Exhibit 10.1
AGREEMENT
This AGREEMENT (the "Agreement") is effective as of December 1, 1997 by and
between American Eco Corporation, an Ontario, Canada corporation whose principal
executive offices are in Houston, Texas (the "Company"), and Windrush
Corporation, an Ontario Company, whose principal office is 18444 Centreville
Creek Road, Caledon East, Ontario, Canada LON IEO. (the "Consultant").
R E C I T A L S
The Consultant has directed its President, ("the Management Designee") to
serve as Vice-Chairman and/or President & CEO of the Company, since the initial
engagement of the Consultant in January of 1992.
The Board of Directors of the Company has determined that it is in the best
interests of the Company to retain the Consultant & its Management Designee's
services and to reinforce and encourage the continued attention and dedication
of members of the Company's management, including the Consultant & its
Management Designee, to their assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a change in control of
the Company or the assertion of claims and actions against employees.
Both the Company and the Consultant & its Management Designee recognize the
increased risk of litigation and other claims being asserted against officers
and directors of companies in today's environment.
The Bylaws of the Company require the Company to indemnify its directors
and officers to the full extent permitted by law.
Costs, limits in coverage and availability of director's and officer's
liability insurance policies and developments in the application, amendment and
enforcement of statutory and bylaw indemnification provisions generally have
raised questions concerning the adequacy and reliability of the protection
afforded to directors and officers and have increased the difficulty of
attracting and retaining qualified persons to serve as directors and officers.
In recognition of the Consultant & its Management Designee's need for
substantial protection against personal liability to enhance and induce the
Consultant & its Management Designee's continued service to the Company in an
effective manner and the Consultant & its Management Designee's reliance on the
Bylaws, and in part to provide the Consultant & its Management Designee with
specific contractual assurance that the protection promised by the Bylaws will
be available to the Consultant & its Management Designee (regardless of, among
other things, any amendment to or revocation of the Bylaws or any change in the
composition of the Company's Board of Directors or acquisition transaction
relating to the Company), the Company wishes to provide in this Agreement for
the continuing Engagement of the Consultant & its Management Designee and the
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indemnification of, and the advancing of expenses to, the Consultant & its
Management Designee to the full extent (whether partial or complete) permitted
by law and as set forth in this Agreement, and, to the extent insurance is
maintained, for the coverage of the Consultant & its Management Designee under
the Company's directors' and officers' liability insurance policies.
The Company wishes to assure itself of the services of the Consultant & its
Management Designee for the period provided in this Agreement and the Consultant
& its Management Designee wishes to serve in the Company on the terms and
conditions hereinafter provided.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and the Consultant & its Management Designee
hereby agree as follows:
ARTICLE 1
Engagement
1.1 Engagement. The Company hereby employs the Consultant & its Management
Designee and the Consultant & its Management Designee hereby accepts Engagement
by the Company for the period and upon the terms and conditions contained in
this Agreement.
1.2 Office and Duties.
(a) Position. The Consultant & its Management Designee shall direct
its President to serve the Company as Vice Chairman, with authority, duties
and responsibilities not less than the Consultant & its Management Designee
has on the date of this Agreement, with his actions at all times subject to
the direction of the Board of Directors of the Company.
(b) Commitment. Throughout the term of this Agreement, the Consultant
& its Management Designee shall faithfully and diligently further the
business and interests of the Company. Subject to the foregoing, the
Consultant & its Management Designee may serve, or continue to serve, on
the boards of directors of, and hold any other offices or positions in,
companies or organizations that are disclosed to the Board of Directors and
that will not materially affect the performance of the Consultant & its
Management Designee's duties pursuant to this Agreement.
1.3 Term. The term of this Agreement shall commence on December 1, 1997 and
shall end on the fifth anniversary of the date on which the Board of Directors
of the Company notifies the Consultant & its Management Designee that the Board
of Directors has determined to discontinue the automatic daily extension of this
Agreement (the period of time between the commencement and the end of this
Agreement is referred to herein as the Term).
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1.4 Compensation.
(a) Base Fee. The Company shall pay the Consultant & its Management
Designee as compensation an aggregate fee (the "Base Fee") of USD$9,000 per
month plus applicable taxes during the Term, or such greater amount as
shall be approved by the Compensation Committee of the Company's Board of
Directors. The Compensation Committee shall review any increases in the
Consultant & its Management Designee's Base Fee at least annually.
(b) Additional Compensation. Each year during the Term, the Consultant
& its Management Designee shall be eligible to receive additional fees as
negotiated on a project-by-project basis for acquisitions and financings.
(c) Stock Options. The Consultant or its Management Designee shall be
eligible to receive grants of stock options pursuant to the Company's Stock
Option Plan, as amended May 7, 1997, and as amended hereafter, in amounts
(if any) and on terms and conditions to be determined by the Compensation
Committee of the Company's Board of Directors.
(d) Payment and Reimbursement of Expenses. During the Term, the
Company shall pay or reimburse the Consultant or its Management Designee
for all reasonable travel and other expenses incurred by the Consultant or
its Management Designee in performing their obligations under this
Agreement in accordance with the policies and procedures of the Company for
its senior executive officers, provided that the Consultant or its
Management Designee properly accounts therefor in accordance with the
regular policies of the Company.
(e) Vacations. During the Term and in accordance with the regular
policies of the Company, the Consultant's Management Designee shall be
entitled to the number of paid vacation days in each calendar year
determined by the Company from time to time for its senior executive
officers, but not less than four weeks in any calendar year.
(e) Benefits Not in Lieu of Compensation. No benefit or perquisite
provided to the Consultant or its Management Designee shall be deemed to be
in lieu of Base Fee, Additional Compensation, or other compensation.
1.5 Termination.
(a) Disability. The Company may terminate this Agreement for
Disability. Disability shall exist if because of ill health or physical or
mental disability, and notwithstanding reasonable accommodations made by
the Company, the Consultant's Management Designee shall have been unable,
unwilling or shall have failed to perform his duties under this Agreement,
as determined in good faith by the Compensation Committee of the Company's
Board of Directors, for a period of 180 consecutive days, or if, in any 12-
month period, the Consultant's Management Designee shall have been unable
or unwilling or shall have failed to perform his duties for a period of 270
days, irrespective of whether or not such days are consecutive.
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(b) Cause. The Company may terminate the Consultant & its Management
Designee's Engagement for Cause. Termination for Cause shall mean
termination because of the Consultant or its Management Designee's (i)
willful gross misconduct that causes material economic harm to the Company
or that brings substantial discredit to the Company's reputation, (ii)
final, nonappealable conviction of a felony involving moral turpitude, or
(iii) material breach of any provision of this Agreement. Items (i) and
(iii) of this subsection shall not constitute Cause unless the Company
notifies the Consultant & its Management Designee thereof in writing,
specifying in reasonable detail the basis therefor and stating that it is
grounds for Cause, and unless the Consultant & its Management Designee
fails to cure such matter within 60 days after such notice is sent or given
under this Agreement. The Consultant & its Management Designee shall be
permitted a response and defense before the Board of Directors within a
reasonable time after written notification of any proposed termination for
Cause under item (i) or (iii) of this subsection.
(c) Without Cause. During the Term, the Company may terminate the
Consultant & its Management Designee's Engagement Without Cause, subject to
the provisions of subsection 1.6(d) (Termination Without Cause or for
Company Breach). Termination Without Cause shall mean termination of the
Consultant & its Management Designee's Engagement by the Company other than
termination for Cause or for Disability.
(d) Company Breach. The Consultant & its Management Designee may
terminate their Engagement hereunder for Company Breach. For purposes of
this Agreement, Company Breach shall mean:
(i) without the express written consent Consultant & its
Management Designee, any material reduction in the authority, duties
and responsibilities that the Consultant or its Management Designee
has on the date of this Agreement, or the assignment to the
Consultant's Management Designee of any duties inconsistent with his
positions, duties, responsibilities and status with the Company, or a
change in his reporting responsibilities, titles or offices, or any
removal of the Consultant's Management Designee from or any failure to
re-elect Consultant & its Management Designee to any of such
positions, except in connection with the termination of his Engagement
for Cause, Disability or retirement or as a result of the death of the
Consultant's Management Designee, or by the Consultant & its
Management Designee other than for Company Breach or Change in
Control;
(ii) a reduction in the Consultant & its Management Designee's
Base Fee as in effect on the date of this Agreement or as the same may
be increased from time to time;
(iii) a relocation of the Company's principal corporate executive
offices to any other than Toronto, Ontario requiring the Consultant or
its Management Designee to be based anywhere other than Toronto,
Ontario, Canada, except for required travel on the Company's business
to an extent substantially
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consistent with Consultant's Management Designee's present business
travel obligations, or, in the event the Consultant & its Management
Designee consents to any relocation, the failure by the Company (a) to
retain a real estate broker, at the Company's expense, and otherwise
assist the Consultant & its Management Designee in selling the
Consultant's & its Management Designee's principal residence, (b) to
pay (or reimburse the Consultant & its Management Designee) for all
reasonable moving expenses incurred by them relating to a change of in
their principal residence in connection with such relocation and (c)
to indemnify the Consultant & its Management Designee against any loss
(defined as the difference between the actual sale price of such
residence and the higher of (1) their aggregate investment in such
residence or (2) the fair market value of such residence as determined
by a real estate appraiser designated by the Consultant & its
Management Designee and reasonably satisfactory to the Company)
realized on the sale of the Consultant's & its Management Designee's
principal residence in connection with any such change of residence;
(iv) the failure by the Company to continue in effect any benefit or
compensation plan (including but not limited to any stock option plan,
pension plan, life insurance plan, health and accident plan or
disability plan) in which the Consultant & its Management Designee is
participating (or plans providing substantially similar benefits), the
taking of any action by the Company which would adversely affect the
Consultant & its Management Designee's participation in or materially
reduce their benefits under any of such plans or deprive them of any
material fringe benefit, or the failure by the Company to provide the
Consultant & its Management Designee with the number of paid vacation
days to which the Consultant's Management Designee is then entitled on
the basis of years of service with the Company in accordance with the
Company's normal vacation policy in effect on the date hereof;
(v) any failure of the Company to obtain the assumption of, or the
agreement to perform, this Agreement by any successor as contemplated
in Section 4.13 (Binding Effect, Etc.) hereof; or
(vi) any material breach of this Agreement by the Company;
provided, however, that a material breach of this Agreement by the Company
shall not constitute Company Breach unless the Consultant & its Management
Designee notifies the Company in writing of the breach, specifying in
reasonable detail the nature of the breach and stating that such breach is
grounds for Company Breach, and unless the Company fails to cure such
breach within 60 days after such notice is sent or given under this
Agreement.
(e) Change in Control. The Consultant & its Management Designee may
terminate their Engagement hereunder within 12 months of a Change in
Control (defined below):
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(i) "Change in Control" shall mean any of the following:
(1) any consolidation, sale, or merger of the Company in which
the Company is not the continuing or surviving corporation or pursuant
to which shares of the Company's common stock would be converted into
cash, securities or other property, other than a merger of the Company
in which the holders of the Company's common stock immediately prior
to the merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger;
(2) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company;
(3) any approval by the stockholders of the Company of any plan
or proposal for the liquidation or dissolution of the Company;
(4) the cessation of control (by virtue of their not constituting
a majority of directors) of the Company's Board of Directors by the
individuals (the "Continuing Directors" who, (x) at the date of this
Agreement were directors or, (y) become directors after the date of
this Agreement and whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds
of the directors then in office who were directors at the date of this
Agreement or whose election or nomination for election was previously
so approved); or
(5) the acquisition of beneficial ownership (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
of an aggregate of 15% of the voting power of the Company's
outstanding voting securities by any person or group (as such term is
used in Rule 13d-5 under such Act) who beneficially owned less than
10% of the voting power of the Company's outstanding voting securities
on the date hereof, or the acquisition of beneficial ownership of an
additional 5% of the voting power of the Company's outstanding voting
securities by any person or group who beneficially owned at least 10%
of the voting power of the Company's outstanding voting securities on
the date hereof; provided, however, that notwithstanding the
foregoing, an acquisition shall not constitute a Change in Control
hereunder if the acquiror is (w) the Consultant or its Management
Designee, (x) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company and acting in such capacity, (y)
a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership
of voting securities of the Company or (z) any other person whose
acquisition of shares of voting securities is approved in advance by a
majority of the Continuing Directors;
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(6) subject to applicable law, in a Chapter 11 bankruptcy
proceeding, the appointment of a trustee or the conversion of a case
involving the Company to a case under Chapter 7.
(f) Without Good Reason. During the Term, the Consultant & its
Management Designee may terminate their Engagement Without Good Reason.
Termination "Without Good Reason" shall mean termination of the Consultant
& its Management Designee's Engagement by the Consultant & its Management
Designee other than termination for Company Breach or as a result of a
Change in Control.
(g) Explanation of Termination of Engagement. Any party terminating
this Agreement shall give prompt written notice ("Notice of Termination")
to the other party hereto advising such other party of the termination of
this Agreement. Within thirty (30) days after notification that the
Agreement has been terminated, the terminating party shall deliver to the
other party hereto a written explanation (the "Explanation of Termination
of Engagement"), which shall state in reasonable detail the basis for such
termination and shall indicate whether termination is being made for Cause,
Without Cause or for Disability (if the Company has terminated the
Agreement) or for Company Breach, upon a Change in Control or Without Good
Reason (if the Consultant & its Management Designee has terminated the
Agreement).
(h) Date of Termination. "Date of Termination" shall mean the date on
which Notice of Termination is sent or given under this Agreement.
1.6 Compensation During Disability or Upon Termination.
(a) During Disability. During any period that the Consultant & its
Management Designee fails to perform their duties hereunder because of
Disability, they shall continue to receive their full Base Fee and benefits
pursuant to Section 1.4 (Compensation) until the Date of Termination.
(b) Termination for Disability. If the Company shall terminate the
Consultant & its Management Designee's Engagement for Disability, then the
Company shall have no further obligation to make any payment under this
Agreement which has not already become payable, but has not yet been paid,
excepting that any stock options granted to the Consultant or its
Management Designee, shall remain in force for a period of 12 months
following such termination.
(c) Termination for Cause or Without Good Reason. If the Company shall
terminate the Consultant & its Management Designee's Engagement for Cause
or if the Consultant & its Management Designee shall terminate their
Engagement Without Good Reason, then the Company shall have no further
obligation to make any payment under this Agreement which has not already
become payable, but has not yet been paid, except as may otherwise be
provided under the terms of any employee benefit programs in which the
Consultant & its Management Designee is participating.
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(d) Termination Without Cause or for Company Breach. If the Company
shall terminate the Consultant & its Management Designee's Engagement
Without Cause or if the Consultant & its Management Designee shall
terminate their Engagement for Company Breach, then the Company shall pay
to the Consultant & its Management Designee, as severance pay in a lump sum
no later than the 15th day following the Date of Termination, any payment
of Base Fee (at the rate in effect as of the Date of Termination) but has
not yet been paid, through the Date of Termination.
If the Consultant & its Management Designee terminates his Engagement
for Company Breach based upon a reduction by the Company of the
Consultant's & its Management Designee's Base Fee, then for purposes of
this Section 1.6(d) (Termination Without Cause or for Company Breach), the
Consultant's & its Management Designee's Base Fee as of the Date of
Termination shall be deemed to be the Consultant's & its Management
Designee's Base Fee immediately prior to the reduction that the Consultant
& its Management Designee claims as grounds for Company Breach.
(e) Termination Upon a Change in Control. If the Consultant & its
Management Designee terminates his Engagement after a Change in Control
pursuant to Section 1.5(e) (Change in Control), then the Company shall pay
to the Consultant & its Management Designee as severance pay and as
liquidated damages (because actual damages are difficult to ascertain), in
a lump sum, in cash, within 15 days after termination, an amount equal to
the amounts provided in Sections 1.6(d) above. In addition, if the
Consultant & its Management Designee is liable for the payment of any
excise or GST taxes (the "Basic Excise Tax") because of Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the Revenue
Canada regulations, or any successor or similar provisions, with respect to
any payments or benefits received or to be received from the Company or its
affiliates, or any successor to the Company or its affiliates, whether
provided under this Agreement or otherwise, the Company shall pay the
Consultant & its Management Designee an amount (the "Special
Reimbursement") which, after payment by the Consultant & its Management
Designee (or on the Consultant's & its Management Designee's behalf) of any
federal, state, provincial, and local taxes applicable thereto, including,
without limitation, any further excise tax under such Section 4999 of the
Code, Revenue Canada regulations, on, with respect to or resulting from the
Special Reimbursement, equal the net amount of the Basic Excise Tax. The
determination of the amount of the payment described in this Section 1.6(e)
shall be made by the Company's independent auditors.
(f) No Mitigation. The Consultant & its Management Designee shall not
be required to mitigate the amount of any payment provided for in this
Section 1.6 (Compensation During Disability or Upon Termination) by seeking
other Engagement's or otherwise.
1.7 Death of Consultant's Management Designee. If the Consultant's
Management Designee dies prior to the expiration of this Agreement, and the
Company is unwilling to accept an alternative Management Designee of the
Consultant's, the obligations under this Agreement shall automatically terminate
and all compensation to which the Consultant's Management Designee is or
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would have been entitled hereunder (including without limitation under Sections
1.4(a) (Base Fee), shall terminate as of the end of the month in which the
Consultant & its Management Designee's death occurs; provided, however, that (i)
the Company shall pay to the Consultant's Management Designee's estate, within
30 days, an amount equal to 6 times the monthly Base Fee; (ii) extend the
benefits to the Consultant's Management Designee's estate pursuant to Section
1.4(c) hereof for a period of 12 months following such termination; and (iii)
such reimbursement as may have been due to the Consultant & its Management
Designee pursuant to Section 1.4(b) (Additional Compensation) hereof.
ARTICLE 2
Non-Competition and Confidentiality
2.1 Non-Competition.
(a) Description of Proscribed Actions. Throughout the Consultant & its
Management Designee's Engagement during the term of this Agreement and,
unless the within Agreement is not mutually renewed at the end of its term,
or unless the within Agreement terminates pursuant to Section 1.5(a)
(Disability), Section 1.5(c) (Without Cause), Section 1.5(d) (Company
Breach), or Section 1.5(c) (Change in Control), for a period of two (2)
years after the termination of the Consultant & its Management Designee's
Engagement, in consideration for the Company's obligations hereunder,
including without limitation the Company's disclosure (pursuant to Section
2.2(b) (Obligation of The Company) below) of Confidential Information and
the Company's agreement to indemnify the Consultant & its Management
Designee (pursuant to Article 3 (Indemnification) hereof), the Consultant &
its Management Designee shall not:
(i) directly or indirectly, manage, operate, control or be
employed by, or render services or advice to, any Competing Business
(as defined in Section 2.1(d) below); provided, however, that the
Consultant & its Management Designee may invest in the securities of
any enterprise (but without otherwise participating in the activities
of such enterprise) if (x) such securities are listed on any national
or regional securities exchange of have been registered under Section
12(g) of the Securities Exchange Act of 1934 and (y) the Consultant &
its Management Designee does not beneficially own (as defined Rule
13d-3 promulgated under the Securities Exchange Act of 1934) in excess
of ten-percent 10% of the outstanding capital stock of such
enterprise;
(ii) directly or indirectly, either as principal, agent,
independent contractor, consultant, director, officer, employee,
employer, advisor (whether paid or unpaid), partner or in any other
individual or representative capacity whatsoever, either for his own
benefit or for the benefit of any other person or entity, solicit,
divert or take away any suppliers, customers or clients of the Company
or any of its Affiliates (as defined in Section 2.1(e) below); or
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(b) Judicial Modification. The Consultant & its Management Designee
agrees that if a court of competent Jurisdiction determines that the length
of time or any other restriction, or portion thereof, set forth in this
Section 2.1 (Non-Competition) is overly restrictive and unenforceable, the
court may reduce or modify such restrictions to those which it deems
reasonable and enforceable under the circumstances, and as so reduced or
modified, the parties hereto agree that the restrictions of this Section
2.1 (Non-Competition) shall remain in full force and effect. The Consultant
& its Management Designee further agrees that if a court of competent
jurisdiction determines that any provision of this Section 2.1
(Non-Competition) is invalid or against public policy, the remaining
provisions of this Section 2.1 (Non-Competition) and the remainder of this
Agreement shall not be affected thereby, and shall remain in full force and
effect.
(c) Nature of Restrictions. The Consultant & its Management Designee
acknowledges that the business of the Company and its Affiliates is
international in scope and that the Restrictions imposed by this Agreement
are legitimate, reasonable and necessary to protect the Company's and its
Affiliates' investment in their businesses and the goodwill thereof. The
Consultant & its Management Designee acknowledges that the scope and
duration of the restrictions contained herein are reasonable in light of
the time that the Consultant & its Management Designee has been engaged in
the business of the Company and its Affiliates, the Consultant & its
Management Designee's reputation in the markets for the Company's and its
Affiliates' businesses and the Consultant & its Management Designee's
relationship with the suppliers, customers and clients of the Company and
its Affiliates. The Consultant & its Management Designee further
acknowledges that the restrictions contained herein are not burdensome to
the Consultant & its Management Designee in light of the consideration paid
therefor and the other opportunities that remain open to the Consultant &
its Management Designee. Moreover, the Consultant & its Management Designee
acknowledges that they have other means available to them for the pursuit
of their livelihood.
(d) Competing Business. "Competing Business" shall mean any
individual, business, firm, company, partnership, joint venture,
organization, or other entity engaged in industrial support services and
specialty fabrication business in any domestic or international market area
in which the Company or any of its Affiliates does business at any time
during the Consultant & its Management Designee's Engagement with the
Company. The Company hereby acknowledges and agrees that the Consultant's
current Management Designee's responsibilities as Chairman & CEO of an
industrial environmental services company does not conflict with the
definition of a Competing Business.
(d) Affiliate. When used with reference to the Company, "Affiliate"
shall mean any person or entity that directly or indirectly through one or
more intermediaries controls or is controlled by or is under common control
with the Company.
2.2 Confidentiality. For the purposes of this Section 2.2
(Confidentiality), the term "the Company" shall be construed also to include any
and all Affiliates of the Company.
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(a) Confidential Information. "Confidential Information" shall mean
information that is used in the Company's business and
(i) is proprietary to, about or created by the Company;
(ii) gives the Company some competitive advantage, the
opportunity of obtaining such advantage or the disclosure of which
could be detrimental to the interests of the Company;
(iii) is not typically disclosed to non-employees by the Company,
or otherwise is treated as confidential by the Company; or
(iv) is designated as Confidential Information by the Company or
from all the relevant circumstances should reasonably be assumed by
the Consultant & its Management Designee to be confidential to the
Company.
Confidential Information shall not include information publicly known
(other than as a result of a disclosure by the Consultant & its Management
Designee). The phrase "publicly known" shall mean readily accessible to the
public in a written publication and shall not include information that is
only available by a substantial searching of the published literature or
information the substance of which must be pieced together from a number of
different publications and sources, or by focused searches of literature
guided by Confidential Information.
(b) Obligation of The Company. During the Term, the Company shall
provide access to, or furnish to, the Consultant & its Management Designee
Confidential Information of the Company necessary to enable the Consultant
& its Management Designee properly to perform his obligations under this
Agreement.
(c) Non-Disclosure. The Consultant & its Management Designee
acknowledges, understands and agrees that all Confidential Information,
whether developed by the Company or others or whether developed by the
Consultant & its Management Designee while carrying out the terms and
provisions of this Agreement (or previously while serving as an officer of
the Company), shall be the exclusive and confidential property of the
Company and (i) shall not be disclosed to any person other than employees
of the Company and professionals engaged on behalf of the Company, and
other than disclosure in the scope of the Company's business in accordance
with the Company's policies for disclosing information, (ii) shall be
safeguarded and kept from unintentional disclosure and (iii) shall not be
used for the Consultant & its Management Designee's personal benefit.
Subject to the terms of the preceding sentence, the Consultant & its
Management Designee shall not use, copy or transfer Confidential
Information other than ag is necessary in carrying out his duties under
this Agreement.
2.3 Injunctive Relief. Because of the Consultant & its Management
Designee's experience and reputation in the industries in which the Company
operates, and because of the unique nature
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of the Confidential Information, the Consultant & its Management Designee
acknowledges, understands and agrees that the Company will suffer immediate and
irreparable harm if the Consultant & its Management Designee falls to comply
with any of his obligations under Article 2 (Non-Competition and
Confidentiality) of this Agreement, and that monetary damages will be inadequate
to compensate the Company for such breach. Accordingly, the Consultant & its
Management Designee agrees that the Company shall, in addition to any other
remedies available to it at law or in equity, be entitled to injunctive relief
to enforce the terms of Article 2 (Non-Competition and Confidentiality), without
the necessity of proving inadequacy of legal remedies or irreparable harm.
ARTICLE 3
Indemnification
3.1 Basic Indemnification Arrangement.
(a) Claims Arising from the Consultant's Management Designee's
Position with the Company. In addition to any separate agreements between
the Consultant & its Management Designee and the Company relating to
indemnification, the Company will indemnify and hold harmless the
Consultant & its Management Designee, to the fullest extent permitted by
applicable law, in respect of any liability, damage, cost or expense
(including reasonable counsel fees) incurred in connection with the defense
of any claim, action, suit or proceeding to which he is a party, or threat
thereof, by reason of his being or having been an officer or director of
the Company or any subsidiary or affiliate of the Company, or his serving
or having served at the request of the Company as a director, officer,
employee or agent of another corporation or of a partnership, joint
venture, trust, business organization, enterprise or other entity,
including service with respect to employee benefit plans. Without limiting
the generality of the foregoing, the Company will pay the expenses
(including reasonable counsel fees) of defending any such claim, action,
suit or proceeding in advance of its final disposition.
(b) Contests of this Agreement. The Company agrees to pay promptly as
incurred, to the full extent permitted by law, all legal fees and expenses
which the Consultant & its Management Designee may reasonably incur as a
result of any contest (regardless of the outcome thereof by the Company,
the Consultant & its Management Designee or others of the validity or
enforceability of, or liability under any provision of this Agreement or
any guarantee of performance thereof (including as a result of any contest
by the Consultant & its Management Designee about the amount of any payment
pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
(c) Liability Insurance. During the Term, the Company agrees to
continue on the Consultant's & its Management Designee's behalf, directors
and officers insurance or any other indemnity policy presently carried on
behalf of the Consultant & its Management
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Designee, and further agrees to supplement any such existing policy to
cover all actions taken by the Consultant & its Management Designee in
connection with their Engagement by the Company.
ARTICLE 4
Miscellaneous
4.1 Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or on behalf of the Company or any Affiliate of the
Company against the Consultant & its Management Designee, or its Management
Designee's spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause of action,
and any claim or cause of action of the Company or any Affiliate shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action such
shorter period shall govern.
4.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
4.3 Indulgences, Etc. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any night, remedy, power or privilege preclude any other or further
exercise of the same or of any right, remedy, power or privilege, nor shall any
waiver of any right, remedy, power, or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence.
4.4 Consultant & its Management Designee's Sole Remedy. The Consultant &
its Management Designee's sole remedy shall be against the Company for any
claim, liability or obligation of any nature whatsoever arising out of or
relating to this Agreement or an alleged breach of this Agreement or for any
other claim arising out of the Consultant & its Management Designee's Engagement
by the Company, their service to the Company, any indemnification obligation of
the Company or the termination of the Consultant & its Management Designee's
Engagement hereunder (collectively, "Consultant & its Management Designee
Claims"). The Consultant & its Management Designee shall have no claim or right
of any nature whatsoever against any of the Company's directors, former
directors, officers, former officers, employees, former employees, stockholders,
former stockholders, agents, former agents or the Independent Counsel in their
individual capacities arising out of or relating to any Consultant & its
Management Designee Claim. The Consultant & its Management Designee hereby
releases and covenants not to sue any person other than the Company over any
Consultant & its Management Designee Claim. The persons described in this
Section 4.4 (other than the Company and the Consultant & its Management
Designee) shall be third-party beneficiaries of this Agreement for purposes of
enforcing the terms of this Section 4.4
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Page 13 of 18 - May 1, 1998
(Consultant & its Management Designee's Sole Remedy) against the Consultant &
its Management Designee.
4.5 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement and the transactions contemplated
herein shall be in writing and shall be deemed to have been duly given, made and
received when sent by telecopy (with a copy sent by mail) or when personally
delivered or one business day after it is sent by overnight service, addressed
as set forth below:
If to the Consultant & its Management Designee:
Windrush Corporation
18444 Centreville Creek Road
Caledon East, Ontario, Canada LON I EO Attn: J. C. Pennie, President
If to the Company:
American Eco Corporation
Ste. 200, 154 University Avenue
Toronto, Ontario, Canada M5H 3Y9
Attn: President and CEO
Any party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the provisions of
this subsection for the giving of notice, which shall be effective only upon
receipt.
4.6 Provisions Separable. The provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
4.7 Entire Agreement. This Agreement contains the entire understanding
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained, which shall be deemed terminated effective immediately. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.
4.8 Headings; Index. The headings of paragraphs and Index of Defined Terms
herein are included solely for convenience of reference and shall not control
the meaning or interpretation of any of the provisions of this Agreement.
4.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario, without giving effect to
principles of conflict of laws.
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4.10 Dispute Resolution. Subject to the Company's right to seek injunctive
relief in court as provided in Section 2.3 (Injunctive Relief) of this Agreement
and the Consultant & its Management Designee's right to such a judicial
determination that the Consultant & its Management Designee should be
indemnified by the Company (as provided in Section 3.1(b) (Conditions) of this
Agreement), any dispute, controversy or claim arising out of or in relation to
or connection with this Agreement, including without limitation any dispute as
to the construction, validity, interpretation, enforceability or breach of this
Agreement, shall be exclusively and finally settled by arbitration, and any
party may submit such dispute, controversy or claim, including a claim for
indemnification under this Section 4.10 (Dispute Resolution), to arbitration.
(a) Arbitrators. The arbitration shall be heard and determined by one
arbitrator, who shall be impartial and who shall be selected by mutual
agreement of the parties; provided, however, that if the dispute involves
more than Cdn$1,000,000, then the arbitration shall be heard and determined
by three (3) arbitrators. If three (3) arbitrators are necessary as
provided above, then (i) each side shall appoint an arbitrator of its
choice within thirty (30) days of the submission of a notice of arbitration
and (ii) the party-appointed arbitrators shall in turn appoint a presiding
arbitrator of the tribunal within thirty (30) days following the
appointment of the last party-appointed arbitrator. All decisions and
awards by the arbitration tribunal shall be made by majority vote.
(b) Proceedings. Unless otherwise expressly agreed in writing by the
parties to the arbitration proceedings:
(i) The arbitration proceedings shall be held in Toronto, Canada,
at a site chosen by mutual agreement of the parties, or if the parties
cannot reach agreement on a location within thirty (30) days of the
appointment of the last arbitrator, then at a site chosen by the
arbitrators;
(ii) The arbitrators shall be and remain at all times wholly
independent and impartial;
(iii) The arbitration proceedings shall be conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association, as amended from time to time;
(iv) Any procedural issues not determined under the arbitral
rules selected pursuant to item (iii) above shall be determined by the
law of the place of arbitration, other than those laws which would
refer the matter to another jurisdiction;
(v) The costs of the arbitration proceedings (including
attorneys' fees and costs) shall be borne in the manner determined by
the arbitrators;
(vi) The decision of the arbitrators shall be reduced to writing;
final and binding without the right of appeal; the sole and exclusive
remedy regarding any claims, counterclaims, issues or accounting
presented to the arbitrators; made and promptly paid in United States
dollars free of any deduction or offset; and any costs or fees
incident to
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Page 15 of 18 - May 1, 1998
enforcing the award shall, to the maximum extent permitted by law, be
charged against the party resisting such enforcement;
(vii) The award shall include interest from the date of any
breach or violation of this Agreement, as determined by the arbitral
award, and from the date of the award until paid in fall, at 6% per
annum; and
(viii) Judgment upon the award may be entered in any court having
jurisdiction over the person or the assets of the party owing the
judgment or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may
be.
4.11 Survival. The covenants and agreements of the parties set forth in
Article 2 (Non-Competition and Confidentiality), Article 3 (Indemnification) and
Article 4 (Miscellaneous) are of a continuing nature and shall survive the
expiration, termination or cancellation of this Agreement, regardless of the
reason therefor.
4.12 No Duplication of Payments; Subrogation. The Company shall not be
liable under this Agreement to make any payment in connection with any claim
made against the Consultant & its Management Designee to the extent the
Consultant & its Management Designee has otherwise actually received payment
(under any insurance policy, Bylaw or otherwise) of the amounts otherwise
indemnifiable hereunder. In the event the Consultant & its Management Designee
actually receives payment (under any insurance policy, Bylaw or otherwise) of
any amount with respect to which the Company has already indemnified or
subsequently indemnifies the Consultant & its Management Designee, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Consultant & its Management Designee, who shall execute all
papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
4.13 Binding Effect, Etc. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors, assigns (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Company), spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business or assets of the
Company, by written agreement in form and substance satisfactory to the
Consultant & its Management Designee, expressly to assume and agree to perform
this Agreement in the same mariner and to the same extent that the Company would
be required-to perform if no such succession had taken place. The indemnity
provisions of this Agreement shall continue in effect regardless of whether the
Consultant & its Management Designee continues to serve as an employee of the
Company.
4.14 Contribution. If the indemnity contained in this Agreement is
unavailable or insufficient to hold the Consultant & its Management Designee
harmless in a Claim for an Indemnifiable Event, then separate from and in
addition to the indemnity provided elsewhere herein,
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Page 16 of 18 - May 1, 1998
the Company shall contribute to Expenses, judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by or on behalf of
the Consultant & its Management Designee in connection with such Claim in such
proportion as appropriately reflects the relative benefits received by, and
fault of, the Company on the one hand and the Consultant & its Management
Designee on the other in the acts, transactions or matters to which the Claim
relates and other equitable considerations.
4.15 This Agreement supersedes and rescinds any existing Engagement
contracts now in effect between the Company and the Consultant & its Management
Designee.
* * * * * * *
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its officer thereunto duly authorized, and Consultant & its Management Designee
has signed this Agreement, all as of the day and year first above written.
AMERICAN ECO CORPORATION
By: /s/ Michael E. McGinnis
-------------------------------------------
Michael E. McGinnis, President & CEO
WINDRUSH CORPORATION
By: /s/ J.C. Pennie
-------------------------------------------
J.C. Pennie, President
/s/ John C. Pennie
-------------------------------------------
John C. Pennie, Consultant's Management Designee
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Page 17 of 18 - May 1, 1998
Index of Defined Terms
Term Section
Affiliate 2.1(e)
Agreement Preamble
Additional Compensation 1.4(b)
Base Fee 1.4(a)
Cause 1.5(b)
Change in Control 1.5(e)
Company Preamble
Company Breach 1.5(d)
Competing Business 2.1(d)
Confidential Information 2.2(a)
Date of Termination 1.5(h)
Disability 1.5(a)
Consultant & its Management Designee Preamble
Consultant & its Management Designee Claims 4.4
Explanation of Termination of Engagement 1-5(g)
Notice of Termination 1-5(g)
Term 1.3
Without Cause 1.5(c)
Without Good Reason 1.5(f)
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