Exhibit 10.9
EMPLOYMENT AGREEMENT BETWEEN
XXXXX X. XXXXXX
AND
XXXXXX ENGINEERING, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated as of April 10, 1998, between Xxxxxx Engineering,
Inc., a Texas corporation (the "COMPANY"), and Xxxxx X. Xxxxxx, a resident of
Kingwood, Texas, the ("EXECUTIVE"),
W I T N E S S E T H:
WHEREAS, on the date of this Agreement, the Company, OEI International,
Inc., a Delaware corporation ("OEI"), GEI Acquisition, Inc., a Texas corporation
and a wholly owned subsidiary of OEI (the "MERGER SUBSIDIARY"), and the
stockholders of the Company, including the Executive, are entering into an
Agreement and Plan of Reorganization (the "ACQUISITION AGREEMENT"), under which
the Company will merge with the Merger Subsidiary in a merger (the "MERGER") of
which the Company will be the surviving corporation and as a result of which the
Company will become a wholly owned subsidiary of OEI; and
WHEREAS, The Executive founded the Company, has served as an officer and
director of the Company since its inception, and has contributed substantially
to the Company's growth and success; and
WHEREAS, OEI wishes to insure that the Company will have the continued
benefit of the Executive's knowledge and experience concerning the affairs of
the Company and the engineering services industry generally, and to keep them
from being availed of by third parties, and has therefore required as a
condition to its execution of the Acquisition Agreement that the Executive enter
into this Agreement to become effective upon consummation of the Merger; and
WHEREAS, the Executive is willing to accept employment by the Company on
the terms and conditions of this Agreement;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 EMPLOYMENT BY THE COMPANY. The Company agrees to employ The
Executive as the Chairman and Chief Executive Officer of the Company for the
duration of the Employment Term (as defined in Section 2 below), to render such
services and to perform such duties as are normally associated with and inherent
in the executive capacity in which the Executive will be serving, as well as
such other duties, which are not inconsistent with the Executive's position as
an executive of the Company, as shall from time to time reasonably be assigned
to him by the Board of Directors of the Company (the "BOARD OF DIRECTORS").
1.2 ACCEPTANCE OF EMPLOYMENT BY THE EXECUTIVE. The Executive accepts
such employment for the Employment Term and agrees to render the services
required of him under Section 1.1. During the Employment Term, the Executive
shall devote his full business time,
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attention and energy to the business of the Company and the performance of his
duties under this Agreement. The foregoing shall not, however, prohibit the
Executive from making and overseeing personal investments, including management
of his existing ownership interest in an ammonia plant in Xxxxxx, Georgia
previously operated by Shoreline Chemical and the Patterson Gas processing Plant
in Patterson, Louisiana, or from engaging in civic or charitable activities,
that do not materially impair the performance of his duties under this
Agreement. If appointed or elected, as applicable, the Executive also shall
serve during all or any part of the Employment Term as any other officer and/or
as a director of the Company or any of its subsidiaries or affiliates, without
any additional compensation other than that specified in this Agreement.
1.3 PLACE OF PERFORMANCE. The Executive shall be based in the
Greater Houston Metropolitan Area, and nothing in this Agreement shall require
the Executive to relocate his base of employment or principal place of residence
from the Greater Houston Metropolitan Area.
1.4 TERMINATION OF EXISTING CONTRACTS. The Executive agrees that all
agreements and contracts, whether written or oral, relating to the employment of
the Executive by the Company shall be terminated effective as of the
commencement of the Employment Term. However, nothing in this Section 1.4 shall
(i) affect accrued vacation, holiday or sick pay accruals (but only to the
extent such accruals were reflected in the Acquired Company's financial
statements delivered to OEI pursuant to the Acquisition Agreement), (ii) require
the Acquired Company to cease to make available to the Executive, and, subject
to his meeting all applicable eligibility requirements, the Executive shall be
entitled to continue to be covered under, all group health, medical and dental
insurance policies, plans and programs maintained by the Company for its
employees generally, in each case until replacement coverage is provided by the
Company, or (iii) impair or adversely affect any indemnification rights that
Executive may have under statutes empowering corporations in the Acquired
Company's state of incorporation to indemnify their officers and directors, or
under the Acquired Company's bylaws or any written indemnification agreement
between the Executive and the Acquired Company implementing such statutory
indemnification rights, but only with respect to third-party claims or
proceedings that relate to actions taken by the Executive as an officer or
director of the Acquired Company prior to the date hereof and that are disclosed
to OEI in the Disclosure Statement delivered to OEI pursuant to the Acquisition
Agreement or, if asserted or brought for the first time after the date hereof,
would not constitute a breach of the representations or warranties of the
Acquired Company or its stockholders under the Acquisition Agreement.
2. EMPLOYMENT TERM. The term of the Executive's employment under this
Agreement (the "EMPLOYMENT TERM") shall commence on the date of consummation of
the Merger pursuant to the Acquisition Agreement (the "COMMENCEMENT DATE"), and
shall continue through and expire on the third anniversary of the Commencement
Date (the "EXPIRATION DATE"), unless earlier terminated as herein provided.
However, if the Acquisition Agreement is terminated under the terms of its
Article XII, then this Agreement shall also terminate, automatically and without
the requirement of any action on the part of either of its parties.
2.1 CONSULTING CONTRACT. On the Expiration Date, the Company, at it
sole and exclusive option, may offer to engage Executive in a consulting
capacity. If the Company elects to
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offer such a consulting contract to Executive, the contract shall be for a
period of up to two years, and shall be on substantially the same salary and
benefit terms contained herein.
3. COMPENSATION AND OTHER BENEFITS.
3.1 ANNUAL SALARY. As compensation for services to be rendered under
this Agreement, the Company shall pay the Executive a salary (the "ANNUAL
SALARY"), subject to such increases as the Board of Directors may, in its
discretion, approve, at a rate of $225,000 per annum. The Executive shall also
be eligible, during the Employment Term, to receive such other compensation,
whether in the form of cash bonuses, incentive compensation, stock options,
stock appreciation rights, restricted stock awards or otherwise (collectively,
the "ADDITIONAL COMPENSATION"), as the Board of Directors (or any committee of
the Board) may, in its discretion, approve. The Annual Salary and the Additional
Compensation shall be payable in accordance with the applicable payroll and/or
other compensation policies and plans of the Company as in effect from time to
time during the Employment Term, less such deductions as shall be required to be
withheld by applicable law and regulations.
3.2 PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Executive shall be
permitted, during the Employment Term, if and to the extent he is and continues
to meet all applicable eligibility requirements, to participate in any group
life, hospitalization or disability insurance plan, health program, pension
plan, similar benefit plan or other "fringe benefits" of the Company, which may
be available to all other members of the Company's management on generally the
same terms.
3.3 EXECUTIVE SUPPORT. The Company shall provide to the Executive
office facilities, furniture, and equipment, secretarial and support personnel
and other management level support services as the Executive shall reasonably
require in connection with his performance of his duties under this Agreement.
3.4 REIMBURSEMENT OF BUSINESS EXPENSES. The Executive may incur
reasonable, ordinary and necessary business expenses in the course of his
performance of his duties under this Agreement, including expenses for travel,
food and entertainment. The Company shall reimburse the Executive for all such
business expenses if (i) the expenses are incurred by the Executive in
accordance with the Company's business expense reimbursement policy, if any, as
may be established and modified by the Company from time to time, and (ii) the
Executive provides to the Company a record of and appropriate receipts for (A)
the amount of the expense, (B) the date, place and nature of the expense, (C)
the business reason for the expense and (D) the names, occupations and other
data concerning individuals entertained sufficient to establish their business
relationship to the Company. The Company shall have no obligation to reimburse
the Executive for expenses that are not incurred and substantiated as required
by this Section 3.4.
3.5 AUTOMOBILE. The Company shall provide the Executive with the use
of a Company-owned or leased automobile for use by the Executive in connection
with the performance of his duties under this Agreement, and shall pay the
reasonable costs of insuring, operating and maintaining the automobile, or, in
lieu thereof the Company, at is option, may pay to the Executive an automobile
allowance to help defray the Executive's cost of owning and operating a personal
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automobile for such purpose. Such Company furnished automobile or such allowance
shall be comparable to the automobile or allowance that was taken into account
in determining the merger consideration that is to be paid by the Company to the
Company's stockholders pursuant to the Acquisition Agreement.
4. NON-COMPETITION.
4.1 COVENANTS AGAINST COMPETITION. The Executive acknowledges that
(i) the Company, which for purposes of this Section 4 includes OEI and all of
its present and future subsidiaries and affiliates, including subsidiaries and
affiliates that may be formed or incorporated during the Restricted Period (as
defined in Section 4.1.1), is engaged in the business of providing professional
engineering services (the "Business"); (ii) the Executive is one of a limited
number of persons who has performed a significant role in developing the
Business; (iii) the Business is conducted throughout the United States and
internationally; (iv) his work for the Company has given him, and will continue
to give him, possession of and access to trade secrets of, and confidential
information concerning, the Company; (v) the agreements and covenants contained
in this Section 4 (collectively, the "RESTRICTIVE COVENANTS") are essential to
protect the Business and the goodwill of the Company; (vi) he has means to
support himself and his dependents other than by engaging in the Business in
violation of the Restrictive Covenants, and (vii) the Restrictive Covenants will
not impair his ability to do so. Accordingly, the Executive agrees as follows:
4.1.1 NON-COMPETE. During the Restricted Period, the Executive
shall not (A) engage, anywhere within the Territory (as hereinafter
defined), as an officer, director or in any other managerial capacity or
as an owner, co-owner or other investor or creditor in or of, whether as
an employee, independent contractor, consultant or advisor, in any
business selling or providing any services which are sold or offered by
the Company, within the territory surrounding each office or fabrication
facility (each a "FACILITY") at which the Executive was employed by the
Company within the three-year period immediately preceding the date of the
Executive's termination of employment (for purposes of this Section 4.1,
the territory surrounding a facility shall be: (A) the city, town or
village in which the facility is located, (B) the county or parish in
which the facility is located, (C) the counties or parishes contiguous to
the county or parish in which the facility is located, (D) the area
located within 100 miles of the facility and (E) the area in which the
facility regularly makes sales or provides services, all of such locations
being herein collectively called the "TERRITORY"), or (B) call on any
person or entity that at the time is, or at any time within one year prior
to the date of termination of the Executive's employment was, a customer
of the Company, for the purpose of soliciting or selling any product or
service which is then sold or offered within the Territory by the Company
if the Executive has knowledge of that customer relationship; PROVIDED,
HOWEVER, that nothing in this Section 4.1.1 shall prohibit the Executive
from owning, directly or indirectly, solely as an investment, securities
of any entity traded on any national securities exchange or
over-the-counter market if the Executive is not a controlling person of,
or a member of a group which controls, such entity and does not, directly
or indirectly, own one percent or more of any class of securities of such
entity. As used in this Section 4, the term "RESTRICTED PERIOD" means the
period beginning on the Commencement Date and ending:
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(i) if during the Employment Term the Executive's employment
terminates as a result of (a) a termination for Cause under Section
5.2 or (b) the Executive's voluntary resignation, the fourth
anniversary of the Commencement Date;
(ii) if during the Employment Term the Executive's employment
terminates as a result of a termination for disability under Section
5.3, the latest to occur of (a) expiration of the Severance Benefit
Period (as defined in Section 5.4) or (b) the third anniversary of
the Commencement Date; or
(iii) if after the Employment Term the Executive's employment
terminates for any reason, the later to occur of (a) the fourth
anniversary of the Commencement Date if he is not eligible for
severance benefits under Section 5.4 or (b) the expiration of the
Severance Benefit Period if the Executive is eligible for severance
benefits under Section 5.4.
4.1.2 CONFIDENTIAL INFORMATION; PERSONAL RELATIONSHIPS. During
the Restricted Period and thereafter, the Executive shall keep secret and
retain in strict confidence, and shall not use for the benefit of himself
or others, all confidential matters of the Company, including, without
limitation, "know-how," trade secrets, customer lists, details of client
or consultant contracts, pricing policies, bidding practices and
procedures, operational methods, marketing plans or strategies, project
development techniques or plans, business acquisition plans, new personnel
acquisition plans, methods of production, manufacture and installation,
technical processes, designs and design projects, inventions and research
projects of the Company learned by the Executive heretofore or during the
Restricted Period; nor shall the Executive exploit for his own benefit, or
the benefit of others, personal relationships with customers, suppliers or
agents of the Company in connection with or adversely affecting the
Business formed previously during the course of his association with the
Acquired Company or formed during the Restricted Period.
4.1.3 PROPERTY OF THE COMPANY. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof), including
such items stored in computer memories, on microfiche or by any other
means, made or compiled by or on behalf of the Executive, or made
available to the Executive relating to the Company, other than purely
personal matters, are and shall be the Company's property and shall be
delivered to the Company promptly upon the termination of the Executive's
employment (whether such termination is for Cause, as hereinafter defined,
or otherwise) or at any other time on request of the Company.
4.1.4 EMPLOYEES OF THE COMPANY. During the Restricted Period
and thereafter for as long as the Executive shall remain an employee of or
consultant to the Company, the Executive shall not, directly or
indirectly, hire or solicit any employee or consultant engineer of the
Company away from the Company or encourage any such employee or agent to
leave such employment.
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4.1.5 CONSULTANTS OF THE COMPANY. During the Restricted Period
and thereafter for as long as the Executive shall remain an employee of or
consultant to the Company, the Executive shall not, directly or
indirectly, hire or solicit any consultant then under contract with the
Company or encourage such consultant to terminate such relationship.
4.1.6 ACQUISITION CANDIDATES. During the Restricted Period and
thereafter for as long as the Executive shall remain an employee of or
consultant to the Company, the Executive shall not call on any Acquisition
Candidate (as defined below in this Section 4.1.6), with the knowledge of
such Acquisition Candidate's status as such, for the purpose of acquiring,
or arranging the acquisition of, that Acquisition Candidate by any person
or entity other than the Company. In this Section 4.1.6 "ACQUISITION
CANDIDATE" means any person or entity engaged in any of the businesses of
providing professional engineering services, and (i) which was called on
by the Company, in connection with the possible acquisition by the Company
of that person or entity, or (ii) with respect to which the Company has
made an acquisition analysis.
4.2 RIGHTS AND REMEDIES UPON BREACH. If the Executive breaches or
threatens to commit a breach of the Restrictive Covenants, the Company shall
have the following rights and remedies, each of which shall be independent of
the others and severally enforceable, and each of which is in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity:
4.2.1 SPECIFIC PERFORMANCE. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company and
that money damages would not provide an adequate remedy to the Company.
4.2.2 ACCOUNTING. The right and remedy to require the
Executive to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived or
received by the Executive as the result of any transaction constituting a
breach of the Restrictive Covenants.
4.3 SEVERABILITY OF COVENANTS. The Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in geographical and
temporal scope and in all other respects. If any court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall
be given full effect, without regard to the invalid portions.
4.4 REFORMATION. If any court determines that any Restrictive
Covenant, or any part thereof, is unenforceable because of the duration or
geographic scope of such provision, such court shall have the power to reduce
the duration or scope of such provision, as the case may be, and, in its reduced
form, such provision shall then be enforceable.
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4.5 ENFORCEABILITY IN JURISDICTIONS. The Company and the Executive
intend to and hereby consent to jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
the Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of the Company and the
Executive that such determination not bar or in any way affect the Company's
right to the relief provided above in the courts of any other jurisdiction
within the geographical scope of the Restrictive Covenants, as to breaches of
such covenants in such other respective jurisdictions, such covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
5. TERMINATION.
5.1 TERMINATION UPON DEATH. If the Executive dies during the
Employment Term, this Agreement shall terminate, except that the Executive's
legal representatives, successors, heirs or assigns shall be entitled to receive
the Annual Salary, the Additional Compensation and other accrued benefits, if
any, earned up to the date of the Executive's death; PROVIDED, HOWEVER, if any
Additional Compensation or other benefits are governed by the provisions of any
written employee benefit plan or policy of the Company, any written agreement
contemplated thereunder or any other separate written agreement entered into
between the Executive and the Company, the terms and conditions of such plan,
policy or agreement shall control in the event of any discrepancy or conflict
with the provisions of this Agreement regarding such Additional Compensation or
other benefit upon the death, termination or disability of the Executive.
5.2 TERMINATION FOR CAUSE. At any time during the Employment Term,
the Company shall have the right, exercisable by serving notice effective in
accordance with its terms, to terminate the Executive's employment under this
Agreement and discharge the Executive for Cause. If such right is exercised, the
Company's obligation to the Executive shall be limited to the payment of any
unpaid Annual Salary, Additional Compensation and other benefits, if any,
accrued up to the effective date specified in the Company's notice of
termination (which date shall not be retroactive). As used in this Section 5.2
and elsewhere in this Agreement, term "CAUSE" shall mean that a majority of the
Board of Directors shall have determined, and a majority of the Board of
Directors of OEI shall have concurred, that (i) after notice and a right to
cure, there has been a material breach by the Executive of the terms of this
Agreement, (ii) after receipt of a written warning, the Executive has willfully
and persistently failed or refused to follow the reasonable policies and
directives established by the Board of Directors or executive officers of the
Company senior to the Executive, (iii) the Executive has wrongfully
misappropriated money or other assets or properties of the Company or any
subsidiary or affiliate of the Company, (iv) the Executive has been convicted of
any felony or other serious crime, (v) the Executive's employment performance
has been substantially impaired by chronic absenteeism, alcoholism or drug
addiction, or (vi) the Executive has exhibited gross moral turpitude relevant to
his office or employment with the Company or any subsidiary or affiliate of the
Company.
5.3 TERMINATION UPON DISABILITY. If during the Employment Term the
Executive becomes physically or mentally disabled, whether totally or partially,
as evidenced by the written statement of a competent physician licensed to
practice medicine in the United States, so that the Executive is unable to
substantially perform his services hereunder for (i) a period of six consecutive
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months, or (ii) for shorter periods aggregating six months during any period of
twelve consecutive months, the Company may at any time after the last day of the
six consecutive months of disability or the day on which the shorter periods of
disability equal an aggregate of six months within a period of twelve
consecutive months, by written notice to the Executive, terminate the
Executive's employment hereunder. If such right is exercised, the Company's
obligation to the Executive shall be as set forth in Section 5.4 below.
5.4 SEVERANCE BENEFIT. If at any time during or after the Employment
Term, the Executive's employment by the Company is terminated for disability
pursuant to Section 5.3, then for a period of one year following the date of
termination of the Executive's employment (the "SEVERANCE BENEFIT PERIOD"), the
Company shall continue to (a) pay to the Executive the amount of Annual Salary
in effect at the date of termination of his employment and (b) at the Company's
expense, continue to include the Executive and his eligible dependents under the
coverage of all group health, medical and dental insurance policies, plans and
programs maintained by the Company during Severance Benefit Period for the
Company's employees, or management employees, generally.
6. INSURANCE. The Company may, from time to time, apply for and take out,
in its own name and at its own expense, naming itself or others as the
designated beneficiary (which it may change from time to time), policies for
health, accident, disability or other insurance upon the Executive or his life,
in any amount or amounts that it may deem necessary or appropriate to protect
its interest. The Executive agrees to aid the Company in procuring such
insurance by submitting to reasonable medical examinations and by filling out,
executing and delivering such applications and other instruments in writing as
may reasonably be required by an insurance company or companies to which any
application or applications for insurance may be made by or for the Company.
7. OTHER PROVISIONS.
7.1 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission or,
if mailed, five days after the date of deposit in the United States mail, as
follows:
if to the Company, to:
Xxxxxx Engineering, Inc.
0000 Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx
Telecopy No.(000) 000-0000
with a copy to:
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OEI International, Inc.
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: X. X. Xxxxxx
Chief Executive Officer
Telecopy: (000) 000-0000
if to the Executive, to:
Xxxxx X. Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Telecopy: None
Either party may change its address for notice hereunder by notice to the
other party.
7.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding between the parties with respect to its subject matter and
supersedes all prior agreements, written or oral, with respect thereto;
PROVIDED, HOWEVER, that nothing herein shall in any way limit the obligation,
rights or liabilities of the parties under any written stock option agreement
separately entered into by the parties.
7.3 WAIVERS AND AMENDMENTS. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
7.4 GOVERNING LAW; VENUE. This Agreement, except as set forth in
Section 4.5 hereof, shall be governed by, and construed in accordance with, the
laws of the State of Texas without reference to principles governing choice or
conflicts of law.
7.5 ASSIGNMENT. This Agreement, and any rights and obligations
hereunder, may not be assigned by any party hereto without the prior written
consent of the other party, except that the Company may assign this Agreement to
any of its subsidiaries or affiliates without the Executive's consent provided
such assignment does not diminish any of the Executive's benefits, rights or
obligations hereunder.
7.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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7.7 HEADINGS. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
XXXXXX ENGINEERING, INC.
/s/ XXXXX XXXXXX
Xxxxx Xxxxxx, Secretary
/s/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx
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