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EXHIBIT 10.23
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between Xxxxx'x
River City Mechanical, Inc. (the "Company"), an Ohio corporation, American
Plumbing & Mechanical, Inc., a Delaware corporation ("AmPaM"), and Xxxxx X.
Xxxxx, Xx. ("Executive") is hereby entered into effective as of the date of the
closing date of the transactions contemplated in the Acquisition Agreement
between the Company, AmPaM and others dated February 11, 1999 (the "Effective
Date").
RECITALS
The following statements are true and correct:
As of the Effective Date, the Company, AmPaM and the other subsidiaries
of AmPaM (collectively, the "AmPaM Companies") are engaged primarily in the
providing of plumbing and mechanical contracting services.
Executive is employed hereunder by the Company in a confidential
relationship wherein Executive, in the course of his employment with the
Company, has and will continue to become familiar with and aware of information
as to the Company's and AmPaM's customers and specific manner of doing business,
including the processes, techniques and trade secrets utilized by the Company
and AmPaM, and future plans with respect thereto, all of which has been and will
be established and maintained at great expense to the Company and AmPaM. This
information is a trade secret and constitutes the valuable goodwill of the
Company and AmPaM.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
AGREEMENTS
1. Employment and Duties.
(a) The Company hereby employs Executive as President of the
Company. As such, Executive shall have the responsibilities, duties and
authority reasonably accorded to, expected of and consistent with
Executive's position as President of the Company. Executive hereby
accepts this employment upon the terms and conditions herein contained
and, subject to paragraph 1(c), agrees to devote substantially all of
his time, attention and efforts during normal business hours to promote
and further the business and interests of the Company and its
affiliates. Executive shall perform his duties under this Agreement
from the Company's principal place of business in Cincinnati, Ohio.
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(b) Executive shall faithfully adhere to, execute and fulfill
all reasonable and lawful policies established by the Company, to the
extent such policies have been communicated to Executive in writing and
are not inconsistent with any of the terms of this Agreement.
(c) Except as set forth on Schedule 1(c) hereto, Executive
shall not, during the term of his employment hereunder, engage in any
other business activity pursued for gain, profit or other pecuniary
advantage if such activity interferes in any material respect with
Executive's duties and responsibilities hereunder. The foregoing
limitations shall not be construed as prohibiting Executive from making
personal investments in such form or manner as will not require a
substantial portion of such Executive's time during normal business
hours in the operation or affairs of the companies or enterprises in
which such investments are made.
(d) Executive shall be entitled to vacation in accordance with
the policies of the Company.
2. Compensation. For all services rendered by Executive, the Company
shall compensate Executive as follows:
(a) Base Salary. The base salary payable to Executive during
the term shall be $150,000 per year, payable in accordance with the
Company's payroll procedures for officers, but not less frequently than
monthly. On an annual basis such base salary shall be reviewed by the
Board of Directors of AmPaM (the "AmPaM Board") and may be adjusted at
its discretion, in light of the Executive's position, responsibilities,
performance and such other reasonable, job related factors that the
AmPaM Board deems appropriate; provided, however, any adjusted Base
Salary may not be less than that amount in effect on the Effective
Date.
(b) Annual Bonus. AmPaM will consider adopting an incentive
bonus plan under which Executive and other key employees of the AmPaM
Companies will be eligible to receive annual bonus awards in amounts
that are competitive with those provided to similarly situated
executives, as determined by the AmPaM Board.
(c) Executive Perquisites, Benefits and Other Compensation.
Executive shall be entitled to receive additional benefits and
compensation from the Company in such form and to such extent as
specified below:
(i) Executive shall be reimbursed for all business
travel and other out-of-pocket expenses (including those costs
to maintain any professional certifications held or obtained
by Executive) reasonably incurred by Executive in the
performance of his duties pursuant to this Agreement and in
accordance with AmPaM's policy for
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its similarly situated executives. All such expenses shall be
appropriately documented in reasonable detail by Executive
upon submission of any request for reimbursement, and in a
format and manner consistent with AmPaM's expense reporting
policy.
(ii) Executive shall be entitled to participate in
all incentive compensation plans and to receive all fringe
benefits and prerequisites offered by the Company or AmPaM to
any of the Company's or the AmPaM Companies' similarly
situated executives, including, without limitation,
participation in the various employee benefit plans or
programs provided to the employees of the Company or the AmPaM
Companies in general, subject to the regular eligibility
requirements with respect to each such benefit plans or
programs.
(iii) The Company shall provide Executive with such
other perquisites as may be deemed appropriate for Executive
by the AmPaM Board during the term of this Agreement, all on a
basis as favorable to Executive as may be provided or offered
to other similarly situated executives of the AmPaM Companies.
3. Non-Competition Agreement.
(a) Executive acknowledges that as a consequence of his
employment with the Company, he will be furnished or have access to
Confidential Information (as defined below). Executive further
recognizes that the Company's willingness to enter into this Agreement
is based in material part on Executive's agreement to the provisions of
this paragraph 3 and that Executive's breach of the provisions of this
paragraph 3 could materially damage the Company. Subject to paragraph
4(d) and the further provisions of this Agreement, Executive will not,
during the term of his employment with the Company, and for a period of
two years immediately following the termination of such employment for
any reason, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, company, partnership, corporation or
business of whatever nature:
(i) engage, as an officer, director, shareholder,
owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or
advisor, or as a sales representative, in any plumbing,
piping, mechanical, heating, ventilation, or air conditioning
contracting, installation or services business or operation,
or any ancillary contracting, installation or services
business directly related thereto (such business and
operations referred to herein as the "Plumbing and Mechanical
Business") within 100 miles of where any AmPaM Company
conducts business, including any territory serviced by an
AmPaM Company during the term of Executive's employment (the
"Territory");
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(ii) call upon any person who is, at that time, an
employee of an AmPaM Company for the purpose or with the
intent of enticing such employee away from or out of the
employ of the AmPaM Company;
(iii) call upon any person or entity which is, at
that time, or which has been, within one year prior to that
time, a customer of an AmPaM Company within the Territory for
the purpose of soliciting customers, orders or contracts for
any Plumbing and Mechanical Business within the Territory;
(iv) call upon any prospective acquisition candidate,
on Executive's own behalf or on behalf of any competitor,
which candidate was, to Executive's knowledge after due
inquiry, either called upon by an AmPaM Company or for which
an AmPaM Company made an acquisition analysis, for the purpose
of acquiring such entity;
(v) disclose customers, whether in existence or
proposed, of the Company to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever
except to the extent that the Company has in the past
disclosed such information to the public for valid business
reasons; or
(vi) testify as an expert witness in matters related
to the Plumbing and Mechanical Business for an adverse party
to an AmPaM Company in litigation; provided, that nothing
contained in this paragraph 4(a)(vi) shall interfere with
Executive's duty to testify as a witness if required by law.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit Executive from acquiring as an investment (i) not
more than 1% of the capital stock of a company engaged in the Plumbing
and Mechanical Business whose stock is traded on a national securities
exchange, the Nasdaq Stock Market or on an over-the-counter or similar
market or (ii) not more than 5% of the capital stock of a competing
business whose stock is not publicly traded if the AmPaM Board consents
to such acquisition.
(b) Because of the difficulty of measuring economic losses to
the Company and AmPaM as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that
could be caused to the Company and AmPaM for which they would have no
other adequate remedy, Executive agrees that foregoing covenant may be
enforced by the Company, in the event of breach by him, by injunctions,
restraining orders and orders of specific performance issued by a court
of competent jurisdiction. Executive further agrees to waive any
requirement for the Company's securing or posting of any bond in
connection with such remedies.
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(c) It is agreed by the parties that the foregoing covenants
in this paragraph 3 impose a reasonable restraint on Executive in light
of the activities and business of the AmPaM Companies on the date of
the execution of this Agreement and the current plans of the AmPaM
Companies; but it is also the intent of the Company and Executive that,
subject to paragraph 3(g) hereof, such covenants be construed and
enforced in accordance with the changing activities, business and
locations of the AmPaM Companies throughout the term of this covenant,
whether before or after the date of termination of the employment of
Executive, unless the Executive was conducting such new business prior
to any AmPaM Company conducting such new business. For example, if,
during the term of this Agreement, an AmPaM Company engages in new and
different activities, enters a new business or establishes new
locations for its current activities or business in addition to or
other than the activities or business enumerated under the Recitals
above or the locations currently established therefor, then, subject to
paragraph 3(g) hereof, through the term of this covenant Executive will
be precluded from soliciting the customers or employees of such new
activities or business or from such new location and from directly
competing with such new business activities, or locations within 100
miles of where such new activities, business or locations are
conducted, unless Executive was conducting such new activities or
business prior to any AmPaM Company conducting such new activities or
business.
(d) It is further agreed by the parties hereto that, in the
event that Executive shall cease to be employed hereunder and shall
enter into a business or pursue other activities not in competition
with the Plumbing and Mechanical Business of any of the AmPaM Companies
or similar activities or business in locations the operation of which,
under such circumstances, does not violate clause (a)(i) of this
paragraph 3, and in any event such new business, activities or location
are not in violation of this paragraph 3 or of Executive's obligations
under this paragraph 3, if any, Executive shall not be chargeable with
a violation of this paragraph 3 if the AmPaM Companies shall, at any
time after the termination of Executive's employment, enter the same,
similar or a competitive (i) business, (ii) course of activities or
(iii) location, as applicable.
(e) The covenants in this paragraph 3 are severable and
separate, and the unenforceability of any specific covenant shall not
affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the
intention of the parties that such restrictions be enforced to the
fullest extent which the court deems reasonable, and the Agreement
shall thereby be reformed.
(f) All of the covenants in this paragraph 3 shall be
construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of
Executive against the Company or AmPaM, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the
enforcement by AmPaM or the Company of such covenants. It is
specifically agreed that the period of two years (subject to
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the further provisions of this Agreement) following termination of
employment stated at the beginning of this paragraph 3, during which
the agreements and covenants of Executive made in this paragraph 3
shall be effective, shall be computed by excluding from such
computation any time during which Executive is in violation of any
provision of this paragraph 3.
(g) The Company and the Executive hereby agree that this
covenant is a material and substantial part of this transaction.
4. Term; Termination; Rights on Termination. The term of this Agreement
shall begin on the Effective Date and continue for five years (the "Initial
Term") unless terminated sooner as herein provided; however, beginning on the
fifth anniversary of the Effective Date and on each anniversary thereafter the
term shall automatically continue for one year on the same terms and conditions
contained herein in effect as of the time of renewal (the "Extended Term")
unless not less than six months prior to any such anniversary either party shall
give written notice to the other party that the term shall not be so extended;
provided further, however, upon a Change in Control (as defined in paragraph
11(d)) during the Initial Term or any Extended Term the term of this Agreement
shall automatically continue following such Change in Control for a period equal
to the then remaining term or two years, whichever period is longer (such longer
period being an Extended Term), unless earlier terminated as provided in
paragraph 11. This Agreement and Executive's employment may be terminated in any
one of the followings ways:
(a) Death. The death of Executive shall immediately terminate
this Agreement with no severance compensation due to Executive's
estate; provided, however, for the 90 day period following Executive's
death, the Company, at its sole cost and expense, shall continue to
provide the Executive's then qualified beneficiaries with coverage
under the Company's group health plan in which Executive participated
immediately prior to his death or a successor plan thereto, subject to
the terms of such plan as it may be amended ("Company Health Plan").
Thereafter, the Company shall provide continuation of coverage
elections to such qualified beneficiaries as are required by law.
(b) Disability. If, Executive becomes entitled to and receives
benefits under an insured long term disability plan of an AmPaM Company
(incurs a "Disability"), the Company, with the approval of at least 51%
of the members of the AmPaM Board, may terminate this Agreement and
Executive's employment hereunder. In the event this Agreement is
terminated as a result of Executive's Disability, Executive shall have
no right to any severance compensation; provided, however, (i) for 12
months thereafter or until his death, if earlier, the Company shall
continue to pay Executive an amount equal to his monthly base salary at
the time of his termination, reduced by any monthly benefits payable to
Executive under such long term disability plan and (ii) the Company, at
its sole cost and expense, shall continue the coverage of Executive and
his qualified beneficiaries (for as long as they are qualified
beneficiaries thereunder) under the Company's Health Plan for as long
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as Executive continues to qualify for and receive benefits under such
long term disability plan, but not to exceed five years. Thereafter,
the Company shall provide COBRA elections to Executive and his
qualified beneficiaries as required by law.
(c) Cause. The Company may terminate this Agreement and
Executive's employment 30 days after written notice is provided by the
Company, at the direction of the AmPaM Board, to Executive for "Cause",
which shall be: (1) Executive's willful and material breach of this
Agreement (which remains uncured at the end of such 30 day period); (2)
Executive's gross negligence in the performance or intentional
nonperformance (in either case continuing for 30 days after receipt of
written notice by the Company, at the direction of the AmPaM Board, of
need to cure) of any of Executive's material duties and
responsibilities hereunder; (3) Executive's dishonesty or fraud with
respect to the business, reputation or affairs of an AmPaM Company
which materially and adversely affects an AmPaM Company (monetarily or
otherwise); or (4) Executive's conviction of a felony crime involving
moral turpitude. Any termination for Cause must be approved by at least
51% of the members of the AmPaM Board. For purposes hereof, no act, or
failure to act, on Executive's part shall be deemed "willful" unless
done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's action or omission was in the best
interest of the Company. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for Cause unless and until there
shall have been delivered to Executive a copy of a resolution duly
adopted by the AmPaM Board, finding that in the good faith opinion of
the AmPaM Board Executive was guilty of conduct set forth above and
specifying the particulars thereof in detail. In the event of a
termination for Cause, Executive shall have no right to any severance
compensation.
(d) Without Cause and For Good Reason. Executive may, without
Good Reason (as hereinafter defined), terminate this Agreement and
Executive's employment, effective 30 days after written notice is
provided to the Company. Executive may only be terminated without Cause
and other than due to Disability by the Company during either the
Initial Term or Extended Term if such termination is approved by at
least 51% of the members of the AmPaM Board. Should Executive be
terminated by the Company without Cause and other than due to
Disability or should Executive terminate with Good Reason during the
Initial Term, Executive shall receive from the Company, in a lump sum
payment due on the effective date of termination, an amount equivalent
to the base salary at the rate then in effect for (i) whatever time
period is remaining under the Initial Term (but in no event more than
two years) or (ii) for one year, whichever amount is greater. Should
Executive be terminated by the Company without Cause and other than due
to Disability or should the Executive terminate with Good Reason during
the Extended Term, Executive shall receive from the Company, in a lump
sum payment due on the effective date of termination, an amount
equivalent to the base salary at the rate then in effect for one year.
Further, any termination by the Company without Cause or due to
Disability or by Executive for Good Reason (whether during the Initial
Term or any Extended Term) shall operate to shorten the period
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set forth in paragraph 3(a) and during which the terms of paragraph 3
apply to one year from the date of termination of employment. If
Executive resigns or otherwise terminates his employment without Good
Reason, rather than the Company terminating his employment pursuant to
this paragraph 4(d), Executive shall receive no severance compensation.
Executive shall have "Good Reason" to terminate his employment
hereunder upon the occurrence of any of the following events, unless
such event is agreed to in writing by Executive: (a) Executive is
demoted by means of a material reduction in authority, title,
responsibilities or duties to a position of less stature or importance
within the Company than the position described in Section 1 hereof; (b)
Executive's annual base salary as then in effect is reduced in
accordance with paragraph 2(a) or otherwise; or (c) the relocation of
the Company's principal executive offices to a location outside the
greater Cincinnati, Ohio area or the Company's requiring Executive to
relocate anywhere other than the Company's principal executive offices;
(c) the assignment to Executive of any duties or responsibilities which
are materially inconsistent with Executive's title, position or
responsibilities as in effect immediately prior to such assignment; or
(d) the failure by the Company to continue in effect any employee
benefit plan in which Executive participates and/or any prerequisite
provided Executive, which is (are) material to Executive's total
compensation and benefits, unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has been made with respect
to such plan or perquisite; provided, however, Good Reason shall exist
with respect to a matter only if such matter is not corrected within 30
days of receipt by the Company of written notice of such matter from
Executive.
If termination of Executive's employment arises out of the Company's
failure to pay Executive on a timely basis the amounts to which he is entitled
under this Agreement or as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 18 below, the Company shall pay all amounts and damages
to which Executive may be entitled as a result of such breach, including
interest thereon and all reasonable legal fees and expenses and other costs
incurred by Executive to enforce his rights hereunder. Further, none of the
provisions of paragraph 3 shall apply in the event this Agreement is terminated
as a result of a breach by the Company.
Upon termination of this Agreement for any reason provided above, in
addition to the above payments, if any, Executive shall be entitled to receive
all compensation earned and all benefits and reimbursements due through the
effective date of termination, paid to Executive in a lump sum on the effective
date of termination. In addition, a termination of this Agreement shall not
alter or impair any of Executive's vested rights or benefits, if any, under any
(i) employee benefit plan of the AmPaM Companies or (ii) deferred compensation
plan, including, without limitation, any stock option plan, of the AmPaM
Companies. All other rights and obligations of the Company and Executive under
this Agreement shall cease as of the effective date of termination, except that
Executive's obligations under paragraphs 3, 5, 6, 7, and 8 herein and the
Company's obligations under paragraphs 4 (with respect to severance payments, if
applicable), 11(g) and 14 shall survive
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such termination in accordance with their terms, unless or except as expressly
provided otherwise in this Agreement.
5. Return of Company Property. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Executive by or on behalf of the Company, AmPaM or
any AmPaM Companies or their representatives, vendors or customers which pertain
to the business of the Company or AmPaM or any AmPaM Companies shall be and
remain the property of the Company or AmPaM or the AmPaM Company, as the case
may be, and be subject at all times to their discretion and control. Likewise,
all correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of the
Company or AmPaM or the AmPaM Company which is collected by Executive shall be
delivered promptly to the Company without request by it upon termination of
Executive's employment and Executive shall not retain any copies of the same.
6. Inventions. Executive shall disclose promptly to the Company any and
all significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by
Executive, solely or jointly with another, during the period of employment or
within one year thereafter, if conceived during employment, and which are
directly related to the business or activities of the Company and which
Executive conceives as a result of his employment by the Company, including any
predecessor (collectively, the "Intellectual Property"). Executive hereby
assigns and agrees to assign all his interests therein to the Company or its
nominee. Whenever requested to do so by the Company, Executive shall execute any
and all applications, assignments or other instruments that the Company shall
deem necessary to apply for and obtain Letters Patent of the United States or
any foreign country or to otherwise protect the Company's interest therein.
Executive must also render to the Company, at the Company's expense, assistance
in the perfection, enforcement and defense of any Intellectual Property.
7. Trade Secrets. Executive agrees that he will not, during or after
the term of this Agreement, disclose the specific terms of the Company's or
AmPaM's relationships or agreements with their respective significant vendors or
customers or any other significant and material trade secret of the Company or
AmPaM, whether in existence or proposed, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever, except as required
by law and prior to any such disclosure Executive shall give the Company prior
written notice thereof and the opportunity to contest such disclosure.
8. Confidentiality.
(a) Executive acknowledges and agrees that all Confidential
Information (as defined below) of the Company is confidential and a
valuable, special and unique asset of the Company that gives the
Company an advantage over its actual and potential, current and future
competitors. Executive further acknowledges and agrees that Executive
owes the Company a fiduciary duty to preserve and protect all
Confidential Information from
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unauthorized disclosure or unauthorized use, that certain Confidential
Information constitutes "trade secrets" under applicable laws and, that
unauthorized disclosure or unauthorized use of the Confidential
Information would irreparably injure the Company.
(b) Both during the term of Executive's employment and after
the termination of Executive's employment for any reason (including
wrongful termination), Executive shall hold all Confidential
Information in strict confidence, and shall not use any Confidential
Information except for the benefit of the Company, in accordance with
the duties assigned to Executive. Executive shall not, at any time
(either during or after the term of Executive's employment), disclose
any Confidential Information to any person or entity (except other
employees of the Company who have a need to know the information in
connection with the performance of their employment duties, and who
have been informed of the confidential nature of the confidential
information and have agreed to keep it confidential), or copy,
reproduce, modify, transmit, including electronic transmission,
decompile or reverse engineer any Confidential Information, or remove
any Confidential Information from the Company's premises, without the
prior written consent of the AmPaM Board, or permit any other person to
do so. Executive shall take reasonable precautions to protect the
physical security of all documents and other material containing
Confidential Information (regardless of the medium on which the
Confidential Information is stored). This Agreement applies to all
Confidential Information, whether now known or later to become known to
Executive.
(c) Upon the termination of Executive's employment with the
Company for any reason, and upon written request of the Company at any
other time, Executive shall promptly surrender and deliver to the
Company all documents and other written material of any nature
containing or pertaining to any Confidential Information and shall not
retain any such document or other material. Within five days of any
such written request, Executive shall certify to the Company in writing
that all such materials have been returned.
(d) As used in this Agreement, the term "Confidential
Information" shall mean any information or material known to or used by
or for an AmPaM Company (whether or not owned or developed by an AmPaM
Company and whether or not developed by Executive) that is not
generally known to persons in the Plumbing and Mechanical Business.
Confidential Information includes, but is not limited to, the
following: all trade secrets of the AmPaM Companies; all information
that an AmPaM Company has marked as confidential or has otherwise
described to Executive (either in writing or orally) as confidential;
all nonpublic information concerning the Company's products, services,
prospective products or services, research, product designs, prices,
discounts, costs, marketing plans, marketing techniques, market
studies, test data, customers, customer lists and records, suppliers
and contracts; all AmPaM Company business records and plans; all AmPaM
Company personnel files; all financial information of or concerning the
AmPaM Companies; all information relating to operating system software,
application software, software and system methodology, hardware
platforms, technical information, inventions, computer programs and
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listings, source codes, object codes, copyrights and other intellectual
property; all technical specifications; any proprietary information
belonging to an AmPaM Company; all computer hardware or software
manuals; all training or instruction manuals; and all data and all
computer system passwords and user codes. For purposes hereof,
Confidential Information shall not include such information (i) which
becomes or is already known to the public through no fault of
Executive; or (ii) the disclosure of which (x) is required by law
(including regulations and rulings) or the order of any competent
governmental authority or (y) Executive reasonably believes is required
in connection with the defense of a lawsuit against Executive, provided
that in either case, prior to disclosing any information, Executive
shall give prior written notice thereof to the Company and provide the
Company with the opportunity to contest such disclosure.
9. No Prior Agreements. Executive hereby represents and warrants to the
Company that the execution of this Agreement by Executive and his employment by
the Company and the performance of his duties hereunder will not violate or be a
breach of any agreement, including any non-competition agreement, invention or
secrecy agreement, with a former employer, client or any other person or entity.
Further, Executive agrees to indemnify the Company for any loss or expense,
including, but not limited to, reasonable attorneys' fees and expenses, the
Company may incur based upon or arising out of Executive's breach of this
paragraph 9.
10. Assignment; Binding Effect. Executive understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, that he
cannot assign all or any portion of his performance under this Agreement.
Subject to the preceding two sentences and the express provisions of paragraph
12 below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns. The Company and AmPaM will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and assets of the Company
or AmPaM to expressly assume and agree in writing reasonably satisfactory to
Executive to perform this Agreement in the same manner and to the same extent
that the Company or AmPaM would be required to perform it if no such succession
had taken place. Failure of the Company or AmPaM to obtain such written
agreement prior to the effectiveness of any such secession shall be a material
breach of this Agreement.
11. Change in Control.
(a) Executive understands and acknowledges that the Company
may be merged or consolidated with or into another entity and that such
entity shall automatically succeed to the rights and obligations of the
Company hereunder or that the Company may undergo a Change in Control
(as defined below). In the event a Change in Control is initiated or
occurs during the Initial Term or any Extended Term, then the
provisions of this paragraph 11 shall be applicable.
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(b) In the event of a Change in Control wherein AmPaM and
Executive have not received written notice at least ten business days
prior to the date of the event giving rise to the Change in Control
from the successor to all or a substantial portion of the AmPaM's
business and/or assets that such successor is willing as of the closing
to assume and agrees to perform, or continue to cause the Company to
perform, the Company's obligations under this Agreement in the same
manner and to the same extent that the Company is hereby required to
perform, then Executive may, at Executive's sole discretion, elect to
terminate Executive's employment on the effective date of such Change
in Control by providing written notice to the AmPaM Board at least five
business days prior to the closing of the transaction giving rise to
the Change in Control. In such case, the applicable provisions of
paragraph 4(d) will apply as though the Company had terminated
Executive without Cause; however, the amount of the lump sum severance
payment due Executive shall be triple the amount calculated under the
terms of paragraph 4(d), but shall in no event exceed six times
Executive's annual base salary.
(c) In any Change in Control situation, Executive may, at
Executive's sole discretion, elect to terminate Executive's employment
upon the effective date of such Change in Control by providing written
notice to the AmPaM Board at least five business days prior to the
closing of the transaction giving rise to the Change in Control. In
such case, the applicable provisions of paragraph 4(d) will apply as
though the Company had terminated Executive without Cause; however, the
amount of the lump sum severance payment due Executive shall be double
the amount calculated under the terms of paragraph 4(d), but shall in
no event exceed four times Executive's annual base salary.
(d) If, on or within two years following the effective date of
a Change in Control the Company terminates Executive's employment other
than for Cause or Disability or if Executive terminates his employment
for Good Reason, or if Executive's employment with the Company is
terminated by the Company within three months before the effective date
of a Change in Control and it is reasonably demonstrated that such
termination (i) was at the request of a third party that has taken
steps reasonably calculated to effect a Change in Control, or (ii)
otherwise arose in connection with or anticipation of a Change in
Control, then Executive shall receive from Company, in a lump sum
payment due on the effective date of termination, the greater of (i)
the equivalent of three years' annual base salary at the rate in effect
on the date of Executive's termination, or (ii) the base salary for
whatever period is then remaining on the Initial Term, if any, which
payment shall be in lieu of any amounts otherwise payable pursuant to
paragraph 4(d).
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, entity or group (as such terms are
used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Act"), other than the AmPaM
Companies or an employee benefit plan of the AmPaM Companies,
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acquires, directly or indirectly, the beneficial ownership (as
defined in Section 13(d) of the Act) of any voting security of
AmPaM and immediately after such acquisition such person is,
directly or indirectly, the beneficial owner of voting
securities representing 20% or more of the total voting power
of all of the then outstanding voting securities of AmPaM
entitled to vote generally in the election of directors;
(ii) upon the first purchase of AmPaM's common stock
pursuant to a tender or exchange offer (other than a tender or
exchange offer made by AmPaM);
(iii) the stockholders of AmPaM shall approve a
merger, consolidation, recapitalization or reorganization of
AmPaM, or a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not obtained, other than any such
transaction which would result in at least 75% of the total
voting power represented by the voting securities of the
surviving entity outstanding immediately after such
transaction being beneficially owned by the holders of all of
the outstanding voting securities of AmPaM immediately prior
to the transactions with the voting power of each such
continuing holder relative to other such continuing holders
not substantially altered in the transaction;
(iv) the stockholders of AmPaM shall approve a plan
of complete liquidation or dissolution of AmPaM or an
agreement for the sale or disposition by AmPaM of all or
substantially all of AmPaM's assets; or
(v) if, at any time during any period of two
consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute
at least a majority thereof, unless the election or nomination
for the election by the Company's stockholders of each new
director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of the period.
(f) Notwithstanding anything in this Agreement to the
contrary, a termination pursuant to paragraph 11(b), (c), or (d) shall
operate to automatically waive in full the noncompetition restrictions
imposed on Executive pursuant to paragraph 3.
(g) If it shall be finally determined that any payment made or
benefit provided to Executive in connection with a Change in Control of
the Company or AmPaM, whether or not made or provided pursuant to this
Agreement, is subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, or any successor thereto,
the Company shall pay Executive an amount of cash (the "Additional
Amount") such that the net amount received by Executive after paying
all applicable taxes on such Additional Amount shall be equal to the
amount that Executive would have received if Section 4999 were not
applicable.
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12. No Mitigation or Offset. Executive shall not be required to
mitigate the amount of any Company payment provided for in this Agreement by
seeking other employment or otherwise. The amount of any payment required to be
paid to Executive by the Company pursuant to this Agreement shall not be reduced
by any amounts that are owed to the Company by Executive, or by any setoff,
counterclaim, recoupment, defense or other claim, right or action.
13. Release. Notwithstanding anything in this Agreement to the
contrary, Executive shall not be entitled to receive any severance payments
pursuant to paragraphs 4 or 11 of this Agreement unless Executive has executed
(and not revoked) a general release of all claims Executive may have against the
Company and its affiliates relating to Executive's employment hereunder in a
form of such release reasonably acceptable to the Company.
14. Indemnification. In the event Executive is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
against Executive), by reason of the fact that he is or was performing services
under this Agreement or as an executive officer of the Company prior to the date
of this Agreement, then the Company shall indemnify Executive against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Executive in connection
therewith. In the event that both Executive and the Company are made a party to
the same third-party action, complaint, suit or proceeding, the Company agrees
to engage competent legal representation, and Executive agrees to use the same
representation, provided that if counsel selected by the Company shall have a
conflict of interest that prevents such counsel from representing Executive,
Executive may engage separate counsel and the Company shall pay all reasonable
attorneys' fees and reasonable expenses of such separate counsel. Further, while
Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held liable to
the Company for errors or omissions made in good faith where Executive has not
exhibited gross, willful and wanton negligence and misconduct nor performed
criminal and fraudulent acts which materially damage the business of the
Company. The Company shall indemnify Executive against and hold Executive
harmless from any costs, liabilities, losses and exposures for Executive's
services as an employee, officer and director of the Company (or any successor)
to the maximum extent permitted under applicable law.
15. Complete Agreement. This Agreement supersedes, and replaces in
full, all representations, understandings and agreements (oral or written)
between Executive and the Company or any AmPaM Company, AmPaM or any of their
officers, directors or representatives existing as of the Effective Date and
covering the same subject matter as this Agreement, but excluding the
Acquisition Agreement among AmPaM, the Company, the Executive and other
stockholders of the Company, dated February 11, 1999, which shall not be
affected by this Agreement. This written Agreement is the final, complete and
exclusive statement and expression of the agreement between the Company, AmPaM
and Executive and of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreements. This written Agreement may not be modified after the
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Effective Date except by a further writing signed by a duly authorized officer
of the Company and Executive, and no term of this Agreement may be waived except
by writing signed by the party waiving the benefit of such term. Without
limiting the generality of the foregoing, either party's failure to insist on
strict compliance with this Agreement shall not be deemed a waiver thereof.
16. Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: c/o American Plumbing & Mechanical, Inc.
0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
To Executive: 0000 Xxxxxxxxxx Xx.
Xxxxxxxxxx, Xxxx 00000
Notice shall be deemed given and effective on the earlier of three days after
the deposit in the U.S. mail of a writing addressed as above and sent first
class mail, certified, return receipt requested, or when actually received.
Either party may change the address for notice by notifying the other party of
such change in accordance with this paragraph 16.
17. Severability; Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
18. Dispute Resolutions. Except with respect to injunctive relief as
provided in paragraph 3(b), neither party shall institute a proceeding in any
court or administrative agency to resolve a dispute between the parties before
that party has sought to resolve the dispute through direct negotiation with the
other party. If the dispute is not resolved within two weeks after a demand for
direct negotiation, the parties shall attempt to resolve the dispute through
mediation. If the parties do not promptly agree on a mediator, the parties shall
request the Association of Attorney Mediators in Xxxxxx County, Texas to appoint
a mediator certified by the Supreme Court of Texas. If the mediator is unable to
facilitate a settlement of the dispute within a reasonable period of time, as
determined by the mediator, the mediator shall issue a written statement to the
parties to that effect and any unresolved dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators in Cincinnati, Ohio,
in accordance with the rules of the American Arbitration Association then in
effect. The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs and expenses, including those incurred to
enforce this Agreement, including reasonable attorneys' fees and interest
thereon
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in the event the arbitrators determine that Executive was terminated without
Disability or Cause, as defined in paragraphs 4(b) and 4(c), respectively, or
that the Company has otherwise materially breached this Agreement. A decision by
a majority of the arbitration panel shall be final and binding. Judgment may be
entered on the arbitrators' award in any court having jurisdiction. The costs
and expenses, including reasonable attorneys' fees, of the prevailing party in
any dispute arising under this Agreement will be promptly paid by the other
party.
19. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Texas without regard to its conflicts of
law provisions.
20. AmPaM Guaranty. AmPaM hereby irrevocably and unconditionally
guarantees to Executive the payment of all amounts and the performance of all
other obligations of the Company in accordance with the terms of this Agreement.
21. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective for all purposes as of the Effective Date.
XXXXX'X RIVER CITY MECHANICAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
--------------------------------
Title: Vice President
-------------------------------
EXECUTIVE
By: /s/ Xxxxx X. Xxxxx, Xx.
----------------------------------
Xxxxx X. Xxxxx, Xx.
AMERICAN PLUMBING & MECHANICAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
--------------------------------
Title: Chief Financial Officer
-------------------------------
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