EXHIBIT 10.17
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into and made
effective as of January 29, 1996, by and among Synagro Technologies, Inc.
("Employer") a Nevada corporation, and Xxxxxx X. Xxxxx ("Employee").
R E C I T A L S
WHEREAS, Employer is desirous of hiring Employee as one of its key
employees;
WHEREAS, Employee is willing to accept employment as an employee of
Employer; and
WHEREAS, the parties hereto desire to delineate the responsibilities
of Employee and the expectations of Employer;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and obligations herein contained, the parties hereto agree as
follows:
AGREEMENT
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
accepts employment with Employer, upon the terms and conditions set forth in
this Agreement.
2. TERM OF EMPLOYMENT. The employment of Employee pursuant to the
terms of this Agreement shall commence as of January 29, 1996, and shall
continue for a period of five (5) years, unless sooner terminated pursuant to
the provisions hereof; PROVIDED, HOWEVER, that this Agreement shall, unless
earlier terminated, at the end of each anniversary, be automatically extended
for an additional one year term.
3. DUTIES.
3.1. BASIC DUTIES. Subject to the direction and control of the Board
of Directors of Employer, Employee shall serve as the Chief Executive Officer of
Employer and shall fulfill all duties and obligations of such office.
3.2. OTHER DUTIES OF EMPLOYEE. In addition to the foregoing,
Employee shall perform such other or different duties related to those set forth
in Paragraph 3.1 as may be assigned to him from time to time by Employer;
PROVIDED, HOWEVER, that any such additional assignment shall be at a level of
responsibility commensurate with that set forth in Paragraph 3.1 and PROVIDED,
FURTHER, that Employee may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in,
companies or entities that in the judgment of Employer will not present any
conflict of interest with Employer or any of its operations or adversely affect
the performance of Employee's duties pursuant to this Agreement.
3.3. TIME DEVOTED TO EMPLOYMENT. Employee shall devote his full time
to the business of Employer during the term of this Agreement to fulfill his
obligations hereunder.
3.4. PLACE OF PERFORMANCE OF DUTIES. The services of Employee shall
be performed at Employer's place of business and at such other locations as
shall be designated from time to time by Employer.
4. COMPENSATION AND METHOD OF PAYMENT.
4.1 TOTAL COMPENSATION. As compensation under this Agreement, Employer
shall pay and Employee shall accept the following:
(1) For each year of this Agreement, measured from the effective date
hereof, base compensation of one hundred and twenty-five thousand dollars
($125,000), with such upward adjustments as may be approved from time to
time by the Board of Directors of Employer. Such adjustments may be based
on the performance of Employer, the value of Employee to Employer or any
other factors considered relevant by Employer.
(2) For each year, such bonus, supplemental or incentive compensation
("Incentive Compensation") as may be approved by the Board of Directors.
(3) Reimbursement of such discretionary expenses as are reasonable and
necessary, in the judgment of the Board of Directors, for Employee's
performance of his responsibilities under this Agreement.
(4) Nonqualified options to acquire up to 125,000 shares of Common Stock at
an exercise price of $2.00 per share, subject to the terms of such options
as set forth in the Stock Option Agreement attached hereto as Exhibit "A."
(5) Participation in Employer's employee fringe benefit programs in effect
from time to time for employees at comparable levels of responsibility.
Participation will be in accordance with any applicable policies adopted by
Employer. Employee shall be entitled to vacations, absences for illness,
and to similar benefits of employment, and shall be subject to such
policies and procedures as may be adopted by Employer. Without limiting
the generality of the foregoing, it is initially anticipated that such
benefits of employment shall include four (4) weeks' vacation during each
12-month period of employment with Employer (which shall accrue monthly on
a
2
PRO RATA basis and which shall be carried forward for a period not to
exceed three (3) years and otherwise in accordance with Employer's
policies); major medical and health insurance; life and disability
insurance coverage; and stock option plans for members of the Board of
Directors. Employer further agrees that in the event it offers disability
insurance to its employees, Employer shall arrange for Employee to be
covered by similar insurance.
(6) In addition, Employee shall be entitled to: (a) a car allowance of $500
per month, (b) a club membership expense allowance of $300 per month, and
(c) if for any reason Employee shall not be covered by a health insurance
policy of Employer, a medical insurance coverage expense allowance of $360
per month.
(7) In the event of a Change of Control of Employer (as such term is
defined in Section 4.3(2)(c) hereof), Employee shall be entitled to receive
the balance of the unpaid base compensation which would otherwise be
payable to Employee during the remainder of the term of this Agreement
pursuant to Section 4.1(1) hereof within thirty (30) days of the date of
such Change of Control and any and all options granted to Employee pursuant
to Section 4.1(4) hereof and otherwise shall vest immediately upon the date
of such Change of Control; PROVIDED, HOWEVER, in the event of such Change
of Control of Employer, the term of this Agreement shall automatically be
extended to a period of five (5) years from the date of such Change of
Control of Employer for purposes of this Section 4.1(7).
4.2 PAYMENT OF COMPENSATION. Employer shall pay the compensation provided
for in Section 4.1 hereof as follows:
(1) Employer shall pay the base compensation in cash the base compensation
semi-monthly in twenty-four equal installments or in accordance with
Employer's payroll practices for all its employees, but in no event less
frequently than monthly.
(2) Employer shall pay all Incentive Compensation in cash or in shares of
Common Stock ("Shares") of Employer, which shall be at the sole election of
Employee, to a Deferred Compensation Trust, to be established by Employer
in the form provided in Exhibit "B" hereto. With respect to each year,
Employee shall, on or before the beginning of such year, inform Employer in
writing of the percentage of Incentive Compensation which shall be paid in
cash and of the percentage thereof which shall be paid in Shares to the
Deferred Compensation Trust.
(3) Employer shall pay in cash the reimbursement of such discretionary
expenses provided in Section 4.1(3) hereof.
3
4.3 AMOUNTS PAID TO THE DEFERRED COMPENSATION TRUST
(1) The amount of Incentive Compensation paid by the Company to the
Deferred Compensation Trust may not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment by creditors of Employee or his beneficiaries,
and Employee has only the status of a general unsecured creditor of the
Company as to the amounts of Incentive Compensation paid pursuant to this
Agreement.
(2) The total of Incentive Compensation paid to the Deferred Compensation
Trust pursuant to this Agreement will be distributed to Employee therefrom
in a lump sum on the occurrence of the earliest of the following:
(a) Employee's termination of service because of death, disability, or
termination of employment;
(b) Employee's attainment of the age of sixty-five (65) years; or
(c) A Change of Control of Employer. For all purposes of this
Agreement, a "Change of Control" shall mean: (i) the acquisition by
any person, entity or group of persons, within the meaning of Section
13(d) or 14(d), or any comparable successor provisions, of the
Securities Exchange Act of 1934 (the "Act") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of at
least twenty-five percent (25%) of either the outstanding shares of
common stock or the combined voting power of Employer's then
outstanding voting securities entitled to vote generally, or (ii) the
approval by the stockholders of Employer of a reorganization, merger,
or consolidation, in each case with respect to which persons who were
stockholders of Employer immediately prior to such reorganization,
merger or consolidation do not, immediately thereafter, own or control
more than fifty percent (50%) of the combined voting power entitled to
vote generally in the election of directors of the reorganized, merged
or consolidated Employer's then outstanding securities, or a
liquidation or dissolution of Employer or of the sale of all or
substantially all of Employer's assets, or (iii) in the event Employer
terminates Employee pursuant to this Agreement for any reason other
than the occurrence of any of the events set forth in Sections
5.2(2),(3),(4),(6), (7) or (9) hereof, or (iv) in the event any person
shall be elected by the stockholders of Employer to the Board of
Directors of Employer who shall not have been nominated for election
by a majority of the Board of Directors of Employer or any duly
appointed committee thereof.
4
5. TERMINATION OF AGREEMENT.
5.1. BY NOTICE. This Agreement, and the employment of Employee
hereunder, may be terminated by Employee or Employer upon ninety (90) days'
written notice of termination; PROVIDED, HOWEVER, in the event Employer
terminates this Agreement for any reason other than the occurrence of any of the
events set forth in Sections 5.2 (2), (3), (4), (6), (7) or (9), and subject to
Section 4.1(7) hereof, Employee shall be entitled to receive the balance of the
unpaid base salary which would otherwise be payable to Employer during the
remainder of the term of this Agreement pursuant to Section 4.1(1) hereof within
thirty (30) days after such ninety (90) day notice period.
5.2. OTHER TERMINATION. This Agreement, and the employment of
Employee hereunder, shall terminate immediately upon the occurrence of any one
of the following events:
(1) The death or mental or physical incapacity of Employee.
(2) The loss by Employee of legal capacity (other than as described
in Section 5.2(1) hereof).
(3) The failure by Employee to devote substantially all of his
available professional time to the business of Employer or the
wilful and habitual neglect of duties.
(4) The willful engaging by Employee in an act of dishonesty
constituting a felony under the laws of the state in which
Employer's principal place of business is located, resulting or
intending to result in gain or personal enrichment at the expense
of Employer or to the detriment of Employer's business and to
which Employee is not legally entitled.
(5) The continued incapacity in excess of one hundred eighty (180)
days on the part of Employee to perform his duties, unless waived
by Employer.
(6) The mutual written agreement of Employee and Employer.
(7) The expiration of the term of this Agreement.
(8) The involuntary termination of Employee as a director of
Employer.
(9) Employee's breach of this Agreement.
5
5.3 EFFECT OF TERMINATION BY REASON OF DEATH OR INCAPACITY. In the
event of the termination of Employee's employment pursuant to Sections 5.2(1) or
(5) of this Agreement prior to the completion of the term of employment
specified herein, and subject to Section 4.1(7) hereof, Employee shall be
entitled to receive the balance of the unpaid compensation (including any
Incentive Compensation pursuant to Section 4.4 hereof) which is not covered by
disability or other insurance and which would otherwise be payable to Employee
during the term of this Agreement pursuant to Sections 4.1(1) and 4.1(6) hereof
within 60 days after such termination.
5.4. REMEDIES. No termination of the employment of Employee pursuant
to the terms of this Agreement shall prejudice any other remedy to which any
party to this Agreement may be entitled either at law, in equity, or under this
Agreement.
6. PROPERTY RIGHTS AND OBLIGATIONS OF EMPLOYEE.
6.1. TRADE SECRETS. For purposes of this Agreement, "trade secrets"
shall include without limitation any and all financial, cost and pricing
information and any and all information contained in any drawings, designs,
plans, proposals, customer lists, records of any kind, data, formulas,
specifications, concepts or ideas, where such information is reasonably related
to the business of Employer and has not previously been publicly released by
duly authorized representatives of Employer or Parent or otherwise lawfully
entered the public domain.
6.2. PRESERVATION OF TRADE SECRETS. Employee will preserve as
confidential all trade secrets pertaining to Employer's business that have been
or may be obtained or learned by him by reason of his employment or otherwise.
Employee will not, without the written consent of Employer, either use for his
own benefit or purposes or disclose or permit disclosure to any third parties,
either during the term of his employment hereunder or thereafter (except as
required in fulfilling the duties of his employment), any trade secret connected
with the business of Employer.
6.3. TRADE SECRETS OF OTHERS. Employee agrees that he will not
disclose to Employer or induce Employer to use any trade secrets belonging to
any third party.
6.4. PROPERTY OF EMPLOYER. Employee agrees that all documents,
reports, files, analyses, drawings, designs, tools, equipment, plans (including,
without limitation, marketing and sales plans), proposals, customer lists,
computer software or hardware, and similar materials that are made by him or
come into his possession by reason of his employment with Employer are the
property of Employer and shall not be used by him in any way adverse to
Employer's interests. Employee will not allow any such documents or things, or
any copies, reproductions or summaries
6
thereof to be delivered to or used by any third party without the specific
consent of Employer. Employee agrees to deliver to the Board of Directors of
Employer or its designee, upon demand, and in any event upon the termination of
Employee's employment, all of such documents and things which are in Employee's
possession or under his control.
6.5 NONCOMPETITION BY EMPLOYEE. During the term of this Agreement,
and for a period of one (1) year following the termination of this Agreement,
Employee shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, partner, principal stockholder, corporate officer,
director, or in any other individual or representative capacity: (i) engage or
participate in any business that is in competition in any manner with the
business of Employer; (ii) divert, take away or attempt to divert or take away
(and during the one year period, call on or solicit) any of Employer's clients
within the United States. For purposes of this Agreement, the term "Employer's
clients" shall mean clients who had a business relationship with Employer prior
to Employee's employment with Employer and those who develop a business
relationship with Employer, during Employee's employment with Employer; (iii)
undertake planning for or organization of any business within the United States
or in any other country in which Employer is engaged in business activity
competitive with Employer's business within the United States or in any other
country in which Employer is engaged in business or combine or conspire with
employees or other representative of Employer's business within the United
States or in any other country in which Employer is engaged in business for the
purpose of organizing any such competitive activity within the United States or
in any other country in which Employer is engaged in business; or (iv) induce or
influence (or seek to induce or influence) any person who is engaged, as an
employee, agent, independent contractor or otherwise by Employer within the
United States or in any other country in which Employer is engaged in business
to terminate his or her employment or engagement.
6.6 SURVIVAL PROVISIONS AND CERTAIN REMEDIES. Unless otherwise
agreed to in writing between the parties hereto, the provisions of this Section
6 shall survive the termination of this Agreement. The covenants in this
Section 6 shall be construed as separate covenants and to the extent any
covenant shall be judicially unenforceable, it shall not affect the enforcement
of any other covenant. In the event Employee breaches any of the provisions of
this Section 6, Employee agrees that Employer shall be entitled to injunctive
relief in addition to any other remedy to which Employer may be entitled.
7
7. GENERAL PROVISIONS.
7.1. NOTICES. Any notices or other communications required or
permitted to be given hereunder shall be given sufficiently only if in writing
and served personally or sent by certified mail, postage prepaid and return
receipt requested, addressed as follows:
If to Employer: Synagro Technologies, Inc.
00000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
If to Employee: Xxxxxx X. Xxxxx
00 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
However, either party may change his/its address for purposes of this Agreement
by giving written notice of such change to the other party in accordance with
this Paragraph 7.1. Notices delivered personally shall be deemed effective as
of the day delivered and notices delivered by mail shall be deemed effective as
of three days after mailing (excluding weekends and federal holidays).
7.2. CHOICE OF LAW AND FORUM. Except as expressly provided otherwise
in this Agreement, this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas. The parties agree that any
dispute arising under this Agreement, whether during the term of this Agreement
or at any subsequent time, shall be resolved exclusively in the courts of the
State of Texas and the parties hereby submit to the jurisdiction of such courts
for all purposes provided herein and appoint the Secretary of State of the State
of Texas as agent for service of process for all purposes provided herein.
7.3. ENTIRE AGREEMENT; MODIFICATION AND WAIVER. This Agreement
supersedes any and all other agreements, whether oral or in writing, between the
parties hereto with respect to the employment of Employee by Employer and
contains all covenants and agreements between the parties relating to such
employment in any manner whatsoever. Each party to this Agreement acknowledges
that no representations, inducements, promises, or agreements, oral or written,
have been made by any party, or anyone acting on behalf of any party, which are
not embodied herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding. Any modification of this
Agreement shall be effective only if it is in writing signed by the party to be
charged. No waiver of any of the provisions of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
8
7.4. ASSIGNMENT. Because of the personal nature of the services to
be rendered hereunder, this Agreement may not be assigned in whole or in part by
Employee without the prior written consent of Employer. However, subject to the
foregoing limitation, this Agreement shall be binding on, and shall inure to the
benefit of, the parties hereto and their respective heirs, legatees, executors,
administrators, legal representatives, successors and assigns.
7.5. SEVERABILITY. If for any reason whatsoever, any one or more of
the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable, or invalid as applied to any particular case or in all cases,
such circumstances shall not have the effect of rendering any such provision
inoperative, unenforceable, or invalid in any other case or of rendering any of
the other provisions of this Agreement inoperative, unenforceable or invalid.
7.6 CORPORATE AUTHORITY. Employer represents and warrants as of the
date hereof that Employer's execution and delivery of this Agreement to Employee
and the carrying out of the provisions hereof have been duly authorized by
Employer's Board of Directors and authorized by Employer's shareholders and
further represents and warrants that neither the execution and delivery of this
Agreement, nor the compliance with the terms and provisions thereof by Employer
will result in the breach of any state regulation, administrative or court
order, nor will such compliance conflict with, or result in the breach of, any
of the terms or conditions of Employer's Articles of Incorporation or Bylaws, as
amended, or any agreement or other instrument to which Employer is a party, or
by which Employer is or may be bound, or constitute an event of default
thereunder, or with the lapse of time or the giving of notice or both constitute
an event of default thereunder.
7.7. ATTORNEYS' FEES. In any action at law or in equity to enforce
or construe any provisions or rights under this Agreement, the unsuccessful
party or parties to such litigation, as determined by the courts pursuant to a
final judgment or decree, shall pay the successful party or parties all costs,
expenses, and reasonable attorneys' fees incurred by such successful party or
parties (including, without limitation, such costs, expenses, and fees on any
appeals), and if such successful party or parties shall recover judgment in any
such action or proceedings, such costs, expenses, and attorneys' fees shall be
included as part of such judgment.
7.8. COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9
7.9. HEADINGS AND CAPTIONS. Headings and captions are included for
purposes of convenience only and are not a part hereof.
7.10. CONSULTATION WITH COUNSEL. Employee acknowledges that he has
had the opportunity to consult with counsel independent of Employer or
Employer's counsel, Matthias & Xxxx LLP, regarding the entering into of this
Agreement and has done so to the extent he sees fit.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first written above at Houston, Texas.
"Employer"
SYNAGRO TECHNOLOGIES, INC.
a Nevada corporation
By: /s/ Xxx X. Xxxxx
--------------------------
Xxx X. Xxxxx
Chief Executive Officer
"Employee"
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Xxxxxx X. Xxxxx
10
