EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into this 26th day of
October, 1992, by and between Xxxxxxxx Engineering Company, a Texas corporation
(hereinafter referred to as the "Company," which term shall for all purposes be
deemed to include its successors and assigns), and Xxxxxx X. Xxxxxxxx (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive has expertise in the business currently conducted
by the Company and was a shareholder, director and officer of the Company, prior
to the acquisition of all of the issued and outstanding shares of capital stock
of the Company by Industrial Holdings, Inc., a Texas corporation ("IHI"),
pursuant to the Stock Purchase Agreement dated October 26, 1992, by and among
IHI, the Executive and other shareholders of the Company (the "Stock Purchase
Agreement");
WHEREAS, in light of the foregoing, the Company desires to employ the
Executive as its President upon the terms and subject to the conditions set
forth herein, and the Executive desires to accept such employment.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT.
(a) The Company hereby employs the Executive and the Executive
hereby accepts employment as the President of the Company, subject to the
direction of the Board of Directors and the Company's officers designated by the
Board of Directors, and shall perform and discharge well and faithfully the
duties and responsibilities which are assigned to him by the Board of Directors.
The authority, duties and responsibilities of the Executive shall be as
described in EXHIBIT A. Executive agrees to devote such of his time, attention
and energy to the business of the Company, and any of its subsidiaries or
affiliates, as may be required to perform the duties and responsibilities
assigned to him by the Board of Directors to the best of his ability and with
requisite diligence. If the Executive is elected or appointed a director or
officer of the Company or any subsidiary therefor during the term of this
Agreement, the Executive will serve in such capacity without further
compensation..
(b) The Executive agrees to comply in all material respects at
all times during the Executive Period with all applicable policies, rules and
regulations of the Company and IHI.
2. TERM. Subject to the terms hereof, this Agreement shall commence
on the date hereof (the "Execution Date" ) and shall terminate on the second
anniversary of the Execution Date; provided, that the Company and Executive
will have the option to renew this Agreement
for successive one-year periods. Not less than thirty (30) days and not more
than sixty (60) days before the expiration of the term hereof the Company shall
deliver notice to the Executive of its intention to either (i) renew this
Agreement or (ii) allow this Agreement to terminate in accordance with its
terms. If the Company intends to renew this Agreement, the Executive shall have
ten (10) days after the receipt of such notice to inform the Company in writing
of his intention to accept or deny the Company's offer of renewal. If the
Company fails to send or to send timely notice to the Executive, then the
Company will be deemed to have sent such renewal notice 30 days prior to the
expiration of the term hereof. The term of this Agreement shall include any such
renewal periods, and shall be referred to herein as the "Executive Period."
3. COMPENSATION. (a) For all services rendered under this
Agreement, the Company agrees to pay to Executive during the Executive Period:
(i) an annual salary of $110,000, payable in equal semi-monthly
installments or on any other periodic basis consistent with the Company's
payroll procedures, subject only to such payroll and withholding deductions as
are required by law;
(ii) annual performance bonuses in the following dollar amounts
or percentages of certain levels of Before Tax Profits ("BTP") for the Company
for each fiscal year during the term of this Agreement in which the Company
equals or exceeds such level of BTP, (for purposes hereof, Before Tax Profits
shall mean net operating income without regard to or reduction for taxes,
interest expense, amortization of intangibles, overhead allocations,
intercompany service charges or the levy of any management fees by the Buyer or
its affiliates as such terms are defined by Generally Accepted Accounting
Principles ("GAAP"));
Annual Annual
BTP BONUS
$500,000 but less than $600,000.................. $5,000
$600,000......................................... an additional $5,000
Each dollar above $600,000.......................an additional 2% per dollar
Before Tax Profits shall be calculated quarterly by the independent auditors of
IHI and be determined in accordance with the usual accounting practices of IHI
and payments of any sums due under this paragraph shall be made quarterly upon
delivery of the Company's income statement for the preceding fiscal quarter, but
no later than 60 days after the end of such quarter;
(iii) reimbursement of all reasonable out-of-pocket expenses
incurred by him in the performance of his duties, subject to the submission of
appropriate documentation in accordance with the Company's expense reimbursement
policy as in existence from time to time;
(iv) 15 days vacation per year, excluding weekends and days which
the Company has recognized as holidays or on which the Company is not opened for
business, paid by the Company, if taken;
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(v) (a) an automobile allowance of $500.00 per month and
reimbursement for routine operating and maintenance expenses, including, but not
limited to gas and oil, and (b) $100.00 per month for all costs and expenses of
ownership and operation incurred by the Executive in connection with the use of
Executive's mobile or portable telephone to be reimbursed to the Executive as
reasonable business expenses;
(vi) country club or health club dues for Executive in an
amount not to exceed $400 per month.
(b) During the Executive Period, the Executive shall be eligible to
participate in employee benefit plans or programs of the Company and/or its
parent IHI, if any, to the extent that his position, tenure, salary, age, health
and other qualifications make him eligible to participate, subject to the rules
and regulations applicable thereto.
(v) The Company shall provide health insurance for the Executive and his
dependents (spouse and children not over 21 years of age) which is uniform in
coverage with that provided to other employees of the Company and/or IHI. If, in
the sole discretion of the Executive, such coverage is deemed unsatisfactory or
inadequate, the Company shall pay to the Executive $400 per month to be used by
the Executive to obtain alternative coverage. The Company's obligation pursuant
to this Section 3(c) to provide health insurance or the alternative to the
Executive and his dependents shall survive termination of the employment of the
Executive pursuant to Section 6(b) hereof for the remainder of the Executive
Period.
4. DISCLOSURE OF INFORMATION.
(a) OBLIGATION OF EXECUTIVE. Executive hereby acknowledges, understands
and agrees that, all Confidential Information, as set forth in Paragraph 4(b),
is the exclusive and confidential property of the Company and shall be at all
times regarded, treated and protected as such in accordance with this Agreement,
until such Confidential Information comes into the public domain. Executive
acknowledges that all such Confidential Information is in the nature of a trade
secret. Failure to xxxx any writing confidential shall not affect the
confidential nature of such writing or the information contained therein.
Notwithstanding any provision herein to the contrary, for purposes of this
Section 4, the term "Company" shall refer to the Company and each of its parent
and subsidiary corporations, including, without limitation, IHI.
(b) DEFINITION OF CONFIDENTIAL INFORMATION. "Confidential Information"
shall mean information, which is used in Company's business and (1) is
proprietary to, about or created by the Company; (2) gives the Company some
competitive business advantage or the opportunity of obtaining such advantage or
the disclosure of which could be detrimental to the interest of the Company; (3)
is designated as Confidential Information by the Company, known by the Executive
to be considered confidential by the Company, or from all relevant circumstances
should reasonably be assumed by Executive to be confidential and proprietary to
the Company, except such information as required to be disclosed by Executive in
connection with the performance of his duties as set forth in this Agreement or
as necessary to comply with the applicable federal, state or local laws. Such
Confidential Information includes, but is not limited
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to, the following types of information and other information of a similar nature
(whether or not reduced to writing or designated as confidential);
(i) Internal Company personnel and financial information,
financial statements, projections, budgets, vendor information (including vendor
characteristics, customer lists, services, prices, lists and agreements),
purchasing and internal cost information and internal service and operational
manuals;
(iii) Marketing and development plans, price and cost data, price
and fee amounts, pricing and billing policies, quoting procedures, marketing
techniques, acquisition strategies and candidates, pending or future
acquisitions, forecasts and forecast assumptions and volumes, and future plans
and strategies of the Company which have been or are being discussed:
(iii) Names of customers and their representatives, contracts
and their contents and parties; and
(iv) Confidential and proprietary information provided to the
Company by any actual or potential customer, government agency, or other third
party (including businesses, consultants and other entities and individuals).
(c) COVENANTS OF EXECUTIVE. As a consequence of Executive's acquisition
or anticipated acquisition of Confidential Information, Executive will occupy a
position of trust and confidence with respect to the Company's affairs and
business. In view of the foregoing and of the consideration to be provided to
Executive, Executive agrees that it is reasonable and necessary that Executive
make the following covenants, which covenants shall survive for the term of this
Agreement and for three years thereafter, as follows:
(i) Executive will not disclose Confidential Information to any
person or entity, either inside or outside of the Company, other than as
necessary in carrying out duties on behalf of the Company, without first
obtaining the Company's prior written consent (unless such disclosure is
compelled pursuant to court order or subpoena and at which time Executive gives
prior written notice of such proceedings to the Company), or is necessary to
comply with applicable federal, state or local laws.
(ii) Executive will not use, copy or transfer Confidential
Information other than as necessary in carrying out his duties on behalf of the
Company, without first obtaining the Company's prior written consent.
(iii) Upon the termination of the Executive Period, the Executive
shall promptly deliver to the Company (or its designee) all written materials,
records and documents made by the Executive or coming into his possession prior
to or during the Executive Period concerning the business or affairs of the
Company, including all materials containing Confidential Information.
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(d) EXCEPTIONS. The obligations of this Section 4 shall not apply to
Confidential Information that (i) at the time of the Executive's employment by
the Company was in the public domain, (ii) is or becomes generally available in
the public domain other than pursuant to a breach by the Executive of this
obligation under this Section 4 or (iii) the Executive can show was acquired, or
is acquired after the date of this Agreement, from a third party and such third
party did not obtain such confidential information from the Executive subject to
or in violation of obligations similar to those set forth in this Section 4.
5. INSURANCE. The Company may, at its election and for its benefit,
insure the Executive against accidental loss or death, and the Executive shall
submit to a physical examination and supply such reasonable information as may
be required in connection therewith.
6. TERMINATION. (a) At any time during the Executive Period the Company
may, at its sole discretion, discharge the Executive with "cause." For purposes
of this Agreement, the following events shall constitute "cause": (i) the
conviction of the Executive by a court of competent jurisdiction of a crime
involving moral turpitude; or (ii) the commission, or attempted commission, by
the Executive of an act of fraud upon the Company; or (iii) the
misappropriation, or attempted misappropriation, by the Executive of any funds
or property of the Company; (iv) the continued and unreasonable failure by the
Executive to perform in any material respect his obligations under the terms of
this Agreement; (v) the knowing engagement by the Executive in any activity
which would (A) constitute a breach of the covenants not-to-compete of the
Executive set forth in that certain Non-Competition Agreement of even date
herewith, between the Executive and the Company (the "Non-Competition
Agreement"), or (B) result in any material injury to the financial condition of
the Company.
(b) At any time during the Executive Period, the Company may, in its
sole discretion, terminate the Executive without "cause" as that term is defined
in Section 6.2(a) hereof; provided, however, that if the Company should
terminate the Executive without "cause," the Company shall pay to Executive,
within 15 days of the date of termination, the sum of Executive's weekly salary
(pursuant to Section 3(a)(i) multiplied by the number of weeks remaining in the
Executive Period plus all other compensation earned or accrued as of the date of
termination pursuant to the provisions of paragraphs 3(a)(iii), (v) and (vi)
hereof.
(c) This Agreement will terminate automatically upon the earliest to
occur of: (i) the death or disability of the Executive (as used herein, the term
"disability" shall mean the inability of the Executive to perform his
obligations under this Agreement for a period of six months even if not
consecutive but arising form the same illness, which inability, and the cause
therefor, must be confirmed in writing by two licensed medical doctors, one of
which will be designated by the Company); (ii) the voluntary retirement of the
Executive; or (iii) the expiration of the Executive Period unless otherwise
renewed.
(d) At any time during the term of this Agreement, the Executive may
terminate this Agreement by giving at least six months written notice to the
Company of his intent to terminate this Agreement, with the date of termination
to be specified in such notice.
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(e) If this Agreement is terminated pursuant to Sections 6(a), 6(c) or
6(d) hereof, then the Company will have no obligation to pay any amount to the
Executive other than amounts earned or accrued as of the date of termination
pursuant to the provisions of paragraph 3(a)(i), (iii), (v) and (vi) hereof, but
which have not yet been paid as of the date of the termination of the Executive.
7. ASSIGNMENT BY EXECUTIVE. Except as otherwise expressly provided
herein, Executive agrees for himself, and on behalf of his executors and
administrators, heirs, legatees, distributees and any other person or persons
claiming any benefits under him by virtue of this Agreement, that this Agreement
and the rights, interests and benefits hereunder shall not be assigned,
transferred, pledged or hypothecated in any way by Executive or any executor,
administrator, heir, legatee, distributee or person claiming under Executive by
virtue of this Agreement and shall not be subject to execution, attachment or
similar process. Any attempt at assignment, transfer, pledge or hypothecation or
other disposition of this Agreement or of such rights, interests and benefits
contrary to the foregoing provisions, or the levy of any attachment or similar
process thereupon, shall be null and void and without effect.
8. SUCCESSORS OF THE COMPANY. This Agreement shall be binding upon and
inure to the benefit of any Successor (as hereinafter defined) of the Company
and any such Successor shall be deemed substituted for the Company under the
terms of this Agreement. As used in this Agreement, the term "Successor" shall
include any person, firm, corporation or other business entity which at any
time, whether by merger, purchase or otherwise, acquires all or substantially
all of the assets or businesses of the Company; but no such substitution shall
relieve such companies of their original obligations hereunder. This Agreement
may not otherwise be assigned by the Company without Executive's consent to any
person, firm, corporation, limited liability company, trust or other entity.
9. NOTICES. All notices or other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person, transmitted by telecopier or
mailed by registered or certified first class mail, postage prepaid, return
receipt requested to the parties hereto at the address set forth below (as the
same may be changed from time to time by notice similarly given) or the last
known business or residence address of such other person as may be designated by
either party hereto in writing.
If to the Company:
Xxxxxxxx Engineering Company
c/o Industrial Holdings, Inc.
0000 Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxx
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If to the Executive:
Xxxxxx X. Xxxxxxxx
00000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
10. WAIVER OF BREACH. A waiver by the Company or the Executive of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by the other party.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
12. SEVERABILITY. If any provisions of this Agreement shall, for any
reason, be held to violate any applicable law, and so much of said Agreement is
held to be unenforceable, then the invalidity of such specific provision herein
shall not be held to invalidate any other provision herein which shall remain in
full force and effect.
13. AMENDMENT. This Agreement constitutes and contains the entire
agreement of the parties and supersedes any and all prior negotiations,
correspondence, understandings and agreements between the parties respecting the
subject matter hereof. This Agreement may be modified only by an agreement in
writing executed by all the parties hereto.
14. HEADINGS. The section and subsection headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COMPANY:
XXXXXXXX ENGINEERING COMPANY
BY: S/XXXXXX X. XXXX
Xxxxxx X. Xxxx,
Chief Executive Officer
EXECUTIVE:
S/XXXXXX X. XXXXXXXX
Xxxxxx X. Xxxxxxxx
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