquired Companies or the
Related Parties relating to Business Opportunities or Intellectual Property or
other geological, geophysical, economic, financial or management aspects of the
business, operations, properties or prospects of the Acquired Companies or the
Related Parties whether oral or in written form in a Related Parties' Business
Records (as defined in Section 10 below), but shall exclude any information that
(A) has become part of common knowledge or understanding in the oil and gas
pipeline construction industry or otherwise in the public domain (other than
from disclosure by Employee in violation of this Agreement), or (B) was
rightfully in the possession of Employee, as shown by Employee's records, prior
to the date of this Agreement; provided, however, that Employee shall provide to
the Company copies of all information described in clause (B); further provided,
however, that this Section 8 shall not be applicable to the extent Employee is
required to testify in a judicial or regulatory proceeding pursuant to the order
of judge or administrative law judge after Employee requests that such
Confidential Information be preserved. Holding Company and Company agree to
provide Confidential Information to Employee regarding the Acquired Companies
and the Related Parties in exchange for Employee's agreement to keep such
Confidential Information, and any Confidential Information to which Employee has
already become privy, in strict confidence as provided in this Agreement.
4
9. OBLIGATIONS AFTER TERMINATION DATE.
(a) The purpose of the provisions of Section 7 and this Section 9
are to protect the Acquired Companies and the Related Parties from unfair loss
of goodwill and business advantage and to shield Employee from pressure to use
or disclose Confidential Information or to trade on the goodwill belonging to
the Acquired companies or the Related Parties. Accordingly, during the
"Post-Termination Non-Compete Term" s defined below), Employee will not engage
or participate in any manner, whether directly or indirectly through any family
member or as an employee, employer, consultant, agent, principal, partner,
shareholder, officer, director, licensor, lender, lessor or in any other
individual or representative capacity, in any business or activity that is the
same as or similar to the Current Business or to any other business or activity
in which the Related Parties are engaged as of he Termination Date or during the
six (6) month period following such Termination Date in any geographic area (i)
in which the offices and properties of the Related Parties are located, (ii) in
which the customers of the Related Parties are located (which includes the
geographic areas in which customers are engaged in construction projects which
involve the use of products or services like those provided by the Related
Parties) if the Related Parties are, or if within the preceding two years the
Related Parties or the Acquired Companies have been actively engaged in the
design, manufacture, sales or rental of equipment, or the provision of services
to such customers, and (iii) in which prospective customers are located, if the
Related Parties are in the process of preparing bids or other preliminary work
required as a pre-requisite to the design, manufacture, sales or rental of
equipment, or the provision of services to such prospective customers.
(b) For purposes hereof, the "Post Termination Non-Compete Term" is:
(i) with respect to any Employee (A) who voluntarily
resigns or otherwise terminates his position as an officer or
employee of the Related Parties, or (B) whose employment or
engagement by the Related Parties is terminated for "cause", the 18
month period following the Termination Date; or
(ii) with respect to any Employee whose services as an
officer, employee or consultant are terminated by a Related Party
other than for cause, the period during which Employee is entitled
to receive Severance Payments absent a breach of Section 8, 9 or 10.
(c) Employee acknowledges that if the Company is obligated to make
payments during the Severance Period to Employee under this Agreement, then such
payments are intended to, and will, constitute adequate consideration for
Employee's agreements set forth in this Section 9.
(d) Employee will not during Post Termination Non-Compete Term,
solicit, entice, persuade or induce, directly or indirectly, any individual (or
person who within the preceding ninety (90) days was an employee) of any of the
Related Parties or any other person who is under contract with or rendering
services to any of the Related Parties, to (i) terminate his or her employment
by, or contractual relationship with, such person, (ii) refrain
5
from extending or renewing the same (upon the same or new terms), (iii) refrain
from rendering services to or for such person, (iv) become employed by or to
enter into contractual relations with any Persons other than such person, or (v)
enter into a relationship with a competitor of any of the Related Parties.
10. BUSINESS RECORDS.
(a) Employee agrees to promptly deliver to the Company, upon
termination of his employment by the Related Parties, or at any other time when
the Company so requests, all documents relating to the business of the Related
Parties, including, without limitation: contract files, notes, records drawings,
manuals, correspondence, financial and accounting information, customer lists,
statistical data and compilations, patents, copyrights, trademarks, trade names,
inventions, formulae, methods, processes, agreements, contracts, manuals or any
other documents relating to the business of the Related Parties, (collectively,
the "Related Parties' Business Records"), and all copies thereof and therefrom.
(b) Employee confirms that all of the Related Parties' Business
Records (and all copies thereof and therefrom) that are required to be delivered
to the Company pursuant to this Section 10 constitute the exclusive property of
the Related Parties.
(c) The obligation of confidentiality set forth in Section 8 shall
continue notwithstanding Employee's delivery of any such documents to the
Company.
(d) Notwithstanding the foregoing provisions of this Section 10 or
any other provision of this Agreement, Employee shall be entitled to retain any
written materials that, as shown by Employee's records, were in Employee's
possession on or prior to the date hereof, subject to the Company's right to
receive a copy of all such materials.
(e) The provisions of this Section 10 shall continue in effect
notwithstanding termination of Employee's employment for any reason.
11. MISCELLANEOUS.
(a) The invalidity or non-enforceability of any provision of this
Agreement in any respect shall not affect the validity or enforceability of this
Agreement in any other respect or of any other provision of this Agreement. In
the event that any provision of this Agreement shall be held invalid or
unenforceable by a court of competent jurisdiction by reason of the geographic
or business scope or the duration thereof, such invalidity or unenforceability
shall attach only to the scope or duration of such provision and shall not
affect or render invalid or unenforceable any other provision of this Agreement,
and, to the fullest extent permitted by law, this Agreement shall be construed
as if the geographic or business scope or the duration of such provision had
been more narrowly drafted so as not to be invalid or unenforceable.
(b) Employee acknowledges that the remedy at law of any of the
Related Parties for any breach of the provisions of this Agreement is and will
be insufficient and
6
inadequate and that the Related Parties shall be entitled to equitable relief,
including by way of temporary and permanent injunction, in addition to any
remedies they may have at law.
(c) The representations and covenants contained in this Agreement on
the part of Employee will be construed as ancillary to and independent of any
other agreement between the Holding Company or the Company and Employee, and the
existence of any claim or cause of action of Employed against the Company or any
of the other Related Parties or any officer, director, or shareholder of the
Company or any of the other Related Parties, whether predicated on Employee's
employment or otherwise, shall not constitute a defense to the enforcement by
the Holding Company or the Company of the covenants of Employee contained in
this Agreement. In addition, the provisions of this Agreement shall continue to
be binding upon Employee in accordance with their terms, Notwithstanding the
termination of Employee's employment for any reason.
(d) The parties to this Agreement agree that the limitations
contained in Sections 7 and 9 with respect to time, geographical area, and scope
of activity are reasonable. However, if any court shall Determine that the time
or scope of activity of any restriction contained in Section 7 or 9 is
unenforceable, it is the intention of the parties that such restrictive covenant
set forth herein shall not thereby be terminated but shall be deemed amended to
the extent required to render it valid and enforceable.
(e) Any notices or other communications required or permitted to be
sent hereunder shall be in writing and shall be duly given if personally
delivered or sent postage pre-paid by certified or registered mail, return
receipt requested, at the addresses set forth on the signature page hereof.
Either party may change his or its address for the sending of notice to such
party by written notice to the other party sent in accordance with the
provisions hereof.
(f) This Agreement contains the entire understanding of the parties
with respect to the employment of Employee and supersedes all prior arrangements
or understandings with respect thereto and all oral or written employment
agreements or arrangements between any of the Related Parties and Employee.
(g) This Agreement may not be altered or amended except by a
writing, duly executed by the party against whom such alteration or amendment is
sought to be enforced.
(h) The parties agree that this Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, and that the courts
of the County of Xxxxxx in the State of Texas shall be the exclusive courts of
jurisdiction and venue for any litigation, special proceeding, dispute or other
proceeding as between the parties that may be brought or arise out of, in
connection with, or by reason of this Agreement.
(i) This Agreement may be executed in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
instrument.
7
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
in multiple counterparts as of the day and year first above written.
CRC HOLDINGS CORP.
By:_______________________________________
Name:______________________________
Title:_____________________________
CEPI HOLDINGS, INC.
By:_______________________________________
Name:______________________________
Title:_____________________________
EMPLOYEE
__________________________________________
D. Xxxx Xxxx
8
