Exhibit 10.7
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT (the
“Agreement”), dated as of March 18, 2005, between TRC
Companies, Inc., a Delaware Corporation (the “Company”)
and Christopher P. Vincze (the “Executive”).
1.
Effective Date and Employment
Term .
(a)
Effective Date
. This Agreement shall become
effective upon the execution hereof by both parties hereto (the
“Effective Date”).
(b)
Employment Term
. The initial term of the
Executive’s employment under this Agreement shall commence on
May 2, 2005 (the “Start Date”), and continue for a
period of three (3) years from the Start Date (the “Initial
Term”), unless sooner terminated pursuant to Section 4.
Upon the expiration of such initial term, it is anticipated that
Executive will continue as an employee-at-will upon terms and
conditions generally available to individuals at his level in the
Key Person Group of the Company, subject, however, to the
provisions of Subsections 4 (d) and 4 (e) hereof. The initial
term and any successive term shall hereinafter be referred to as
the “Employment Term.”
2.
Position, Reporting, and Other
Activities .
(a)
Position . The Executive hereby accepts employment
with the Company as its Chief Operating Officer in accordance with
the terms and conditions herein. The Executive shall devote
and his full professional time and attention (except for vacation,
sick leave, and other excused leaves of absence) to the performance
of the services customarily incident to such office, and of such
other duties as may be reasonably assigned to the Executive from
time to time by the Company’s Chief Executive Officer
(“CEO”) or Board of Directors. The Company will
provide office facilities, secretarial, and clerical support
consistent with customary practices of the Company. Within
eighteen (18) months from the Start Date and contingent on
Executive meeting mutually agreeable Operational Goals determined
by Executive and the CEO within thirty (30) days from the Start
Date, and subject to the approval of the Company’s Board of
Directors, Executive shall be promoted to President of the
Company. Attachment A illustrates the types of Operational
Goals to be considered.
(b)
Reporting . During the Employment Term, the
Executive shall be required to report to the Company’s
Chairman and Chief Executive Officer.
(c)
Other Activities
. Except upon the prior
written consent of the Board of Directors of the Company (the
“Board”), during the Employment Term, the Executive
will not: (i) accept any other employment; or (ii) engage, directly
or indirectly, in any other business activity (whether or not
pursued for pecuniary advantage) that is competitive with, or that
places him in a competing position to, the Company. Personal
passive investments and personal business affairs not inconsistent
with this Agreement, or teaching, writing or publicly
speaking
are permitted, so long as these activities do
not interfere or conflict with the Executive’s duties
hereunder.
3.
Compensation and Other
Benefits .
(a)
Base Salary
. In consideration of the
services to be rendered hereunder, the Executive shall be paid a
base salary of $297,500.00 per year, payable in accordance with the
Company’s payroll practices in effect during the course of
this Agreement. Upon the earlier of Executive’s
promotion to President of the Company or eighteen (18) months from
the Start Date, Executive’s salary shall increase to
$350,000.00 per year. The compensation payable under this
Section 3(a) shall be Executive’s “Base Salary”
hereunder.
(b)
Initial Bonus
. Executive shall be paid an
initial bonus of $50,000 on July 1, 2005 provided he is employed by
the Company at that time.
(c)
Annual Bonuses
. As further compensation for
the services of the Executive, the Executive shall be eligible and
payable, during the Employment Term, for an annual bonus from the
Company determined as follows.
(I)
Financial Performance
Bonus . Each year
during the Employment Term, the Executive shall receive a
guaranteed bonus of $50,000 payable within thirty (30) days of the
anniversary of the Start Date. For each fiscal year of the
Company during the Employment Term, the Executive will also receive
an additional Performance Bonus of up to $100,000 based on the
degree to which mutually agreeable Operational Goals, as determined
by the CEO and the Executive annually within thirty (30) days from
the close of the Company’s fiscal year, and in the case of
the initial Operational Goals within thirty (30) days from the
Start Date, are achieved by Executive. The Executive and CEO
shall further agree to specific criteria, benchmarks, milestones
and ranges of success with respect to each Operational Goal.
The initial four (4) categories of Operational Goals will consist
of: A) improving the Company’s profit margins; B)
improving the time period in which the Company collects its
accounts receivables and outstanding payments; C) improving the
Company’s sales growth; and D) improving and optimizing the
information technology (IT) program for the Company. In such
first 30 days, the Executive and CEO will divide these topics into
subtopics and place priorities which will focus on the most
important operational requirements. The processes and
approaches used to achieve these agreed-upon objectives will not
significantly change or conflict with TRC’s basic cultural
and organizational characteristics. The Performance Bonus
shall be paid on a pro rata basis with respect to the achievement
of Operational Goals set for the preceding year. For example,
in year one where there are four (4) initial Operational Goals, the
Executive can earn up to $25,000 for each Operational Goal and in
the aggregate earn up to the entire $100,000 Performance
Bonus. Executive shall be paid the entire pro rata portion of
the Performance Bonus with respect to each Operational Goal, if
Executive substantially completes or achieves the Operational Goal
or be paid a reasonable pro rated portion of such pro rata portion
of the Performance Bonus in order to fairly compensate Executive to
the extent of the portion of the Operational Goal that Executive
has achieved. In addition, the Executive shall participate in
the Company’s Key Person Bonus Plan and be given
consideration thereunder in accordance with Executive’s role
in the Company, with the understanding that other bonuses paid to
Employee will be taken into consideration in
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determining any bonus under the Key Person Bonus
Plan. It is generally anticipated that, except for any
bonuses awarded to executive officers for extraordinary performance
and assuming Executive substantially completes or achieves the
Operational Goals, Executive’s bonus will be the second
highest awarded to any executive officer of the Company, subject to
Compensation Committee Approval .
(II)
Periodic Options
. The Executive will be
eligible to receive stock options under the Company’s
Restated Stock Option Plan and will be given consideration
thereunder in accordance with Executive’s role in the
Company. It is generally anticipated that, except for any
awards made to executive officers for extraordinary performance and
assuming Executive substantially completes or achieves the
Operational Goals, Executive’s option grant will be the
second highest amount awarded to any executive officer of the
Company, subject to Compensation Committee Approval.
(d)
Benefits . Executive shall have the right to participate
in and to receive benefits from all present and future life,
vacation, accident, disability, medical, pension, and savings plans
and all similar benefits made available generally to executives of
the Company. The amount and extent of benefits to which the
Executive is entitled shall be governed by any applicable benefit
plan, as it may be amended from time to time. Executive shall
receive no less than three (3) weeks paid vacation each year which
shall accrue if not used in any year and be paid to Executive or
carried forward to subsequent years consistent with Company
policy. The Company shall also carry D&O Liability
Insurance coverage for the benefit of its officers and directors
including Executive.
(e)
Automobile Allowance
. During the Employment Term,
the Company shall provide the Executive with an automobile
allowance of $700 per month to be increased consistent with
policies applicable to other executives of the Company.
Executive will also receive a Company gasoline credit card pursuant
to its standard practice for officers.
(f)
Expenses . The Company shall reimburse the
Executive for reasonable travel and other business expenses
incurred by the Executive in the performance of his duties
hereunder in accordance with the Company’s general policies,
as they may be amended from time to time during the course of this
Agreement including, but not limited to, the cost of
Executive’s Country Club expenses up to $10,000 per
year.
(g)
Options . The Company shall grant to the Executive
ten-year options to purchase 60,000 shares the Company’s
common stock, par value $0.01 per share (the
“Options”), pursuant to the Company’s Restated
Stock Option Plan (the “Plan”). The exercise
price of such Options shall be the closing price of the
Company’s common stock on the trading day immediately
preceding the Start Date. In the event the Executive’s
employment with the Company is terminated, the Executive will only
be permitted to exercise such vested Options within ninety (90) day
period following such termination. The options will vest in
equal one-third increments upon the date of grant and on the next
two anniversaries of such grant, and to the extent unvested, shall
vest in their entirety upon a Change of Control, as defined, or
upon termination of employment pursuant to Subsections 4(d) or 4(e)
hereof.
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4.
Termination of
Employment .
(a)
By Death . If the Executive dies prior to the
expiration of the Employment Term, his bonuses pursuant to Section
3(c) (if any), and accrued but unused vacation will be prorated
through the day of his death and shall be paid to his beneficiaries
or estate within thirty (30) days of the Executive’s death;
provided that the manner and time frame in which the bonuses will
be paid shall be pursuant to Section 4(f). In addition,
Executive agrees to enroll in the Company’s life insurance
plan, and Company will provide a benefit to Executive’s
estate equal to the amount, if any, such life insurance benefit is
less than Executive’s Annual Base Salary hereunder.
Thereafter, the Company’s obligations hereunder shall
terminate.
(b)
By Disability
. If the Executive becomes
“Permanently Disabled” (as defined below) prior to the
expiration of the Employment Term, then the Company shall be
entitled to terminate his employment, subject to the requirements
of applicable law, and
