EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of
July 10, 2002, by and between The Xxxx Group Inc., a Louisiana corporation
(collectively with its affiliates and subsidiaries hereinafter referred to as
"Company"), and X. X. Xxxxxxxx, Xx. ("Employee").
WHEREAS, the Company employs Employee and desires to continue such
employment relationship and Employee desires to continue such employment;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs Employee, and Employee hereby
accepts employment by the Company, on the terms and conditions set forth in this
Agreement.
2. Term of Employment. Subject to the provisions for earlier
termination provided in this Agreement, the term of this agreement (the "Term")
shall be three (3) years commencing on the date hereof, and shall be
automatically renewed on each day following the date hereof so that on any given
day the unexpired portion of the Term of this Agreement shall be three (3)
years. Notwithstanding the foregoing provision, at any time after the date
hereof the Company or Employee may give written notice to the other party that
the Term of this Agreement shall not be further renewed from and after a
subsequent date specified in such notice (the "fixed term
1
date"), in which event the Term of this Agreement shall become fixed and this
Agreement shall terminate on the third anniversary of the fixed term date.
3. Employee's Duties. During the Term of this Agreement, Employee shall
serve as the Senior Vice President of the Company, with such duties and
responsibilities as may from time to time be assigned to him by the board of
directors of the Company (the "Board"), provided that such duties are consistent
with the customary duties of such position.
Employee agrees to devote his full attention and time during normal
business hours to the business and affairs of the Company and to use reasonable
best efforts to perform faithfully and efficiently his duties and
responsibilities. Employee shall not, either directly or indirectly, enter into
any business or employment with or for any person, firm, association or
corporation other than the Company during the Term of this Agreement; provided,
however, that Employee shall not be prohibited from making financial investments
in any other company or business or from serving on the board of directors of
any other company. Employee shall at all times observe and comply with all
lawful directions and instructions of the Board.
4. Base Compensation. For services rendered by Employee under this
Agreement, the Company shall pay to Employee a base salary ("Base Compensation")
of $350,000.00 per annum payable in accordance with the Company's customary pay
periods and subject to customary withholdings. The amount of Base Compensation
shall be reviewed by the Board on an annual basis as of the close of each fiscal
year of the Company and may be increased as the Board may deem appropriate. In
the event the Board deems it appropriate to increase Employee's annual base
salary, said increased amount shall thereafter be the "Base Compensation".
Employee's Base
2
Compensation, as increased from time to time, may not thereafter be decreased
unless agreed to by Employee. Nothing contained herein shall prevent the Board
from paying additional compensation to Employee in the form of bonuses or
otherwise during the Term of this Agreement.
5. Additional Benefits. In addition to the Base Compensation provided
for in Section 4 herein, Employee shall be entitled to the following:
(a) Expenses. The Company shall, in accordance with
any rules and policies that it may establish from time to time
for executive officers, reimburse Employee for business
expenses reasonably incurred in the performance of his duties.
It is understood that Employee is authorized to incur
reasonable business expenses for promoting the business of the
Company, including reasonable expenditures for travel,
lodging, meals and client or business associate entertainment.
Request for reimbursement for such expenses must be
accompanied by appropriate documentation.
(b) Vacation. Employee shall be entitled to four (4)
weeks of vacation per year, without any loss of compensation
or benefits. Employee shall be entitled to carry forward any
unused vacation time.
(c) General Benefits. Employee shall be entitled to
participate in the various employee benefit plans or programs
provided to the employees of the company in general, including
but not limited to, health, dental, disability, 401K and life
insurance plans, subject to the eligibility requirements with
respect to each of such benefit plans or programs, and such
other benefits or perquisites as may be approved by the Board
3
during the Term of this Agreement. Nothing in this paragraph
shall be deemed to prohibit the Company from making any
changes in any of the plans, programs or benefits described in
this Section 5, provided the change similarly affects all
executive officers of the Company similarly situated.
(d) Options. Upon the resignation for Good Reason as
defined in Section 7 (e), discharge as defined in Section 7
(c) (i), or disability as defined in Section 7 (d), Employee
shall be considered as immediately and totally vested in any
and all stock options or other similar awards previously made
to Employee by the Company or its subsidiaries under a "Long
Term Incentive Plan" duly adopted by the Board (such options
or similar awards are hereinafter collectively referred to as
"Options"). In the event that the Options become vested under
this paragraph, employee will be allowed not less than one
year from the date of such vesting in which to exercise such
options.
6. Confidential Information. Employee, during the Term, may have access
to and become familiar with confidential information, secrets and proprietary
information concerning the business and affairs of the Company. As to such
confidential information, Employee agrees as follows:
(a) During the employment of Employee with the
Company and thereafter Employee will not, either directly or
indirectly, disclose to any third party without the written
permission of the Company, nor use in any way (except as
required in the course of his employment with the Company) any
confidential information, secret or proprietary information
4
of the Company. In the event of a breach or threatened breach
of the provisions of this Section 6 (a), the Company shall be
entitled, in addition to any other remedies available to the
Company, to an injunction restraining Employee from disclosing
such confidential information.
(b) Upon termination of employment of Employee, for
whatever reason, Employee shall surrender to the Company any
and all documents, manuals, correspondence, reports, records
and similar items then or thereafter coming into the
possession of Employee which contain any confidential, secret
or proprietary information of the Company.
7. Termination This Agreement may be terminated prior to the end of its
Term as set forth below:
(a) Resignation (other than for Good Reason).
Employee may resign, including by reason of retirement, his
position at any time by providing written notice of
resignation to the Company in accordance with Section 11
hereof. In the event of such resignation, except in the case
of resignation for Good Reason (as defined below), this
Agreement shall terminate and Employee shall not be entitled
to further compensation pursuant to this Agreement other than
the payment of any unpaid Base Compensation accrued hereunder
as of the date of Employee's resignation.
(b) Death. If Employee's employment is terminated due
to his death, one (1) year of Employee's Base Compensation
shall be paid by the Company in lump sum in cash within thirty
(30) days after Employee's death to Employee's surviving
spouse or estate, and one (1) year of paid
5
group health and dental insurance benefits shall be provided
by the Company to Employee's surviving spouse and the minor
children, and after said payments and provision of insurance
benefits, this Agreement shall terminate and the Company shall
have no obligations to Employee or his legal representatives
with respect to this Agreement other than the payment of any
unpaid Base Compensation previously accrued hereunder.
(c) Discharge.
(i) The Company may terminate Employee's
employment for any reason at any time upon written
notice thereof delivered to Employee in accordance
with Section 11 hereof. In the event that Employee's
employment is terminated during the Term by the
Company for any reason other than his Misconduct or
Disability (both as defined below), then (A) the
Company shall pay in lump sum in cash to Employee,
within fifteen (15) days following the date of
termination, an amount equal to the product of (i)
Employee's Base Compensation as in effect immediately
prior to Employee's termination, multiplied by (ii)
the Remaining Term, (B) for the Remaining Term, the
Company, at its cost, shall provide or arrange to
provide Employee (and, as applicable, Employee's
dependents) with disability, accident and group
health insurance benefits substantially similar to
those which Employee (and Employee's dependents) were
receiving immediately prior to Employee's
termination; however, the welfare benefits otherwise
receivable by
6
Employee pursuant to this clause (B) shall be reduced
to the extent comparable welfare benefits are
actually received by Employee (and/or Employee's
dependents) during such period under any other
employer's welfare plan(s) or program(s) , with
Employee being obligated to promptly disclose to the
Company any such comparable welfare benefits, (C) in
addition to the aforementioned compensation and
benefits, the Company shall pay in lump sum in cash
to Employee within fifteen (15) days following the
date of termination an amount equal to the product of
(i) Employee's highest bonus paid by the Company
during the most recent three (3) years immediately
prior to the Date of Termination, multiplied by (ii)
the Remaining Term, and (D) Employee shall be
considered as immediately and totally vested in any
and all Options previously made to Employee by
Company or its subsidiaries.
(ii) Notwithstanding the foregoing
provisions of this Section 7, in the event Employee
is terminated because of Misconduct, the Company
shall have no obligations pursuant to this Agreement
after the Date of Termination other than the payment
of any unpaid Base Compensation accrued through the
Date of Termination. As used herein, "Misconduct"
means (a) the continued failure by Employee to
substantially perform his duties with the Company
(other than any such failure resulting from
Employee's incapacity due to physical or mental
illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by
Employee for
7
Good Reason), after a written demand for substantial
performance is delivered to Employee by the Board,
which demand specifically identifies the manner in
which the Board believes that Employee has not
substantially performed his duties, (b) the engaging
by Employee in conduct which is demonstrably and
materially injurious to the Company, monetarily or
otherwise (other than such conduct resulting from
Employee's incapacity due to physical or mental
illness or any such actual or anticipated conduct
after the issuance of a Notice of Termination by
Employee for Good Reason), or (c) Employee's
conviction for the commission of a felony. Anything
contained in this Agreement to the contrary
notwithstanding, the Chief Executive officer of the
Company shall have the sole power and authority to
terminate the employment of Employee on behalf of the
Company.
(d) Disability. If Employee shall have been absent
from the full-time performance of Employee's duties with the
Company for ninety (90) consecutive calendar days as a result
of Employee's incapacity due to physical or mental illness,
Employee's employment may be terminated by the Company for
"Disability" and Employee shall not be entitled to further
compensation pursuant to this Agreement, except that Employee
shall (1) be paid monthly (but only for up to a twelve (12)
month period beginning with the Date of Termination) the
amount by which Employee's monthly Base Compensation exceeds
the monthly benefit received by Employee pursuant to any
disability insurance covering Employee; (2) continue to
8
receive paid group health and dental insurance benefits for
Employee and his dependents for up to twelve (12) month period
beginning with Date of Termination; and (3) be considered as
immediately and totally vested in any and all options
previously granted to Employee by Company or its subsidiaries.
(e) Resignation for Good Reason. Employee shall be
entitled to terminate his employment for Good Reason as
defined herein. If Employee terminates his employment for Good
Reason he shall be entitled to the compensation and benefits
provided in Paragraph 7 (c) (i) hereof. "Good Reason" shall
mean the occurrence of any of the following circumstances
without Employee's express written consent unless such breach
or circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination given in
respect hereof:
(1) the material breach of any of the
Company's obligations under this Agreement without
Employee's express written consent,
(2) the continued assignment to Employee of
any duties inconsistent with the office of Senior
Vice President;
(3) the failure by the Company to pay to
Employee any portion of Employee's compensation on
the date such compensation is due;
(4) the failure by the Company to continue
to provide Employee with benefits substantially
similar to those enjoyed by other executive officers
who have entered into similar employment agreements
with Employer under any of the Company's medical,
9
health, accident, and/or disability plans in which
Employee was participating immediately prior to such
time; or
(5) the failure of the Company to obtain a
satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated
in Section 13 hereof.
In addition, the occurrence of any Corporate Change
(as defined below), shall constitute "Good Reason" hereunder,
but only if Employee gives notice of his intent to terminate
his employment within ninety (90) days following the effective
date of such Corporate Change.
A "Corporate Change" shall occur if (i) the Company
shall not be the surviving entity in any merger or
consolidation (or survives only as a subsidiary of another
entity), (ii) the Company sells all or substantially all of
its assets to any other person or entity (other than a
wholly-owned subsidiary), (iii) the Company is to be dissolved
and liquidated, (iv) when any "person" as defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and as used in Sections 13 (d) and 14
(d) thereof, including a "group" as defined in Section 13 (d)
of the Exchange Act but excluding any 10% or larger
shareholder of record of the Company as of January 10, 2000,
directly or indirectly, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, as amended from
time to time), of securities of the Company representing 20%
or more of the combined voting power of the Company's then
outstanding securities which are entitled to vote with respect
to the election of the directors of the Company; (v) as a
result of or in connection
10
with a contested election the members of the Board as of the
date of this Agreement shall cease to constitute a majority of
the Board. "Contested" as used herein shall not include
election by a majority of the current Board.
(f) Notice of Termination. Any purported termination
of Employee's employment by the Company under Sections
7(c)(ii) or 7(d), or by Employee under Section 7(e), shall be
communicated by written Notice of Termination to the other
party hereto in accordance with Section 11 hereof. For
purposes of this Agreement, a "Notice of Termination" shall
mean a notice which, if by the Company and is for Misconduct
or Disability, shall set forth in reasonable detail the reason
for such termination of Employee's employment, or in the case
of resignation by Employee for Good Reason, said notice must
specify in reasonable detail the basis for such resignation. A
Notice of Termination given by Employee pursuant to Section
7(e) shall be effective even if given after the receipt by
Employee of notice that the Board has set a meeting to
consider terminating Employee for Misconduct. Any purported
termination for which a Notice of Termination is required
which is not effected pursuant to this Section 7(f) shall not
be effective.
(g) Date of Termination, Etc. "Date of Termination"
shall mean the date specified in the Notice of Termination,
provided that the Date of Termination shall be at least 15
days following the date the Notice of Termination is given.
Notwithstanding the foregoing, in the event Employee is
terminated for Misconduct, the Company may refuse to allow
11
Employee access to the Company's offices (other than to allow
Employee to collect his personal belongings under the
Company's supervision) prior to the Date of Termination.
(h) Mitigation. Employee shall not be required to
mitigate the amount of any payment provided for in this
Section 7 by seeking other employment or otherwise, nor shall
the amount of any payment provided for in this Agreement be
reduced by any compensation earned by Employee as a result of
employment by another employer, except that any severance
amounts payable to Employee pursuant to the Company's
severance plan or policy for employees in general shall reduce
the amount otherwise payable pursuant to Sections 7(c)(i) or
7(e).
(i) Excess Parachute Payments. Notwithstanding
anything in this Agreement to the contrary, to the extent that
any payment or benefit received or to be received by Employee
hereunder in connection with the termination of Employee's
employment would, as determined by tax counsel selected by the
Company, constitute an "Excess Parachute Payment" (as defined
in Section 280G of the Internal Revenue Code), the Company
shall fully "gross-up" such payment so that Employee is in the
same "net" after-tax position he would have been if such
payment and gross-up payments had not constituted Excess
Parachute Payments.
8. Non-Compete.
8.1 No Other Activities. Employer agrees that during the term of this
Agreement, he shall not, directly or indirectly, represent or otherwise engage
in or participate in, the business or ventures of any person, firm, partnership,
association,
12
or corporation other than the Company, without first obtaining the written
consent of the Company. Employee further agrees that during the term of this
Agreement, he shall not, directly or indirectly, solicit or attempt to solicit
any products or agreements for the purpose of using the products or agreements
in the formation of a business outside of the Company, regardless of whether any
such products or the subject of such agreements are then being handled by the
Company.
8.2 Non-Disclosure. Employee further agrees that he will not, during or
after the term of his employment, disclose to any person, firm, partnership,
association, or corporation, the names and addresses of any past or present
customers, or prospective customers, of the Company, any of their methods or
practices of obtaining business, their trade secrets, consultant contracts and
the details thereof, their pricing policies, their operational methods, their
marketing plans or strategies, their business acquisition plans and all other
information pertaining to the business of the Company that is not publicly
available. Employee agrees to keep all information gained as a result of his
relationship with the Company on a confidential basis and shall not disclose
that information to anyone not authorized by the Company to receive information.
If Employee should cease, either voluntarily or involuntarily, to be an employee
of the Company he hereby expressly agrees that, for a period of two (2) years
following termination of his employment, he shall not assist any competitor or
prospective competitor located in the territories serviced by the Company (as
set forth in Attachment 1 or otherwise) during his employment in any way
detrimental to the Company through the use of any information gained as a result
of his employment with the Company. Employee agrees that all computer programs,
print-outs, customer lists, methods, forms, systems and procedures used
13
by the Company constitute the exclusive property and will remain the exclusive
property of the Company and agrees that he will not disclose any of these
matters without the prior written permission of the Company.
8.3 Non-Solicitation, etc. In further consideration of the other terms
and provisions of this Agreement, and to protect the vital interests of the
Company, upon termination of his employment for any reason, for a period of two
(2) years after the termination of his employment, Employee agrees and binds
himself that he shall not, directly or indirectly, or as a member, shareholder,
officer, director, consultant or employee of any other person or entity, compete
with the Company or own, manage, operate, join, control or participate in the
ownership, management, operation, or control of, or become employed by, consult
or advise, or be connected in any manner with any business or activity which is
in actual, direct or indirect competition or anticipated competition with the
Company within those counties, parishes, municipalities or other places listed
in Attachment 1 annexed hereto and made a part hereof, so long as the Company
carries on the business presently conducted by the Company, being the supply of
industrial piping systems for new construction and retrofit projects, which
includes design and engineering services, piping system fabrication,
manufacturing and sale of specialty pipe fittings, design and fabrication of
pipe support systems and industrial and commercial construction and maintenance.
Not by way of limitation or exclusion, Employee shall not, within the aforesaid
locations and during the aforesaid time period, call upon, solicit, advise or
otherwise do, or attempt to do, business with any customers or distributors of
the Company with whom the Company had any dealings during the period of
Employee's employment hereunder or take away or interfere or attempt to
interfere with any
14
custom, trade, business or patronage of the Company or interfere with or attempt
to interfere with any officers, employees, distributors, representatives or
agents of the Company or employ or induce or attempt to induce any of them to
leave the employ of the Company or violate the terms of their contracts, or any
employment arrangements, with the Company. Employee acknowledges and agrees that
any breach of the foregoing covenant not to compete would cause irreparable
injury to the Company and that the amount of injury would be impossible or
difficult to fully ascertain. Employee agrees that the Company shall, therefore,
be entitled to obtain an injunction restraining any violation, further violation
or threatened violation of the covenant not to compete hereinabove set forth, in
addition to any other remedies that the Company may pursue.
8.4 Duration. If the two (2) year period referred to in any of this
Article 8 shall be finally determined by a court to exceed the maximum period
which is permissible by applicable law, the said period shall be reduced to the
maximum period permitted by such law.
9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Employee's continuing or future participation in any benefit, bonus,
incentive, or other plan or program provided by the Company or any of its
affiliated companies and for which Employee may qualify, nor shall anything
herein limit or otherwise adversely affect such rights as Employee may have
under any Options with the Company or any of its affiliated companies.
10. Assignability. The obligations of Employee hereunder are personal
and may not be assigned or delegated by him or transferred in any manner
whatsoever, nor are such obligations subject to involuntary alienation,
assignment or transfer. The
15
Company shall have the right to assign this Agreement and to delegate all
rights, duties and obligations hereunder, either in whole or in part, to any
parent, affiliate, successor or subsidiary organization or company of the
Company, so long as the obligations of the Company under this Agreement remain
the obligations of the Company.
11. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
Company at its principal office address, directed to the attention of the Board
with a copy to the Secretary of the Company, and to Employee at Employee's
residence address on the records of the Company or to such other address as
either party may have furnished to the other in writing in accordance herewith
except that notice of change of address shall be effective only upon receipt.
12. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Successors; Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such
succession had taken place. Failure of the Company
16
to obtain such agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall
entitle Employee to compensation from the Company in the same
amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason,
except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be
deemed the Date of Termination. As used herein, the term
"Company" shall include any successor to its business and/or
assets as aforesaid which executes and delivers the Agreement
provided for in this Section 13 or which otherwise becomes
bound by all terms and provisions of this Agreement by
operation of law.
(b) This Agreement and all rights of Employee
hereunder shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors,
administrators, successors, heirs distributees, devisees and
legatees. if Employee should die while any amounts would be
payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's
devisee, legatee, or other designee or, if there be no such
designee, to Employee's estate.
14. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Employee and such officer as may be specifically
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or in compliance with, any condition or
provision of this Agreement to be
17
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. This
Agreement is an integration of the parties agreement; no agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party, except those which are set
forth expressly in this Agreement. THE VALIDITY, INTERPRETATION, CONSTRUCTION
AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
LOUISIANA.
15. Counterparts. This Agreement may be executed in one 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.
16. Arbitration. Either party may elect that any dispute or controversy
arising under or in connection with this Agreement be settled by arbitration in
Baton Rouge, Louisiana in accordance with the rules of the American Arbitration
Association then in effect. If the parties cannot mutually agree on an
arbitrator, then the arbitration shall be conducted by a three arbitrator panel,
with each party selecting one arbitrator and the two arbitrators so selected
selecting a third arbitrator. The findings of the arbitrator(s) shall be final
and binding, and judgment may be entered thereon in any court having
Jurisdiction. The findings of the arbitrator(s) shall not be subject to appeal
to any court, except as otherwise provided by applicable law. The arbitrator(s)
may, in his or her (or their) own discretion, award legal fees and costs to the
prevailing party.
18
IN WITNESS WHEREOF, the parties have executed this Agreement on October
24, 2002, effective for all purposes as provided above.
THE XXXX GROUP INC.
By
Name: /s/ X. X. Xxxxxxxx, Xx.
----------------------------
EMPLOYEE:
Name: /s/ X. X. Xxxxxxxx, Xx.
----------------------------
X. X. Xxxxxxxx, Xx.
Senior Vice President
19
