1
EXHIBIT 10.1
AGREEMENT
This AGREEMENT (the "Agreement") is effective as of May 1, 1999 by and
between American Eco Corporation, an Ontario, Canada corporation whose principal
executive offices are in Houston, Texas (the "Company"), and Windrush
Corporation, an Ontario Company, (the "Consultant") and Xxxx Xxxxxx ("Xxxxxx").
R E C I T A L S
WHEREAS Consultant employs Xxxx Xxxxxx on a full time basis as its
President;
AND WHEREAS the Consultant has directed its President to serve as
Chairman of the Board of Directors of the Company, and previously, other
management capacities from the date of the initial engagement by the Company of
the Consultant in January of 1992.
AND WHEREAS the Board of Directors of the Company has determined that
it is in the best interests of the Company to retain the Consultant's services
and to reinforce and encourage the continued attention and dedication of members
of the Company's management, and the Consultant 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 the Company, its employees and consultants.
AND WHEREAS both the Company and the Consultant recognize the increased
risk of litigation and other claims being asserted against officers and
directors of companies in today's business environment.
AND WHEREAS the Bylaws of the Company require the Company to indemnify
its directors and officers to the full extent permitted by law.
AND WHEREAS costs, limits in coverage and availability of director's
and officer's 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.
AND WHEREAS in recognition of the Consultant and its President's need
for substantial protection against liability and to enhance and induce the
Consultant's continued service to the Company in an effective manner and the
Consultant's reliance on the Bylaws, and in part to provide the Consultant with
specific contractual assurance that the protection promised by the Bylaws will
be available to the Consultant (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 Engagement of the
Consultant and the indemnification of,
Initials
Page 1 of 19 - May 31, 1999 /s/ DG /s/ MEM
/s/ JCP
2
and the advancing of expenses to, the Consultant 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 Consultant's
President under the Company's directors' and officers' liability insurance
policies.
AND WHEREAS the Company wishes to assure itself of the services of
the Consultant for the period provided in this Agreement and the Consultant
wishes to serve 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 Consultant hereby agree as
follows:
ARTICLE I
ENGAGEMENT
1.1 Engagement. The Company hereby employs the Consultant and the
Consultant hereby accepts Engagement by the Company upon the terms and
conditions contained in this Agreement.
1.2 Office and Duties.
(a) Position. The Consultant shall direct its President to serve
the Company as Chairman of the Board of Directors, with authority, duties and
responsibilities not less than the Consultant has on the date of this Agreement.
(b) The Consultant agrees that Xxxxxx shall be subject to the
absolute direction and control of the Company at all times with respect to the
manner and method of performance of the function as Chairman.
(c) The Consultant further undertakes to make Xxxxxx available at
such time or times as will enable him to devote substantial time, effort and
ability to the performance of the services herein contracted for by the Company.
(d) Commitment. Throughout the term of this Agreement, the
Consultant and Xxxxxx shall faithfully and diligently further the business and
interests of the Company. Subject to the foregoing, Xxxxxx 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 Pennie's duties
pursuant to this Agreement.
1.3 Term. The term of this Agreement shall commence on May 1, 1999 and
shall end on the fifth yearly anniversary of the date on which the Board of
Directors of the Company
Initials
/s/ DG /s/ MEM
Page 2 of 19 - May 31, 1999
/s/ JPC
3
notifies the Consultant that the Board of Directors has determined to
discontinue the automatic daily extension of 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 Fee. The Company shall pay the Consultant as compensation
an aggregate fee (the "Base Fee") of Twenty-thousand-dollars in United States
funds (USD$20,000) per month plus applicable taxes 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 any
increases in the Consultant's Base Fee at least annually and in any case it
shall be adjusted annually for inflation, the amount of such adjustment to be
made by reference to the "All" items consumer price index for the City of
Toronto as established from time to time by Statistics Canada.
(b) Additional Compensation & Annual Profit Participation. (i)
Other than transactions that were commenced prior to the date of the within
agreement, the Consultant shall not be eligible to receive from the Company
further additional project fees for acquisitions and financings; and (ii) Each
year during the term, the Consultant shall be eligible to share in an Annual
Profit Participation equal to 5% of the Company's net income, calculated
according to Appendix A" of the within Agreement.
(c) Payment and Reimbursement of Expenses. During the Term, the
Company shall pay or reimburse the Consultant for all reasonable travel and
other expenses incurred by the Consultant in performing their obligations under
this Agreement in accordance with the policies and procedures of the Company for
its senior executive officers, provided that the Consultant properly accounts
therefor in accordance with the regular policies of the Company.
(d) Benefits Not in Lieu of Compensation. No benefit or
perquisite provided to the Consultant shall be deemed to be in lieu of Base Fee,
Additional Compensation, or other compensation.
1.5 Termination.
(a) Cause. The Company may terminate the Consultant's Engagement
for Cause. Termination for Cause shall mean termination because of the
Consultant's (i) willful gross misconduct that causes material economic harm to
the Company unless the Consultant reasonably believed in good faith that such
act or non act was in the best interests of the Company; (ii) final,
nonappealable conviction of a felony, 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 Consultant thereof in writing, specifying
in reasonable detail the basis therefor and stating that it is grounds for
Cause, and unless the Consultant fails to cure such matter within 60 days after
such notice is sent or given under this Agreement to the extent such cure is
possible. The Consultant shall be permitted a response and defense before the
Initials
Page 3 of 19 - May 31, 1999 /s/ DG /s/ MEM
/s/ JCP
4
Board of Directors within a reasonable time after written notification of any
proposed termination for Cause under item (i) or (iii) of this subsection.
If the Consultant fails to cure such default, the Consultant
shall be entitled to a hearing before the Company's Board of Directors. Such
hearing shall be held within 15 days of notice to the Consultant. If within 5
days following such hearing, the Consultant is furnished written notice by the
Company's Board of Directors confirming that in its judgement exercised in good
faith, grounds for cause on the basis of the original notice exist, the
Consultant shall thereupon be terminated for cause.
(b) Without Cause. During the Term, the Company may terminate the
Consultant's Engagement Without Cause, subject to the provisions of subsection
1.6(c) (Termination Without Cause or for Company Breach). Termination Without
Cause shall mean termination of the Consultant's Engagement by the Company other
than termination for Cause.
(c) Company Breach. The Consultant may terminate its Engagement
hereunder for Company Breach. For purposes of this Agreement, Company Breach
shall mean:
(i) without the express written consent of Consultant, any
material reduction in the authority, duties and
responsibilities that the Consultant or Xxxxxx has on the date
of this Agreement, or the assignment to Xxxxxx 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 Xxxxxx
from or any failure to re-elect Xxxxxx to any of such
positions, except in connection with the termination of
Consultant's Engagement for Cause, or retirement or as a result
of the death of Xxxxxx, or by the Consultant and Xxxxxx other
than for Company Breach or Change in Control;
(ii) a reduction in the Consultant's Base Fee 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 corporate
executive offices to any city or place other than Toronto,
Ontario requiring the Consultant to be based anywhere other
than Xxxxxxx, Xxxxxxx, Xxxxxx, except for required travel on
the Company's business to an extent substantially consistent
with Consultant's present business travel obligations, or, in
the event the Consultant 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 Consultant in
selling the Consultant's principal residence, (b) to pay (or
reimburse the Consultant) for all reasonable moving expenses
incurred by them relating to a change of, in their principal
residence in connection with such relocation and (c) to
indemnify the Consultant against any loss (defined as the
difference between the
Initials
/s/ DG /s/ MEM
Page 4 of 19 - May 31, 1999
/s/ JCP
5
actual sale price of such residence and the higher of (1) their
aggregate investment in such residence or (2) the fair market
value of such residence as determined by a real estate
appraiser designated by the Consultant and reasonably
satisfactory to the Company) realized on the sale of the
Consultant'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 Consultant
and Xxxxxx are participating (or plans providing substantially
similar benefits), the taking of any action by the Company
which would adversely affect the Consultant and Pennie's
participation in or materially reduce their benefits under any
of such plans or deprive them of any material fringe benefit.
(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 4.12 (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
Consultant notifies the Company in writing of the breach and
stating that such breach is grounds for Company Breach, and
unless the Company fails to cure such breach within thirty (30)
days after such notice is sent or given under this Agreement.
(d) Change in Control. The Consultant may forthwith terminate its
Engagement hereunder at any time or times within twelve (12) months of a Change
in Control (defined below):
(i) "Change in Control" shall mean any of the following:
(1) any consolidation, sale, 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
Initials
Page 5 of 19 - May 31, 1999 /s/ MEM
/s/ JCP /s/ DG
6
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 (USA), 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 acquirer is (w) the Consultant,
(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; or
(6) subject to applicable Canadian and/or United States of
America Bankruptcy or Insolvency laws, in a Chapter 11
Bankruptcy proceeding (US Bankruptcy Code) the appointment
of a trustee, receiver, monitor, liquidator or the
conversion of a case involving the Company to a case under
Chapter 7 (US Bankruptcy Code).
Initials
/s/ DG /s/ MEM
Page 6 of 19 - May 31, 1999
/s/ JPC
7
(e) Without Good Reason. During the Term, at any time or times, the
Consultant may terminate its Engagement Without Good Reason effective
immediately. Termination "Without Good Reason" shall mean termination of the
Consultant's Engagement by the Consultant other than termination for Company
Breach or as a result of a Change in Control.
(f) Explanation of Termination of Engagement. 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 Engagement"), which
shall state in reasonable detail the basis for such termination and shall
indicate whether termination is being made for Cause, Without Cause (if the
Company has terminated the Agreement) or for Company Breach, upon a Change in
Control or Without Good Reason (if the Consultant has terminated the Agreement).
(g) 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 Upon Termination.
(a) Survival of Stock Options. Notwithstanding any of the foregoing
relative to Termination the Company agrees that any stock options granted to
either Consultant and/or to Xxxxxx shall remain in force for a period of not
less than twelve (12) months following the date of termination.
(b) Termination for Cause or Without Good Reason. Subject to the
foregoing subsection, if the Company shall terminate the Consultant for Cause or
if the Consultant shall terminate its Engagement 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 Consultant and Xxxxxx are participating.
(c) Termination Without Cause or for Company Breach. If the Company
shall terminate the Consultant's Engagement Without Cause or if the Consultant
shall terminate its Engagement for Company Breach, then the Company shall pay to
the Consultant within 48 hours thereafter, as severance pay in a lump sum
without any deduction or set off on the Date of Termination, the following
amounts:
i) any payment of the Base Fee (at the rate in effect as of the
Date of Termination) and any Annual Profit Participation which
has already become payable, but has not yet been paid, through
to the Date of Termination; and
Initials
/s/ DG /s/ MEM
Page 7 of 19 - May 31, 1999
/s/ JPC
8
ii) In lieu of any further Base Fee and Annual Profit
Participation for the five year period subsequent to the Date
of Termination, an amount equal to the product of (A) the sum
of the Annual Base Fee at the rate in effect as of the Date of
Termination, plus the average Annual Profit Participation paid
to the Consultant during the preceding two (2) years, or such
shorter period for which any Annual Profit Participation has
been paid), multiplied by (B) the number five (5).
If the Consultant terminates its Engagement for Company Breach
based upon a reduction by the Company of the Consultant's Base Fee, then for
purposes of this Section 1.6(c) (Termination Without Cause or for Company
Breach), the Consultant's Base Fee as of the Date of Termination shall be deemed
to be the Consultant's Base Fee immediately prior to the said reduction that the
Consultant claims as grounds for Company Breach.
(d) Termination Upon a Change in Control. If the Consultant
terminates their Engagement after a Change in Control pursuant to Section 1.5(d)
(Change in Control), then the Company shall pay to the Consultant as severance
pay and as liquidated damages (because actual damages are difficult to
ascertain), in a lump sum, in cash on the Date of Termination, an amount equal
to the amounts provided in Section 1.6(c) above. In addition, if the Consultant
is liable for the payment of any excise or GST taxes (the "Basic Excise Tax")
because of Section 4999 of the Internal Revenue Code of 1986 (USA), as amended
(the "Code"), and the Revenue Canada regulations, or any successor or similar
provisions, 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 Consultant an amount (the "Special Reimbursement") which, after
payment by the Consultant (or on the Consultant's behalf) of any federal, state,
provincial, and local taxes applicable thereto, including, without limitation,
any further excise tax under such Section 4999 of the Code, Revenue Canada
regulations, 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(d) shall be made by the Company's
independent auditors acting reasonably.
(e) No Mitigation. The Consultant shall not be required to
mitigate the amount of any payment provided for in this Section 1.6
(Compensation Upon Termination) by seeking other Engagement's or otherwise.
(f) Liquidated Claim. The parties agree that any payments
stipulated hereunder constitute a reasonable estimate of the damages which
would be incurred in the event of termination of the Engagement of the
Consultant and in no event shall such payments be construed as a penalty.
1.7 Death of Consultant's President. If the Consultant's President dies
prior to the expiration of this Agreement, and the Company is unwilling to
accept an alternative employee of the Consultant's to serve in a management
capacity, the obligations under this Agreement
Initials
Page 8 of 19 - May 31, 1999 /s/ DG /s/ MEM
/s/ JCP
9
shall automatically terminate and all compensation to which the Consultant is or
would have been entitled hereunder (including without limitation under Sections
1.4(a) (Base Fee), shall terminate as of the end of the month in which Pennie's
death occurs; provided, however, that (i) the Company shall pay to the
Consultant, within thirty (30) days, an amount equal to twelve (12) times the
monthly Base Fee; (ii) extend the benefits to Pennie's estate pursuant to
Section 4.1 hereof for a period of 12 months following such termination; and
(iii) such reimbursement as may have been due to the Consultant pursuant to
Section 1.4(b) (Additional Compensation) hereof.
1.8 Confidentiality of Settlement. The parties hereto agree that any
payment pursuant to this Article shall remain confidential as between them and
shall not be disclosed by any of them to any person, corporation, group or
organization whatsoever with the exception of each party's legal and financial
advisors and except as may be required by the Toronto Stock Exchange, Nasdaq or
by applicable laws.
ARTICLE 2
NON-COMPETITION AND CONFIDENTIALITY
2.1 Non-Competition.
(a) Description of Proscribed Actions. Throughout the Consultant's
Engagement during the term of this Agreement and, unless the within Agreement is
not mutually renewed at the end of its term, or unless the within Agreement
terminates pursuant to Section 1.5(b) (Without Cause), Section 1.5(c) (Company
Breach), or Section 1.5(d) (Change in Control), for a period of two (2) years
after the termination of the Consultant's Engagement within Canada and the
United States of America, in consideration for the payment by the Company to the
Consultant of the compensation due and/or severance pay due pursuant hereto and
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 Consultant
and Xxxxxx (pursuant to Article 3 (Indemnification) hereof), the Consultant and
Xxxxxx shall not:
(i) directly or indirectly, manage, operate, control or be
employed by, or render services or advice to, any Competing
Business (as defined in Section 2.1(c) below); provided,
however, that the Consultant and Xxxxxx may invest in the
securities of any 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 (USA) and (y) the Consultant and Xxxxxx does not
beneficially own (as defined Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) in excess of twenty-percent
20% of the outstanding capital stock of such enterprise;
Initials
/s/ DG /s/ MEM
Page 9 of 19 - May 31, 1999
/s/ JCP
10
(ii) directly or indirectly, either as principal, agent,
independent contractor, consultant, director, officer,
employee, employer, advisor (whether paid or unpaid), partner
or in any other individual or representative capacity
whatsoever, either for their own benefit or for the benefit of
any other person or entity, solicit, divert or take away any
suppliers, customers or clients of the Company or any of its
Affiliates (as defined in Section 2.1(d) below); or
(b) Nature of Restrictions. The Consultant and Xxxxxx acknowledge
that the business of the Company and its Affiliates is in Canada and the United
States of America 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
Consultant and Xxxxxx acknowledge that the scope and duration of the
restrictions contained herein are reasonable in light of the time that the
Consultant and Xxxxxx have been engaged in the business of the Company and its
Affiliates, the Consultant's and Pennie's reputation in the markets for the
Company's and its Affiliates' businesses and the Consultant and Pennie's
relationship with the suppliers, customers and clients of the Company and its
Affiliates. The Consultant and Xxxxxx further acknowledge that the restrictions
contained herein are not burdensome to the Consultant and Xxxxxx in light of the
consideration paid therefor and the other opportunities that remain open to the
Consultant and Xxxxxx. Moreover, the Consultant and Xxxxxx acknowledge that they
have other means available to them for the pursuit of their livelihood.
(c) Competing Business. "Competing Business" shall mean any
individual, business, firm, company, partnership, joint venture, organization,
or other entity engaged in industrial maintenance services and specialty
fabrication business in the Canadian and United States of America market areas
in which the Company or any of its Affiliates does business at any time during
the Consultant's Engagement with the Company. The Company hereby acknowledges
and agrees that the Consultant's and Pennie's prior responsibilities as Chairman
& CEO of an industrial environmental services company does not conflict with the
definition of a Competing Business.
(d) 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.
(e) Directorships. Notwithstanding the foregoing, Xxxxxx may serve
as a director of other companies in Competing Business's in Canada and/or the
United States of America during the said two (2) year period provided that he
has obtained the prior consent of the Company which consent is not to be and may
not be unreasonably withheld.
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.
Initials
/s/ DG /s/ MEM
/s/ JCP
Page 10 of 19 - May 31, 1999
11
(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.
Confidential Information shall not include information publicly
known (other than as a result of a disclosure by the Consultant and Xxxxxx). The
phrase "publicly known" shall mean readily accessible to the public in a written
publication.
(b) Obligation of The Company. During the Term, the Company shall
provide access to, or furnish to, the Consultant Confidential Information of the
Company necessary to enable the Consultant properly to perform its obligations
under this Agreement.
(c) Non-Disclosure. The Consultant and Xxxxxx acknowledge,
understand and agree that all Confidential Information, whether developed by the
Company or others or whether developed by the Consultant and Xxxxxx 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
any one else who has a need to know, 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 Consultant and Pennie's personal benefit.
Subject to the terms of the preceding sentence, the Consultant and Xxxxxx shall
not use, copy or transfer Confidential Information other than as is necessary in
carrying out their duties under this Agreement.
2.3 Injunctive Relief. Because of the Consultant and Pennie's
experience and reputation in the industries in which the Company operates, and
because of the unique nature of the Confidential Information, the Consultant and
Xxxxxx acknowledge, understand and agree that the Company will suffer immediate
and irreparable harm if the Consultant and Xxxxxx fail to comply with any of
their 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 Consultant and Xxxxxx agree 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.
Initials
/s/ DG /s/ MEM
Page 11 of 19 - May 31, 1999
/s/ JCP
12
ARTICLE 3
INDEMNIFICATION
3.1 Basic Indemnification Arrangement.
(a) Claims Arising from Pennie's Position with the Company. In
addition to any separate agreements between the Consultant, Xxxxxx and the
Company relating to indemnification, the Company will indemnify and hold
harmless both the Consultant and Xxxxxx, 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 Xxxxxx 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) Disputes re: this Agreement. The Company agrees to pay promptly
as incurred, to the full extent permitted by law, all legal fees and expenses
which the Consultant and Xxxxxx may reasonably incur as a result of any action
or lawsuit (regardless of the outcome thereof) by the Company, the Consultant
and Xxxxxx 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 action or lawsuit by the Consultant and Xxxxxx
about the amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable United States 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 both Consultant and Pennie's behalf, directors and officers
insurance or any other indemnity policy presently carried on behalf of the
Consultant and Xxxxxx, and further agrees to supplement any such existing policy
to cover all actions taken by the Consultant and Xxxxxx in connection with its
Engagement by the Company.
ARTICLE 4
MISCELLANEOUS
4.1 Stock Options. Xxxxxx shall be eligible to receive grants of stock
options pursuant to the Company's Stock Option Plan, as amended May 20, 1999,
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.
Initials
/s/ DG /s/ MEM
Page 12 of 19 - May 31, 1999
/s/ JCP
13
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 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 Consultant:
Windrush Corporation
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attn: X.X. Xxxxxx, President
If to Xxxxxx:
00000 Xxxxxxxxxxx Xxxxx Xxxx
Xxxxxxx Xxxx, Xxxxxxx, Xxxxxx X0X 0X0
If to the Company:
American Eco Corporation
00000 Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000 X.X.X.
Attn: President and CEO
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.
Initials
Page 13 of 19 - May 31, 1999 /s/ DG /s/ MEM
/s/ JCP
14
4.5 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.
4.6 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.
4.7 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.
4.8 Applicable Law and Jurisdiction. This Agreement and all of the
rights and obligations arising herefrom shall be interpreted and applied in
accordance with the laws of the Province of Ontario and the courts of the
Province of Ontario shall have exclusive jurisdiction to determine all disputes,
relating to this Agreement and all of the rights and obligations created hereby.
The parties hereto hereby irrevocably attorn to the jurisdiction of the courts
of the Province of Ontario.
4.9 Injunctive Relief. In the event that the Company breaches any of
the terms of the within agreement the Company acknowledges that the Consultant
shall have in addition to any other remedies available to it either in law or in
equity the right to seek injunctive relief in court as provided for Company in
Section 2.3 (Injunctive Relief) of this Agreement and further Consultant inter
alia has the right to a judicial determination that it should be indemnified by
the Company (as provided for in Section 3 of this Agreement).
4.10 Survival. The covenants and agreements of the parties set forth in
Article 2 (Non-Competition and Confidentiality), Article 3 (Indemnification),
Article 4 (Miscellaneous) and Article 5 (Additional) are of a continuing nature
and shall survive the expiration, termination or cancellation of this Agreement,
regardless of the reason therefor.
4.11 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 Consultant and Xxxxxx to the extent the Consultant and Xxxxxx
have otherwise actually received payment (under any insurance policy, Bylaw or
otherwise) of the amounts otherwise indemnifiable hereunder. In the event the
Consultant and Xxxxxx actually receive payment (under any insurance policy,
Bylaw or otherwise) of any amount with respect to which the Company has already
indemnified or subsequently indemnifies the Consultant and Xxxxxx, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Consultant and
Initials
/s/ MEM
/S/ DG /S/ JCP
Page 14 of 19 - May 31, 1999
15
Xxxxxx, 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.
4.12 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
Consultant and Xxxxxx, 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 Consultant
continues to serve as a consultant to the Company.
4.13 Contribution. If the indemnity contained in this Agreement is
unavailable or insufficient to hold the Consultant and Xxxxxx 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 Consultant and Xxxxxx 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
Consultant and Xxxxxx on the other in the acts, transactions or matters to which
the Claim relates and other equitable considerations.
4.14 This Agreement supersedes and rescinds any prior Engagement
contracts in effect between the Company, the Consultant and Xxxxxx.
4.15 Acknowledgement of Xxxxxx and Consultant. Each of Xxxxxx and
Consultant acknowledges and agrees with the Company that Consultant is an
independent contractor and that nothing herein shall be construed so as to
render either the Consultant or Xxxxxx an employee of the Company and that this
Agreement shall not create a partnership, joint venture, employer/employee,
master/servant or any other similar relationship between the Company, and either
the Consultant or Xxxxxx. The Company acknowledges that Xxxxxx is not an
employee of the Company.
4.16 Representations and Warranties. The Consultant represents and
warrants to the Company and acknowledges that the Company is relying upon such
representations and warranties in entering into this Agreement, as follows:
(a) The Consultant is a corporation duly formed under the laws of
the Province of Ontario; and
Initials
/s/ DG /s/ MEM
Page 15 of 19 - May 31, 1999
/s/ JPC
16
(b) the entering into and performance by the Consultant of this
Agreement have been duly authorized by all necessary corporate action and will
not (a) violate or conflict with any corporate agreement or any other agreement
to which the Consultant is a party or by which it is governed or bound; (b)
constitute a breach of an statute of regulation which would adversely affect the
Consultant, or (c) contravene any judgment, decree or order binding on the
Consultant.
4.17 Further Assurances. The parties hereto shall do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered such further acts and documents as shall be reasonably required to
accomplish the intention of this Agreement.
ARTICLE 5
ADDITIONAL
5.1 Wherever any monetary amount is to be determined or specified in
any notice permitted or required to be given under this Agreement, or where any
monetary amount is to be determined for any purpose hereunder, such amount shall
be quoted or stated as the case may be in U.S. dollars.
5.2 The recitals hereof form part of this Agreement, it being
acknowledged that the parties hereto relied upon them in entering into this
Agreement.
5.3 Xxxxxx agrees that he shall carry out his obligations to the
Consultant.
Initials
Page 16 of 19 - May 31, 1999 /s/ DG /s/ MEM
/s/ JCP
17
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officer thereunto duly authorized, and Consultant and Xxxxxx
have signed this Agreement, all as of the day and year first above written.
AMERICAN ECO CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------------------
Xxxxxxx X. XxXxxxxx,
President, CEO & Director
By: /s/ XXX. XXXXXX GETTY
---------------------------------------
Xxx. Xxxxxx Getty,
Chairman, Compensation Committee
& Director
WINDRUSH CORPORATION
By: /s/ XXXX X. XXXXXX
---------------------------------------
Xxxx X. Xxxxxx, President
Xxxxxx hereby acknowledges and agrees that:
(1) He is a key member of the Consultant whose services are fundamental to the
arrangements contemplated herein.
(2) He is personally bound by certain of the provisions of the within Agreement.
/s/ [ILLEGIBLE] /s/ XXXX X. XXXXXX
--------------------------- ------------------------------------
Witness: Xxxx X. Xxxxxx
Page 17 of 19 - May 31, 1999
/s/ DG /s/ MEM
/s/ JCP
18
INDEX OF DEFINED TERMS
TERM SECTION
---- -------
Affiliate 2.1(e)
Agreement Preamble
Additional Compensation 1.4(b)
Base Fee 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)
Consultant & its Management Designee Preamble
Consultant & its Management Designee Claims 4.4
Explanation of Termination of Engagement 1.5(g)
Notice of Termination 1.5(g)
Term 1.3
Without Cause 1.5(c)
Without Good Reason 1.5(f)
Initials
Page 18 of 19 - May 31, 1999 /s/ DG /s/ MEM
/s/ JCP
19
APPENDIX A
CALCULATION OF THE ANNUAL PROFIT PARTICIPATION
Subject to the adequacy of the Company's Annual Profit Participation, the
Consultant shall be paid an Annual Profit Participation which shall be
determined and paid on or before February 28th in each year, for the fiscal year
ended the preceding November 30th, as set forth below:
50% of the Annual Base Fee if the Company's earning per share are equal
to or greater than budget of US$0.30 up to US$0.50 per share; or
100% of the Annual Base Fee if the Company's earning per share are
equal to or greater than US$0.51 to US$1.00 per share; or
150% of the Annual Base Fee if the Company's earning per share are
equal to or greater than US$1.01 to US$1.50 per share; or
200% of the Annual Base Fee if the Company's earning per share are
equal to or greater than US$1.51 per share.
Initials
Page 19 of 19 - May 31, 1999 /s/ DG /s/ MEM
/s/ JCP
