EXHIBIT 10(a)(iii)
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of June 25, 1999 , by and between UNIVERSAL SUPPLY GROUP,
INC., a New York corporation with its principal office at 000 Xxxxxxx Xxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000, (the "Company") and XXXXXXX XXXXXX, residing at
X.X. 000, Xxxxxxx, Xxx Xxxxxx 00000 (the "Employee").
ARTICLE I
EMPLOYMENT: TERM, DUTIES
1.01. Employment. Upon the terms and conditions hereinafter set forth,
the Company hereby employs the Employee, and the Employee hereby accepts
employment, as President of the Company.
1.02. Employee represents and warrants to the Company that he is free
to enter into this Agreement in accordance with the terms hereof and is under no
restriction, contractual or otherwise, which would interfere with his execution
hereof or performance hereunder.
1.03. Term. The Employee's employment hereunder shall be for a term
(the "Term") commencing as of this date (the "Commencement Date") and
terminating at the close of business on December 31, 2005.
1.04. Duties. During the Term, the Employee shall perform such duties,
consistent with his position hereunder, as may be assigned to him from time to
time by the Board of Directors. The Employee shall devote his best efforts and
his entire time, attention and energies, during regular working hours, to the
performance of his duties hereunder and to the furtherance of the business and
interests of the Company, its subsidiaries and affiliate companies. Throughout
the Term, Employee shall engage in no other business activities other than the
passive supervision of his investments.
ARTICLE II
COMPENSATION
2.01 Compensation. For all services rendered by the Employee hereunder
and all covenants and conditions undertaken by him pursuant to this Agreement,
the Company shall pay, and the Employee shall accept a salary at the rate of
$200,000 per annum. Compensation shall be payable not less frequently than in
bi-weekly installments. The Board of Directors of the Company may (but shall not
be obligated to), at any time and from time to time, grant to the Employee an
increase or increases in the compensation otherwise payable pursuant to this
Section 2.01, but such increase or increases, if any, shall not be deemed to
alter, modify, waive or otherwise affect any other term, covenant or condition
of this Agreement.
2.02 Incentive Compensation. For the balance of the calendar year 1999
and for each of the calendar years 2000 through 2005, the Employee shall
receive, as Incentive Compensation, a percentage of the Incentive Compensation
Base. Incentive Compensation Base shall mean the Company's net earnings (as
determined by the Company in accordance with generally accepted auditing
standards consistent with those used by Company's parent company) which are
included in the parent company's consolidated audited financial statements, plus
the amount of any deductions from net earnings which are made in such statements
for (i) interest paid or accrued in connection with the acquisition of the
Company, (ii) Federal income taxes, (iii) parent company management fees or
allocation of overhead from the parent company either paid or accrued and (iv)
Incentive Compensation under this Agreement. For 1999 account shall be taken
only of net earnings during the period from April 1, 1999 through December 31,
1999. Earnings of businesses acquired by the Company shall be included in
determining Incentive Compensation base. Incentive Compensation will be paid
within 30 days following receipt by the Company of the Independent Accountants'
report for the year involved and said report shall be binding and conclusive on
the calculation of net earnings and Incentive Compensation.
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Portion Of
Incentive Additional
Compensation Compensation
Base Percentages
Up to $250,000 8%
$ 251,000 to 500,000 9%
$ 501,000 to 750,000 10%
$ 751,000 to 1,000,000 11%
$1,001,000 and over 12%
For example, if the Incentive Compensation Base is $1,500,000,
the additional compensation would be computed as follows:
Incentive Additional
Compensation Compensation Incentive
Base Percentages Compensation
$ 250,000 at 8% $ 20,000
$ 250,000 at 9% $ 22,500
$ 250,000 at 10% $ 25,000
$ 250,000 at 11% $ 27,500
$ 500,000 at 12% $ 60,000
$ 1,500,000 $ 155,000
Total Incentive Compensation in this example would be $155,000.
2.03. Deductions. The Company shall deduct from the compensation
described in Section 2.01 and Section 2.02 any Federal, state or local
withholding taxes, social security contributions and any other amounts which may
be required to be deducted or withheld by the Company pursuant to any Federal,
state or city laws, rules or regulations.
2.04. Disability Adjustments. Any compensation otherwise payable to the
Employee pursuant to Section 2.01 during any Disability Period (as that term is
hereinafter defined) shall be reduced by any amounts payable to the Employee for
loss of earnings or the like under any insurance plan or policy the premiums for
which are paid for in their entirety by the company.
ARTICLE III
BENEFITS; EXPENSES
3.01 Fringe Benefits. During the Term, the Employee shall be entitled
to participate, in amounts commensurate with the Employee's position hereunder,
in such group life, health, accident, disability or hospitalization insurance
plans, subject to underwriting requirements as the Company, or its parent, may
make available to its other executive employees.
3.02. Expenses. Upon presentation of an itemized account thereof, with
such substantiation as the Company shall require, the Company shall pay or
reimburse the Employee for the reasonable and necessary expenses directly and
properly incurred by the Employee in connection with the performance of his
duties hereunder, subject to guidelines established by the Board of Directors.
This will include a non-accountable automobile allowance of $350.00 per month,
which will be shown on a 1099 form.
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3.03. Vacations. During the Term, the Employee shall be entitled to
paid holidays and paid vacations in accordance with the policy of the Company as
determined by the Board of Directors provided, however, that the Employee shall
be entitled to not less than four weeks paid vacation during each year of the
Term, to be taken at times convenient to the Employee and to the Company.
3.04. Location. Notwithstanding anything which may be contained herein
to the contrary, the Employee's office shall be located in the central New
Jersey area and the performance of his duties hereunder shall not require his
continued presence outside of such area if the Employee shall object thereto.
ARTICLE IV
TERMINATION
4.01. Termination. The employment of the Employee, and the obligations
of the Employee and the Company hereunder, shall cease and terminate (except as
otherwise specifically provided in this Agreement) upon the first to occur on
the following dates (the "Termination Date") described in this Section 4.01:
(a) The date of expiration by its terms of the Term;
(b) The date of death of the Employee
(c) The date on which the Company gives to Employee a notice of
disability (a "Disability Notice"). The Company may give a
Disability Notice if the Employee shall become unable, by
reason of illness or incapacity, to perform the duties
required of him pursuant to this Agreement, for a period of
( i ) ninety (90) consecutive days or (ii) for 180 (one
hundred eighty) days in any 365 day period, (the "Disability
Period").
(d) The date on which the Company by notice terminates
Employee's employment for cause in accordance with Article
VI.
ARTICLE V.
RESTRICTIVE COVENANTS
5.01. Non-Disclosure. During and after Employee's employment, and
whether or not employment is terminated for cause, without cause or otherwise,
the Employee shall not disclose or furnish to any other person, firm or
corporation (the "Entity") except in the course of the performance of his duties
hereunder, the following:
(a) any information relating to any process, technique or
procedure used by by the Company, including, without
limitation, computer programs and methods of evaluation and
pricing and marketing techniques; or
(b) any information relating to the operations or financial
status of the Company, including, without limitation, all
financial data and sources of financing, which is not
specifically a matter of public record; or
(c) any information of a confidential nature obtained as a
result of his prior, present or future relationship with
the Company, which is not specifically a matter of public
record; or
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(d) any trade secrets of the Company; or
(e) the name, address or other information relating to any
customer, supplier or debtor of the Company or other
persons who have or had a business relationship with the
Company.
5.02. Non-Competition. The Employee shall not, from the date hereof and
until two years following the termination of his employment with the Company for
whatever reason, whether with or without cause or otherwise (the "Restriction
Period"):
(a) in any manner, directly or indirectly, be interested in, employed
by, make any loan, guaranty or other financial accommodation for, be
engaged in or participate in the ownership, management, operation or
control of, or act in any advisory, brokerage, finder or other capacity
for any entity which, directly or indirectly, then competes with the
Company anywhere within the Territory (as that term is hereinafter
defined) provided, however, that the Employee may invest in any entity
which may be deemed to be in competition with the Company hereunder,
the Common Stock of which entity is "publicly held", ); provided,
however, that the Employee may invest in any entity which is "publicly
held" and files periodic reports under the Securities Act of 1934 so
long as the Employee does not own or control securities which
constitute more than four percent of the voting rights or equity
ownership of such entity. Without limiting the generality of the
foregoing, the Employee or any entity shall be deemed to compete with
the Company if at any time during the Restriction Period the Employee
or such entity engages in any aspect of the business of distributing
products or services for heating ventilation and air conditioning
("HVAC") contractors. The term "products" includes without limitation
heating and air conditioning equipment, controls, parts, and
accessories. The term "services" includes without limitation
temperature control system design and panel fabrication, technical
field support and technical training.
(b) The Employee shall not during the Restriction Period:
( i ) in any manner, directly or indirectly, attempt to seek
to cause any entity to refrain from dealing or doing
business with the Company or assist any entity in doing so
or attempting to do so;
(ii) employ or retain any person who was an employee or
consultant to the Company at any time during the preceding
two years; or
(iii) solicit the business of any person or entity who at any
time was a customer or active prospect of the Company
5.03 Definitions. As used in this Article V only: (a) the term
"Company" shall include any parent, subsidiary or affiliate of, or successor to,
the Company and (b) the term "Territory" shall mean any state (including the
District of Columbia), territory or possession of the United States within which
the Company presently or hereafter does business.
5.04 Breach of Provisions. In the event that the Employee shall breach
any of the provisions of this Article V, or in the event that any such breach is
threatened by the Employee, in addition to and without limiting or waiving any
other remedies available to the Company at law or in equity, the Company shall
be entitled to immediate injunctive relief in any court, domestic or foreign,
having the capacity to grant such relief, to restrain any such breach or
threatened breach to enforce the provisions of this Article V, without posting
bond or security. The Employee agrees and acknowledges that there is no adequate
remedy at law for any such breach or threatened breach and, in the event that
any action or proceeding is brought seeking injunctive relief, the Employee
shall not use a defense thereto that there is an adequate remedy at law.
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5.05. Reasonable Restrictions; Court May Reform. The parties
acknowledge that the foregoing restrictions, the duration and the territorial
scope thereof as set forth in this Article V, are under all of the circumstances
reasonable and necessary for the protection of the Company and its business. The
courts enforcing this Agreement shall be entitled to modify the duration and
scope of any restriction contained herein to the extent such restriction would
otherwise be unenforceable, and such restriction as modified shall be enforced.
5.06. Extension of Restricted Period. All time periods in this Article
shall be computed by excluding from such computation any time during which
Employee is in violation of any provision of this Agreement and any time during
which there is pending in any court of competent jurisdiction any action
(including any appeal from any final judgment) brought by any person, whether or
not a party to this Agreement, in which action the Company seeks to enforce the
agreements and covenants in this Agreement or in which any person contests the
validity of such agreements and covenants or their enforceability or seeks to
avoid their performance or enforcement.
ARTICLE VI
TERMINATION FOR CAUSE
6.01. Termination by the Company for Cause. At any time during the term
of this Agreement, the Company may discharge the Employee for cause and
terminate this Agreement without any further liability hereunder to the Employee
or his estate, except to pay any accrued, but unpaid, salary but not Incentive
Compensation to him. In the event of such termination, Employee agrees he shall
also be deemed to have resigned from the Company and its Parent, as a President
and Employee, effective as of the date of such termination. For purposes of this
Agreement, a "discharge for cause" shall mean termination of the Employee upon
written notification to the Employee limited, however, to one or more of the
following reasons:
(i) Fraud, misappropriate or embezzlement by the Employee in
connection with the Company; or
(ii) Gross neglect of duties which has a detrimental effect on
the Company after notice to the Employee of the particular
details thereof and a period of thirty (30) days to correct
such mismanagement or neglect, if any; or
(iii) Conviction or plea of "no contest" by a court of
competent jurisdiction in the United States of a felony or
a crime involving moral turpitude, including but not
limited to drug abuse, violence and sexual harassment, or
(iv) Willful and unauthorized disclosure of confidential, or
proprietary trade secret information of the Company; or
(v) The Employee's breach of any material term or provision of
this agreement, after notice to the Employee of the
particular details thereof and a period of not less than
thirty (30) days thereafter within which to cure such
breach, if any.
ARTICLE VII
MISCELLANEOUS
7.01. Assignment. This Agreement shall not be assigned by either party,
except that the Company shall have the right to assign its rights hereunder to
any parent, subsidiary and affiliate of, or successor to, the Company.
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7.02. Binding Effect. This Agreement shall extend to and be binding
upon the Employee, his legal representatives, heirs and distributees, and upon
the Company, its successors and assigns.
7.03. Notices. Any notice required or permitted to be given under this
Agreement to either party shall be sufficient if in writing and if sent by
registered or certified mail, return receipt requested, to the address of such
party hereinabove set forth or to such other address as such party may hereafter
designate by a notice given to the other party in the manner provided in this
Section 7.03.
7.04 Waiver. A waiver by a party hereto of a breach of any term,
covenant or condition of this Agreement by the other party hereto shall not
operate or be construed as waiver of any other or subsequent breach by such
party of the same or any other term, covenant or condition hereof.
7.05. Prior Agreements. Any and all prior agreements between the
Company and the Employee, whether written or oral, between the parties, relating
to any and all matters covered by, and contained or otherwise dealt within this
Agreement are hereby canceled and terminated.
7.06. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject mater hereof and no waiver,
modification, change or amendment of any of its provisions shall be valid unless
in writing and signed by the party against whom such claimed waiver,
modification, change or amendment is sought to be enforced.
7.07. Authority. The parties severally represent and warrant that they
have the power, authority and right to enter into this Agreement and to carry
out and perform the terms; covenants and conditions hereof.
7.08. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. The Federal and state
courts in Nassau County, New York shall have exclusive jurisdiction on all
matters relating to this Agreement. TRIAL BY JURY IS WAIVED.
7.09. Severability. In the event that any of the provisions of this
Agreement, or any portion thereof, shall be held to be invalid or unenforceable,
the validity and enforceability of the remaining provisions shall not be
affected or impaired, but shall remain in full force and effect.
7.10. Titles. The titles of the Articles and Sections of this Agreement
are inserted merely for convenience and ease of reference and shall not affect
or modify the meaning of any of the terms, covenant or conditions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and date first above written.
UNIVERSAL SUPPLY GROUP
By /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, Secretary
By /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx, Employee
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