EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as of
the 15th day of October, 1995, between XXXXXXX X. XXXXX (the "Executive") and
PROFESSIONAL SERVICES GROUP, INC., a Minnesota corporation (the "Company").
WHEREAS, the Company desires the benefit of Executive's knowledge and
experience and to reward Executive for his past loyal and competent
performance, to retain his services as a valued key employee, to encourage
future performance and to employ Executive full time as President and Chief
Executive Officer of the Company, for a term of five (5) years; and
WHEREAS, Executive desires to continue his employment and to be employed for
the term set forth in the preceding recital;
NOW, THEREFORE, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Employment. The Company shall retain Executive in its employ, and
Executive shall serve in the employ of the Company, for the period stated
in Section 3 hereof and upon the other terms and conditions set forth
herein.
2. Position and Responsibilities. The Company shall employ Executive and
Executive shall serve the Company hereunder as the President and Chief
Executive Officer, and as a member of its Board of Directors, for the Term
(as defined in Section 3 hereof) and on the conditions hereinafter set
forth. Executive agrees to perform such services, not inconsistent with
such position, as shall be assigned to him by the Company's Board of
Directors and by the Chief Executive Officer of Air & Water Technologies
Corporation ("AWT"). The Company shall not appoint Executive as an
officer of AWT or any of its subsidiaries, other than PSG, without the
prior written consent of Executive.
3. Term of Employment. Subject to Section 14, the period of Executive's
employment under this Agreement shall commence on November 1, 1995 and
shall continue for five (5) years (such period being referred to as the
"Initial Term"); provided, however, that unless written notice to the
contrary is given by either party to the other not less than 120 days
prior to the expiration date of the Initial Term or any renewal term, this
Agreement shall be automatically extended for successive one-year renewal
terms (the Initial Term, as so extended from time to time, is herein
referred to as the "Term").
4. Duties. Executive agrees to devote all his business time, attention,
skill and efforts to the business of the Company and the faithful,
efficient performance of his duties hereunder and shall not engage in any
other business activity or consulting work; provided, however, that
subject to the approval of the Board of Directors of the Company,
Executive may serve, or continue to serve, on the boards of directors of,
and hold any other offices or positions in, companies or organizations
which, in the judgment of the Board of Directors of the Company, will not
present any conflict of interest with the Company or any of its
subsidiaries or affiliates or materially and adversely affect the
performance of Executive's duties pursuant to this Agreement. The
foregoing shall not preclude Executive from having investments and
devoting reasonable time to the supervision thereof, subject to Section 12
of this Agreement.
5. Compensation. In consideration of the services to be rendered by
Executive hereunder in any capacity during the Term, including, without
limitation, services as an executive, officer, director, or member of any
committee of the Company or of any subsidiary thereof, Executive shall be
entitled to the following compensation:
5.1 Base Salary and Supplemental Bonus. Executive shall receive a base
salary (the "Base Salary") at the rate of $220,000 per annum during
the fiscal year beginning November 1, 1995. Such Base Salary, in
each subsequent fiscal year of the Term, will be subject to the
following increases: (i) a percentage increase equal to the
percentage increase in the Consumer Price Index for urban wage
earners (U.S. cities average) for the preceding calendar year, if
any; and (ii) any merit salary increase authorized by the Board of
Directors of the Company. The Base Salary shall be payable in equal
installments in accordance with the normal payroll policies of the
Company. In addition to the Base Salary provided hereunder,
Executive shall be entitled to a supplemental bonus of $30,000 per
annum (the "Supplemental Bonus") in each fiscal year during the Term.
Supplemental Bonus shall be adjusted annually using the procedure
specified in Section 5.1.(i).
5.2 Annual Incentive Compensation. For each fiscal year during the Term,
Executive shall have the opportunity to receive annual incentive
compensation in the form of a bonus in an amount equal to a
percentage of the Base Compensation earned during that year, based on
the achievement of the Company's annual profit plan of amount of
targeted revenues and profit. For purposes of this Section 5.2,
Executive's "Base Compensation" in each fiscal year shall mean the
sum of Executive's Base Salary and Supplemental Bonus earned in
respect of each fiscal year during the Term. The Incentive
Compensation under this section will be determined in accordance with
Schedule A attached hereto in accordance with the plans developed
each year for PSG which are described in Schedule A for fiscal year
1996. Forty-five percent (45%) of Base Compensation is the target
bonus percentage for the Executive and may be larger or smaller based
upon the matrix contained in Schedule A. Such bonus shall be payable
within one month after the completion of AWT's audit with respect to
that year, but if such audit is not completed by February 28th
following such fiscal year, the said bonus shall be paid no later
than said March 1st (the "Bonus Payment Date").
5.3 Additional Incentive Compensation. On the Bonus Payment Date for the
fiscal year beginning November 1, 1997, Executive shall be entitled
to an additional incentive compensation in the form of a bonus based
on the operating performance of the Company, as reorganized, for the
prior three (3) years beginning November 1, 1995.
The additional incentive compensation under this section shall be
determined in accordance with Schedule B attached hereto in
accordance with the plans developed each year for PSG which are
described in Schedule B for fiscal year 1996. It is understood that
no payment will be made under this section for three (3) years and
such payment will be for the three (3) year period. Future payments
will be made annually after the initial three (3) year period payment
is made.
In the event that the Company acquires other businesses, then the
Company and Executive agree that the computation of revenues and net
income may be adjusted to give effect to such acquisitions.
5.4 Deferred Compensation. Notwithstanding the foregoing provisions of
this Section 5, Executive may from time to time elect to defer all or
any additional part of the Base Salary and any part of the bonus
payable under Sections 5.2 and 5.3, such deferral to be subject to
the terms and provisions of compensation agreement to be executed
between the Company and Executive.
5.5 Executive's Attorneys Fees. The Company agrees to pay the Executive
an amount of up to $5,000 for reimbursement to Executive for fees of
attorneys and counselors in the preparation and/or negotiation of
this Employment Agreement. Such payment is due and payable within 30
days of the execution of this Agreement.
5.6 Stock Options. In addition to any previous grants of incentive stock
options to Executive, Executive shall be entitled to receive
additional grants of incentive stock options from time to time on the
same basis as are granted to the executives and officers of AWT and
its operating subsidiaries in the discretion of the Compensation and
Stock Option Committee of AWT's Board of Directors, and Executive
agrees to execute such additional documents as may be required to
effectuate such stock option awards.
6. Reimbursement of Expenses. During the Term, the Company agrees to pay or
reimburse Executive for all reasonable out-of-pocket travel, business,
promotional, client/customer developmental and other expenses incurred by
Executive in the performance of his duties hereunder, upon the
presentation by Executive of an itemized account of such expenditures and
upon submission of documented receipts therefor, including the cost of
Executive's periodic membership dues for membership in a country club in
the Houston Area. In addition, during the Term Executive will be entitled
to the use of an automobile owned or leased by the Company. The make and
model of such automobile shall be similar to the make and model of
automobile presently provided to the Executive.
7. Profit Sharing and Pension Plans, Medical Benefits and other Plans.
During the Term, the Company agrees that Executive shall be entitled to
receive, and shall be accorded the right to participate in, any and all
plans providing general benefits for the Company's employees, including,
but not limited to, group life insurance plans, accident, disability,
medical, dental, hospitalization insurance, pension, profit sharing, stock
option and bonus plans, 401(k) plans and other similar plans maintained
for the benefit of the Company's employees and/or executives, on the same
basis other executives of the Company are entitled to receive or
participate. In addition, during the Term the Company will contribute
annually $7,500 toward the purchase of an insurance contract for Executive
that he will own and name the beneficiary and that will provide cash value
and death benefit payments to Executive and/or his beneficiaries upon his
retirement or death. Executive shall be entitled to four (4) weeks paid
vacation annually during the Term hereof, and Executive shall be entitled
to accrue any unused vacation time in accordance with the Company's policy
regarding the same.
8. Developments. All developments, including inventions, whether patentable
or otherwise, trade secrets, discoveries, improvements, ideas and writings
which either directly or indirectly relate to or may be useful in the
business of the Company or any of its subsidiaries or affiliates (the
"Developments") which Executive either by himself or in connection with
any other person or persons shall conceive, make, develop, acquire or
acquire knowledge of during the Term, shall become and remain the sole and
exclusive property of the Company. Executive hereby assigns, transfers
and conveys, and agrees to so assign, transfer and convey to the Company,
all of his right, title and interest in and to any and all such
Developments and to fully disclose as soon as practicable in writing all
such Developments to the Board of Directors of the Company. At any time
and from time to time, upon the request of the Company, Executive will
execute and deliver any and all instruments, documents and papers, give
evidence and do any and all other acts which, in the opinion of counsel
for the Company, are or may be necessary or desirable to document such
assignment, transfer or conveyance or to enable the Company to file and
prosecute applications for and to acquire, maintain and enforce any and
all patents, trademark registrations or copyrights under United States or
foreign laws with respect to any such Developments or to obtain any
extension, validation, reissue, continuance or renewal of any such patent,
trademark or copyright. The Company will be responsible for the
preparation of any such instruments, documents and papers and for the
prosecution of any such proceedings and will reimburse Executive for all
reasonable expenses incurred by him in compliance with the provisions of
this Section.
9. Confidential Information. Executive recognizes and acknowledges that the
client lists, inventions, operating methods and systems, trade secrets and
proprietary information of the Company and its subsidiaries, as the same
may exist from time to time, are valuable, special and unique assets of
the business of the Company and its subsidiaries. Executive covenants
that he will not, during the term of this Agreement, disclose any such
lists of clients or part thereof, inventions, operating methods and
systems, trade secrets or proprietary information to any person, firm,
corporation or other entity for any reason whatsoever without
authorization of the Board of Directors of the Company.
10. No Solicitation. Executive agrees that, upon termination of the Term and
for a period of one year thereafter, he will not call on or solicit,
either directly or indirectly, any person, municipality, corporation or
other entity who or which at the time of such termination was, or within
one year prior thereto had been, a client of the Company or any of its
subsidiaries with respect to any material activity, service or business of
the type conducted, performed or engaged in (or about to be conducted,
performed or engaged in at such date of termination) by PSG or the Company
or any of its subsidiaries.
11. Non Competition. During the Term, and for a period of one year
thereafter, Executive will not, unless acting pursuant hereto or with the
prior written consent of the Board of Directors of the Company, directly
or indirectly, own, manage, operate, join, control, finance or participate
in the ownership, management, operation, control or financing of, or be
connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, any business or enterprise
engaged in any service or business competitive with the services provided
and business conducted by PSG, the Company or any of its subsidiaries or
affiliates during the term of Executive's employment hereunder, and at the
time of termination of such employment, in any geographical areas where
the Company or any of its subsidiaries offers such services or conducts
such business, during the term of Executive's employment, hereunder or at
the time of termination of such employment; provided, however, that this
provision shall not be construed to prohibit the ownership by Executive of
not more than one percent (1%) of the capital stock of any corporation
which is engaged in the foregoing business having a class of securities
registered pursuant to the Securities Exchange Act of 1934. In the event
that the provisions of this Section should ever be adjudicated to exceed
the time, geographic or other limitations permitted by applicable law in
any jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the maximum time, geographic or other limitations
permitted by applicable law.
12. Equitable Relief. Executive acknowledges that the restrictions contained
in Sections 9, 10 and 11 hereof are reasonable and necessary to protect
the legitimate interests of the Company and its subsidiaries and
affiliates, that the Company would not have entered into this Agreement in
the absence of such restrictions, and that any violation of any provision
of those Sections will result in irreparable injury to the Company.
Executive also acknowledges that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of
proving actual damages, as well as an equitable accounting of all
earnings, profits and other benefits arising from any such violation,
which rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. Executive agrees that in
the event of any such violation, an action may be commenced for any such
preliminary and permanent injunctive relief and other equitable relief in
any court of competent jurisdiction in the State of Texas. Executive
hereby waives any objections on the grounds of improper jurisdiction or
venue to the commencement of an action in the State of Texas and agrees
that effective service of process may be made upon him by mail at his
present residence address, heretofore furnished by Executive to Company,
or any substituted address furnished to Company by Executive. Executive
further agrees that the Company shall be entitled to reimbursement for
expenses incurred by it in enforcing its rights hereunder, including,
without limitation, reasonable attorneys' fees and expenses.
13. Termination. This Agreement shall terminate prior to the expiration of
its term set forth in Section 3 above or upon the occurrence of any one of
the following events:
13.1 Disability. In the event that Executive is unable fully to perform
his duties and responsibilities hereunder by reason of illness,
injury or incapacity for a period of six (6) consecutive months,
during which period he shall continue to be compensated as provided
in Section 5.2 hereof, this Agreement shall be deemed terminated,
and the Company shall have no further liability or obligation to
Executive for compensation hereunder; provided, however, that
Executive will be entitled to receive the payments prescribed under
any disability or other benefits plan which may be in effect for
officers of the Company, and further provided that he shall be
entitled to receive the incentive compensation provided for in
Sections 5.2 and 5.3 above, prorated to the date of the commencement
of such six-month period of disability. Executive agrees, in the
event of any dispute under this Section, to submit to a physical
examination by a licensed physician selected by a majority of the
Board of Directors of the Company.
13.2 Death. In the event that Executive dies during the Term, the
Company shall pay his executors, legal representatives or
administrators an amount equal to the installment of his salary
payable for the month in which he dies, as well as the incentive
compensation provided for in Sections 5.2 and 5.3 above, prorated to
the date of death. Except for such payment of any unpaid salary and
prorated incentive compensation, and payments under any other plan
afforded to Executive during his employment hereunder, which by its
terms provides income or other benefits following death, the
Company's obligations under this Agreement shall cease on the date
of death and the Company shall have no further liability to
Executive or any other person hereunder.
13.3 Cause. Nothing in this Agreement shall be construed to prevent its
termination by the Company at any time for "cause". For purposes
of this Agreement, "cause" shall mean failure of Executive to
observe any of the terms or provisions of this Agreement,
dishonesty, conviction of a crime involving moral turpitude, or
misappropriation of funds.
13.4 Involuntary Termination. In the event that Executive's employment
hereunder is terminated by the Company, other than pursuant to the
provisions of Sections 13.1 and 13.2 hereof; or, in the event that
Executive's employment hereunder is not renewed other than because
Executive has retired or due to the provisions of Sections 13.1 and
13.2 hereof, then the Company shall pay to the Executive an amount
equal to two (2) times his then current Base Salary as adjusted
under Section 5.2, any accrued incentive bonuses prorated to the
termination date and any accrued but unused vacation. All the
foregoing amounts shall be paid on the date of termination. Such
payments shall be deemed to be severance compensation and other
than Executive's right to receive all payments of accrued salary,
incentive bonus and vacation accrued to the date of such
termination, Executive shall have no further rights against the
Company or any other party hereunder for such involuntary
termination and the provisions of Sections 8, 9, 10 and 11 shall
be effective and enforceable by the Company as against the
Executive.
13.5 Voluntary Termination. (A). Should the Executive's employment
hereunder be voluntarily terminated by the Executive, other than
pursuant to the provisions of Section 13.1 and 13.2 hereof, the
Company shall pay to Executive an amount equal to his then current
base salary, as may be adjusted in Section 5.1, the accrued
incentive bonuses as provided in Section 5.3, and/or 5.4, and any
accrued vacation as applicable, and the provisions of Sections 9, 10
and 11 shall be effective and enforceable by the Company as against
the Executive for a period of one year from his termination. (B).
Additionally, however, the Executive may elect to terminate his
employment hereunder should there be (i) a change in ownership of
control of the Company or sale of substantially all of the Company's
assets (provided, however, that Executive understands and agrees
that a change of control of the Company shall not be deemed to have
occurred for purposes of this Agreement if Compagnie Generale des
Eaux shall increase its ownership interest in the Company or acquire
all or substantially all of the Company's voting securities), or
(ii) a change in the Executive's reporting procedures as set out in
Section 2, or (iii) if at least one of Xxxxxxx Xxxx, Xxxx-Xxxxxxxxx
Xxxxxxxxx or Xxxxx Xxxxxxxxx is not involved in the supervision of
Executive. In such event, the Executive shall be paid and be held
bound as set out in Section 13.4 above.
14. Company's Stockholders Consent to Golden Parachute Payments. If, in the
opinion of the Executive's legal counsel, any payments or benefits
hereunder may constitute an "excess parachute payment," as defined in
Section 280G of the Internal Revenue Code of 1986, the Company shall use
its best efforts to obtain the consent of the stockholders satisfying the
requirements of Section 280G(b)(5) of the said Code and the regulations
thereunder and/or use its best efforts to make such payments an exception
to the "excess parachute payment" rule or not be in fact an "excess
parachute payment.
15. Survival. Notwithstanding the termination of this Agreement by reason of
Executive's disability under Section 13.1 or for cause under Section 13.3,
his obligations under Section 13.3, his obligations under Sections 8, 9,
10 and 11 hereof shall survive and remain in full force and effect for the
periods therein provided, and the provisions for equitable relief against
Executive in Section 12 hereof shall continue in force.
16. Governing Law. This Agreement shall be governed by and interpreted under
the laws of the State of Texas without giving effect to any conflict of
law's provisions.
17. Contents of Agreement: Agreement and Assignment. This Agreement
supersedes all prior agreements and sets forth the entire understanding
between the parties hereto with respect to the subject matter hereof and
cannot be changed, modified or terminated except upon written amendment.
All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective heirs,
executors, administrator, legal representatives, successors and assigns of
the parties hereto, except that the duties and responsibilities of
Executive hereunder are of a personal nature and shall be assignable in
whole or in part by Executive.
18. Severability. If any provision of this Agreement or application thereof
to anyone or under circumstances is adjudicated to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any
other provision or application of this Agreement which can be given effect
without the invalid unenforceable provision or application.
19. Remedies Cumulative: No Waiver. No remedy conferred upon the Company by
this Agreement is intended to be exclusive of any other remedy given
hereunder or now or hereafter existing at law or in equity. No delay or
omission by the Company in exercising any right, remedy or power hereunder
or existing at law or in equity shall be construed as a waiver thereof,
and any such right, remedy or power may be exercised by the Company from
time to time and as often as may be deemed expedient or necessary by the
Company in its sole discretion.
20. AWT Undertaking. AWT undertakes to cause the Company to perform all of its
obligations hereunder and irrevocably guarantees any payments due from the
Company to Executive pursuant to the terms of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
PROFESSIONAL SERVICES GROUP, INC.
By:_________________________________________
Xxxxxxx X. Xxxxxxx
Vice President
EXECUTIVE:
____________________________________________
Xxxxxxx X. Xxxxx
AIR & WATER TECHNOLOGIES CORPORATION
By:_________________________________________
Xxxxxxx Xxxx
Chairman and Chief Executive Officer
