Exhibit 10.19
SENIOR MANAGEMENT EMPLOYMENT AGREEMENT
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THIS AGREEMENT ("Agreement") is made as of December 17, 2000, between
COINMACH CORPORATION, a Delaware corporation (together with its subsidiaries and
affiliates, the "Company"), and Xxxx X. Xxxxxx, with an address at 0000 Xxxxxxx
Xxxx Xxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Employee").
RECITALS
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A. The Company is engaged in the business of (a) leasing and renting
laundry equipment and other household appliances and electronic items to (i)
individuals, (ii) property owners or managers of multi-family dwellings,
including apartment complexes and other similar properties, and (iii) corporate
relocation entities (collectively, "Rental Customers"), (b) supplying
coin-operated laundry equipment services to multi-family properties including,
without limitation, owners, managers, proprietors or operators of rental
buildings, apartments, condominium and cooperative associations, hotels, motels,
extended stay corporate facilities, trailer parks, universities, military and
other institutional housing and other parties (collectively, "Route Customers,"
and together with Rental Customers, "Customers") and (c) (i) engaging in
laundromat construction and laundromat equipment distribution which consists of
constructing complete turnkey laundromat retail stores, retrofitting existing
laundromat retail stores, distributing exclusive lines of commercial coin and
non-coin machines and selling service contracts; (ii) operating, maintaining and
servicing laundromat retail stores; and (iii) selling parts and equipment for
coin-operated and non coin-operated washing machines and dryers, soap machines,
card operated equipment, video or other interactive vending machines, change
makers and any other vending or similar equipment (each of the foregoing
businesses, together with any other business of the Company, the "Business"). As
part of its Business, the Company (a) solicits Rental Customers to rent laundry
equipment and other household appliances and electronic items, (b) solicits
Route Customers to lease laundry room locations to the Company or lease or sell
the Company's coin-metered washers, dryers and laundry equipment for the use of
their tenants and (c) installs and services laundry equipment and, in the case
of coin-operated equipment, collects the revenues generated therefrom.
B. The Company has a proprietary interest in the Company's good will
and its Confidential Information (as hereinafter defined), all of which
information is not publicly available and is considered by the Company to be
confidential trade secrets. The Company imparts to its employees, and said
employees require during the course of their employment, access to Confidential
Information.
C. Employee during the course of Employee's employment with the
Company: (i) will obtain material knowledge and information regarding the
Company's Customers, including without limitation Customers' specialized
requirements, preferences and financial condition, all of which are materially
important in the Company's business relationship with such Customers; (ii) may
perform management, servicing, sales, collection or secretarial duties for the
Company, which duties themselves are of a highly confidential nature; (iii) is
encouraged by the Company to develop personal relationships with the Company's
suppliers, Customers and prospective Customers; and (iv) generally has access to
Confidential Information.
D. The Company is vulnerable to unfair post-employment competition by
Employee, since Employee has access to Confidential Information and has personal
relationships with the Company's suppliers, Customers and prospective Customers.
E. Employee acknowledges the vulnerability of the Company to
post-employment competition by Employee and is willing to enter into this
Agreement with the Company, pursuant to which Employee agrees not to disclose
any of the Company's Confidential Information and not to compete against the
Company following termination of employment for the time periods and to the
limited extent set forth in this Agreement.
F. The Company desires to employ Employee and Employee desires to
accept such employment, pursuant to the terms set forth in this Agreement.
AGREEMENT
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NOW THEREFORE, in consideration of the mutual promises and agreements
contained in this Agreement, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. Employment.
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(a) Term. The Company agrees to employ Employee, and Employee
accepts such employment, for the period commencing on the date hereof through
and including December 31, 2001 (the "Initial Term"), unless sooner terminated
as herein provided. At the end of the Initial Term, this Agreement shall
automatically renew for additional one (1) year terms, on substantially the same
terms and provisions as contained herein, unless the Company provides Employee
with written notice of its intent to terminate this Agreement at the will of the
Board of Directors (the "Board"), or at the will of the Chief Executive Officer
(the "CEO") and either the Chief Operating Officer (the "COO") or the Chief
Financial Officer (the "CFO") of the Company (the CEO and the COO, or the CEO
and CFO hereinafter, collectively, referred to as the "Executive Officers")
within 30 days prior to termination. The period from the commencement of the
term of this Agreement to the date of its termination, after giving effect to
any renewal, shall be considered the "Employment Period" hereunder.
(b) Duties. During the Employment Period, Employee shall serve as
an executive officer of the Company and shall have the duties, responsibilities
and authority consistent with such position as are assigned to him by the Board
or the Executive Officers. Employee shall devote Employee's full time and
effort, energies and abilities as are reasonably required in the discretion of
the Executive Officers for the proper and efficient performance of such duties
and responsibilities.
(c) Salary, Bonus and Benefits.
(i) Salary. During the Employment Period, the Company will pay
Employee a base salary (the "Annual Base Salary") as the Board or any of the
Executive Officers may designate from time to time, at the rate of 140,000 per
annum, which amount shall be reviewed annually by the Board or any of the
Executive Officers in their sole and absolute
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discretion. Employee's Annual Base Salary for any partial year will be prorated
based upon the number of days elapsed in such year.
(ii) Bonus. Employee shall be entitled to receive a bonus
pursuant to the terms of the Company's executive bonus plan then in effect,
which plan may be amended from time to time by the Board or the Executive
Officers in their sole and absolute discretion.
(iii) Benefits. During the Employment Period, Employee shall
be entitled to the benefits approved by the Board or any of the Executive
Officers, as such benefits may be adjusted by the Board or any of the Executive
Officers from time to time in their sole and absolute discretion. Upon
termination of the Employment Period, benefits for periods subsequent to such
termination shall cease, except as provided in Section 2 below.
(iv) Expenses. The Company shall reimburse Employee for all
reasonable out-of-pocket expenses actually incurred by Employee and accounted
for and evidenced in accordance with the standard policies, practices or
procedures regarding expense reimbursement that the Company may establish from
time to time.
(v) Deductions and Withholding. All amounts payable or which
become payable hereunder shall be subject to any deductions authorized by
Employee, any set-off or reimbursement deemed appropriate by the Company and
permitted by law and any deductions or set-offs permitted by this Agreement and
all deductions and withholding authorized by law.
2. Termination.
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(a) Termination Without Just Cause. Except as provided in Sections
2(c) and 2(d) hereunder, upon termination of the Employment Period at any time
by the Company without Just Cause (as hereinafter defined), Employee shall be
entitled to receive only (i) an amount equal to the Employee's Annual Base
Salary then in effect, payable in twelve (12) equal monthly installments (the
"Severance Period"), subject to applicable withholding tax requirements,
commencing upon the execution by the Company and Employee of a mutual release of
the parties' respective rights, duties, privileges and obligations hereunder
other than those rights, duties, privileges and obligations which are
contemplated to continue beyond the Employment Period, which release the parties
hereby agree to use their reasonable good faith efforts to secure and (ii) any
other compensation, benefits or other payments payable to Employee, which
compensation, benefits or other payments shall continue through the Severance
Period and shall cease thereafter.
(b) Termination for Just Cause. The Company may, upon a good faith
determination made by the Board or any of the Executive Officers, terminate
Employee's employment pursuant to this Agreement for Just Cause. Notwithstanding
anything to the contrary in this Agreement, upon termination by the Company of
Employee for Just Cause, (i) the Company shall only be obligated to pay Employee
such portion of Employee's Annual Base Salary payable to him up to the date of
termination and (ii) any other compensation, benefits or other payments payable
to Employee up to the date of termination, and all rights of Employee
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hereunder to any other compensation, benefits or other payments for periods
subsequent to such termination shall cease.
(c) Termination Upon Death. This Agreement shall automatically
terminate upon the last day of the month of the death of Employee, but the
Company shall continue to make Annual Base Salary payments to the estate of
Employee pursuant to Section 1(c) hereof for the shorter of (i) the three (3)
month period following such death and (ii) the period remaining until the date
this Agreement is scheduled to expire.
(d) Termination Upon Disability. If, during the Employment Period,
Employee should fail to perform Employee's duties hereunder on account of
illness or other physical or mental disability or infirmity (i) for 90 days in
any twelve-month period, or (ii) at such earlier time as Employee submits to the
Company medical evidence reasonably satisfactory to the Board or any of the
Executive Officers, that he has a physical or mental disability or infirmity
that will prevent him from returning to the performance of Employee's duties and
responsibilities for 90 days or longer in any twelve-month period, the Company
shall have the right upon not less than 30 days written notice to terminate
Employee's employment under this Agreement. In this event, the Company shall
only be obligated to maintain the Employee's benefits and to pay Employee such
portion of Employee's Annual Base Salary payable to him up to the date of
termination pursuant to such written notice and, thereafter, the Company shall
pay to Employee a total sum, payable in equal monthly installments, equal to 50%
of the Annual Base Salary to which Employee would have been entitled had
Employee performed Employee's duties to the Company, for the lesser of (x) six
months after the date of termination and (y) the period remaining until the date
this Agreement is scheduled to expire; provided, however, the Annual Base Salary
otherwise due Employee under this Agreement for periods when he is unable to
work shall be reduced by any insurance or other disability benefits paid or
payable to Employee under policies of insurance or other disability benefit
agreements provided by the Company.
(e) Notice. Employee shall provide the Company with 30 days prior
written notice of such Employee's intent to terminate this Agreement.
(f) Right of Offset. The Company may offset the amounts of any
outstanding loans, advances or other disbursements made to or on behalf of the
Employee by the Company against any amounts the Company owes Employee hereunder
for severance pay, Annual Base Salary, bonuses, benefits or other items of
compensation hereunder.
(g) Release and Waiver. As a condition to the receipt of payments,
compensation or other benefits under this Agreement, Employee shall be required
to execute and deliver to the Company a general release and waiver, in form and
substance acceptable to the Company.
3. Confidential Information.
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Employee acknowledges that the information, observations and data
obtained by or available to Employee during the course of employment with the
Company concerning the business and affairs of the Company are and will be the
property of the Company. Therefore, Employee agrees, during the Employment
Period and following the termination of Employee's employment for any reason
whatsoever, not to disclose
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or induce or assist in the use or disclosure, to any person or entity, or use
for the account of any person or entity other than the Company, any such
information, observations or data including, without limitation, any business
secrets or methods, processes, formulas, designs, inventories, techniques,
marketing plans, strategies, forecasts, new products, blueprints,
specifications, maps, computer software programs, promotional ideas, unpublished
financial statements, budget projections, licenses, prices, costs, policies,
manuals or instructions, reports, lists of names and/or addresses of Customers,
prospective Customers or suppliers, other Customer or prospective Customer
information or requirements, personnel information, the terms of any Company
contract, lease or other arrangement with any Customer or leasing information
(including without limitation, expiration dates, renewal dates, pricing
information, other data used by the Company in connection with coin-operated
washers, dryers or other laundry equipment, special requirements, referral lists
or other data setting forth names and addresses of Customers) or any other
confidential or proprietary information, records, observations or data of the
Company (whether or not patented, copyrighted or otherwise protected under
applicable law) or information created, discovered, developed, or made known to
the Company (including, without limitation, information created, discovered,
developed, or made known by Employee to the Company during Employee's period of
employment by the Company) along with any reports, analyses, compilations,
memoranda, notes and other writings or recordings prepared by Employee or any
other employee, agent or representative of the Company, which contain, reflect
or are based upon such information, observations or data (collectively,
"Confidential Information") without the Company's prior written consent, unless
and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Employee's acts or
omissions to act, and except as required by law or legal process. In the event
Employee's employment with the Company is terminated for any reason whatsoever,
Employee will promptly return and surrender to the Company any and all
Confidential Information made available to Employee by the Company or otherwise
in the possession of Employee in the course of employment with the Company.
4. Noncompetition and Nonsolicitation.
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(a) Noncompetition. Employee acknowledges that Employee's services
will be of special, unique and extraordinary value to the Company. Therefore,
Employee agrees that, during the Employment Period and for a period of two years
following any Company-initiated or Employee-initiated termination of Employee's
employment for any reason whatsoever, Employee will not, directly or indirectly
(whether as a sole proprietor, partner, stockholder, member, director, officer,
employee, consultant or in any other capacity as principal, agent, broker or
manager), without the Company's prior written consent, own, manage, operate,
join, control or participate in the ownership, management, operation or control
of, or be connected as a director, officer, employee, partner, representative,
agent, consultant or otherwise with, or take any direct or indirect action to
set up or engage in any of the foregoing with any business or organization which
directly or indirectly, competes with the Company's Business as such Business
exists or is in process on the date of the termination of Employee's employment,
(i) within the geographical area included in the 50-mile radius around each
location of a customer of the Company or any business which the Company is
actively considering acquiring at the time of the Employee's termination or has
actively considered acquiring in the last 12 months, or (ii) within any State in
the United States or any Province in Canada in which Employee has spent a
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significant amount of time on behalf of the Company at any time during the
12-month period prior to the date of Employee's termination.
(b) Nonsolicitation. Employee further agrees that, for a period of
two years following any Company-initiated or Employee-initiated termination of
employment for any reason whatsoever, Employee will not, directly or indirectly,
either for Employee or for any other person, firm, company or corporation, in
any capacity, induce or attempt to induce or call upon or solicit any of the
Company's employees, consultants, Customers, prospective Customers, suppliers,
landlords or other business relations of the Company to leave or cease doing
business with the Company or in any way interfere with the relationship between
the Company and any of the Company's employees, Customers, prospective
Customers, suppliers, landlords or other business relations thereof or hire or
solicit for employment any employee of the Company.
(c) Enforcement. If, at the time of enforcement of this Section 4,
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum duration,
scope and geographical area reasonable under such circumstances shall be
substituted for the stated period, scope and area and that the court shall be
allowed to reduce the restrictions contained herein to cover the maximum
duration, scope and area permitted by law.
(d) Employee's Experience. Employee represents and warrants that,
in the event of the voluntary or involuntary termination of Employee's
employment with the Company for any reason whatsoever, Employee's experience and
capabilities are such that Employee can obtain employment in other lines and of
a different nature from the Business, and that the enforcement of this Agreement
will in no way prevent Employee from earning a livelihood. Employee acknowledges
and agrees that, if for any reason Employee does not successfully obtain other
employment, such fact shall not relieve Employee from Employee's obligations
hereunder.
(e) Irreparable Harm. Employee acknowledges that a violation by
Employee of the provisions of this Agreement will cause irreparable harm to the
Business, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such breach will be inadequate. Accordingly, Employee
agrees that, in the event of such violation or threatened violation by Employee,
the Company shall be entitled, in addition to any other remedy which may be
available at law or in equity, to specific performance and injunctive relief,
without posting bond or other security.
(f) Delivery of Documents. Employee agrees that, in the event of
the voluntary or involuntary termination of Employee's employment with the
Company for any reason whatsoever, Employee shall promptly deliver to the
Company all documents, photocopies, notes, drawings, data and other materials of
any nature pertaining to Employee's employment with the Company, and Employee
shall not take with Employee, or allow any third party to take, any of the
foregoing or any reproduction of any of the foregoing.
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5. Definitions.
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"Just Cause" means (i) a material breach of this Agreement by
Employee (after notice and a 30-day cure period); (ii) a breach of Employee's
duty of loyalty to the Company or any act of dishonesty with respect to the
Company or its stockholders, customers or suppliers; (iii) Employee's continued
failure or refusal to perform, in any material respect, any duty or
responsibility to the Company which is normally attached to Employee's position
(after notice and a 30-day cure period), provided, however, any subsequent
failure or refusal to perform such duty or responsibility shall entitle the
Company to terminate employment for Just Cause without notice or an opportunity
to cure; (iv) Employee's gross negligence or willful misconduct in performing
those duties which are normally attached to Employee's position (after notice
and a 30-day cure period); (v) the commission by Employee of an act of fraud,
conversion, misappropriation (including the unauthorized use or disclosure of
confidential or proprietary information of the Company) or embezzlement or crime
of moral turpitude; (vi) a conviction of or guilty plea or confession by
Employee to any fraud, conversion, misappropriation, embezzlement or felony;
(vii) the exposure of the Company to any criminal liability substantially caused
by the conduct of Employee which results in a material adverse effect upon the
Company's business, operations, financial condition or results of operations or
the exposure of the Company to any civil liability caused by Employee's unlawful
harassment in employment; or (viii) the repeated taking of any action prohibited
(a) by the Board or any of the Executive Officers, provided that Employee has
received at least one written notice of having taken an action so prohibited, or
(b) by this Agreement. For purposes of this Agreement, "Employee's duty of
loyalty to the Company" shall include Employee's fiduciary obligation to place
the interests of the Company ahead of Employee's personal interests and thereby
not knowingly profit personally at the expense of the Company, and shall also
include specifically the affirmative obligation to disclose promptly to the
Board any known conflicts of interest Employee may have with respect to the
Company, and the negative obligations not to usurp corporate opportunities of
the Company, not to engage in any "conflict-of-interest" transactions with the
Company (without the approval of the Board), and not to compete directly with
the Company (without the approval of the Board).
6. Notices.
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Any notice provided for in this Agreement must be in writing and
must be either personally delivered, mailed by first class mail (postage prepaid
and return receipt requested) or sent by reputable overnight courier service
(charges prepaid) to each person at the address set forth below:
If to the Company:
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Coinmach Corporation
Xxxxxxxx Place, Suite 590
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Executive Officer
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With a copy (which will constitute notice to
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the Company) to:
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Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
If to Employee:
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See address set forth in the preamble of this Agreement
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
7. General Provisions.
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(a) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement and those documents
expressly referred to herein (i) embody the complete agreement and understanding
between the parties, (ii) supersede and preempt any prior summaries of terms and
conditions, understandings, agreements or representations by or between the
parties, written or oral, which may have related to the subject matter hereof in
any way, and (iii) terminate and cancel any employment, severance, stock option,
bonus or other employee benefit, loan, tax or other indemnity agreement between
Employee and Employee's affiliates, on one hand, and the Company and its
affiliates, on the other hand.
(c) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(d) Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind Employee and the Company and their respective
successors and permitted assigns and inure to the benefit of and be enforceable
by Employee and the Company and their respective successors and permitted
assigns. This Agreement will not be assignable by Employee, but will be
assignable by the Company to its affiliates, and will inure to the benefit of
its successors and assigns.
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(e) Arbitration. If any dispute arises under this Agreement, then
the Company and Employee shall endeavor in good faith to resolve such dispute.
In the event that the Company and Employee are unable to resolve any such
dispute within thirty (30) days, the Company and Employee shall, within ten (10)
days thereafter, appoint an arbitrator ("Arbitrator") who is licensed by the
American Arbitration Association ("AAA") to arbitrate such dispute. In the event
the Company and Employee cannot agree on the selection of the Arbitrator, the
Company shall select one arbitrator and Employee shall select one arbitrator who
shall together select the Arbitrator who shall arbitrate the matter. The Company
and Employee shall, within twenty (20) days thereafter, present their positions
with respect to the dispute to the Arbitrator, together with such other
materials as the Arbitrator deems appropriate. The Arbitrator shall, after the
submission of the evidentiary materials, submit a written decision on each
dispute to the Company and Employee. Any determination by the Arbitrator with
respect to any dispute shall be final and binding on each party to this
Agreement. The Arbitrator shall comply and the arbitration shall be conducted in
the State of New York or any other jurisdiction as the parties may agree in
accordance with the commercial arbitration rules of the AAA as in effect for
commercial arbitrations conducted in the State of New York or such other
jurisdiction by the AAA. The Company and Employee agree that the costs of the
Arbitrator shall be borne equally by the Company and Employee. Resolution of
disputes under this Agreement by arbitration pursuant to this Section 7(e) shall
be the exclusive remedy of the parties hereunder (it being understood that the
Arbitrator shall have authority to enforce all provisions of this Agreement,
including the granting of injunctive or other relief).
(f) CHOICE OF LAW. THE PARTIES HERETO AGREE THAT THIS AGREEMENT
SHALL BE CONSTRUED AND THE OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD
TO ANY CONFLICT OF LAWS PROVISIONS THEREOF) AND APPLICABLE FEDERAL LAW.
(g) Remedies. Each of the parties to this Agreement will be
entitled to enforce its rights under this Agreement, specifically, to recover
damages and costs (including attorney's fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement, and, except
as otherwise provided in Section 7(e), that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended or modified only by
written agreement of the Company and Employee. No other course of dealing
between the parties or third-party beneficiaries hereof or any delay in
exercising any rights hereunder shall operate as a waiver of any rights of any
such holders.
(i) Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by any party
in connection herewith shall survive the execution and delivery of this
Agreement and the consummation of the transactions
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contemplated hereby, regardless of any investigation made by Employee or on
Employee's behalf or by the Company or on its behalf.
(j) Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday in the
State of New York, the time period shall be automatically extended to the
business day immediately following such Saturday, Sunday or holiday.
(k) Descriptive Headings, Interpretation. The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a
Section of this Agreement. The use of the word "including" in this Agreement
shall be by way of example rather than by limitation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
COINMACH CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: CEO
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
