EXHIBIT 10.17 TO 10-K
EXECUTION COUNTERPART
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") between Xxxxxxxxx & Son, Inc.,
an Indiana corporation (the "Company") and a wholly-owned subsidiary of Comfort
Systems USA, Inc., a Delaware corporation ("Comfort"), and Xxxx Xxxxxxxxx
("Executive") is entered into and effective as of the 15th day of November,
1998. This Agreement supersedes any other employment agreements or
understandings, written or oral, between the Company and Executive.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company, Comfort and the other
subsidiaries and affiliates of each (collectively, the "Comfort Group") are
engaged primarily in the business of mechanical contracting services, including
heating, ventilation and air conditioning, plumbing, piping and electrical and
related services ("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 Comfort Group's customers, specific manner of doing business,
including the processes, techniques and trade secrets utilized by the Comfort
Group, and future plans with respect thereto, all of which has been and will be
established and maintained at great expense to the Company and Comfort. This
information is a trade secret and constitutes the valuable goodwill of the
Company and Comfort.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, the Company and
Executive hereby agree as follows:
A G R E E M E N T S
1. EMPLOYMENT AND DUTIES.
(1) The Company hereby employs Executive as its Chief Executive
Officer and Executive hereby accepts this employment upon the terms and
conditions herein contained. Executive agrees to devote substantially all
of his business time, attention and efforts to promote and further the
business of the Company.
(2) Executive shall faithfully adhere to, execute and fulfill all
lawful policies established by the Company and Comfort, including
Comfort's Corporate Compliance Policy.
(3) Executive shall not, during the term of Executive's employment
hereunder, be engaged 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;
PROVIDED, HOWEVER, that Executive may engage in the activities listed on
Exhibit A hereto so long as Executive does not devote more time to such
activities than Executive has historically devoted to such activities. The
foregoing limitations shall not be construed as prohibiting Executive from
making personal investments in such form or manner as will neither require
Executive's services in the operation or affairs of the companies or
enterprises in which such investments are made nor violate the terms of
Section 4.
2. COMPENSATION. For all services rendered by Executive, the Company shall
compensate Executive as follows:
(1) BASE SALARY. Effective the date hereof, the base salary payable
to Executive shall be $300,000 per year, payable on a regular basis in
accordance with the Company's standard payroll procedures, but not less
often than monthly. On at least an annual basis, the Company will review
Executive's performance and may make increases to such base salary if, in
its discretion, any such increase is warranted.
(2) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION.
Executive shall be entitled to receive additional benefits and
compensation from the Company in such form and to the extent specified
below:
(1) Coverage, subject to contributions required of employees
generally, for Executive and Executive's dependent family members
under health, hospitalization, disability, dental, life and other
insurance plans that the Company may have in effect from time to
time for the benefit of its employees.
(2) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Executive in the
performance of Executive's services pursuant to this Agreement.
Reimbursable expenses shall be appropriately documented in
reasonable detail by Executive, and shall be in a format consistent
with the Company's expense reporting policy.
(3) In addition to the benefits described in Section 2(b)(i),
Executive shall be entitled to continue to participate in such other
benefit programs, including, but not limited to, auto allowance and
401(k) plan, as shall be granted from time to time by the Company to
its key employees in a manner consistent with its past practice.
(4) Executive may, in his discretion, take up to eight weeks
of vacation time during any calendar year; PROVIDED, HOWEVER, that
in no event shall Executive take more than three consecutive weeks
of vacation time; and PROVIDED, FURTHER, that in no event shall
Executive's vacation time accrue from year to year.
3. CONFIDENTIALITY.
(1) CONFIDENTIAL INFORMATION. As used herein, the term "Confidential
Information" means any information, technical data or know-how of the
Company and the other members of the Comfort Group, including, but not
limited to, that which relates to customers, business affairs, business
plans, financial matters, financial plans and projections, pending and
proposed acquisitions, operational and hiring matters, contracts and
agreements, marketing, sales and pricing, prospects of the Comfort Group,
and any information, technical data or know-how that contain or reflect
any of the foregoing, whether prepared by the Company, any other member of
the Comfort Group, Executive or any other person or entity; PROVIDED,
HOWEVER, that the term "Confidential Information" shall not include
information, technical data or know-how which is generally available to
the public not as a result of any breach of this Agreement by Executive.
(2) NO DISCLOSURE. Except in the performance of Executive's duties
as an executive of the Company, Executive will not, during or after the
Executive's engagement with the Company, disclose to any person or entity
or use, for any reason whatsoever, any Confidential Information, unless
such disclosure is required by law or the order of any governmental
authority under color of law; PROVIDED, HOWEVER, that prior to disclosing
any information pursuant to this Section 3(b), Executive shall, if
possible, give prior written notice of the disclosure of such information
to the Company and shall provide the Company with the opportunity to
contest such disclosure.
4. NON-COMPETITION AGREEMENT.
(1) COMPETITION. Executive will not, during the period of
Executive's employment by or with the Company, and for a period of two
years immediately following the termination of Executive's employment, for
any reason whatsoever, directly or indirectly, on behalf of Executive or
on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(1) except for the activities listed on Exhibit A hereto,
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, or make or guarantee loans or invest, in or for any
business engaged in Services in competition with the Company or any
other member of the Comfort Group anywhere within the United States
or Canada (the "Territory");
(2) call upon any person who is, at that time, within the
Territory, an employee of the Company or any other member of the
Comfort Group in a technical, managerial or sales capacity for the
purpose or with the intent of enticing such employee away from or
out of the employ of the Company or such other member of the Comfort
Group;
(3) call upon any person or entity which is at that time, or
which has been within two years prior to that time, a customer of
the Company or any other member of the Comfort Group for the purpose
of soliciting or selling Services; or
(4) call upon any prospective acquisition candidate, on
Executive's own behalf or on behalf of any competitor, which
acquisition candidate either was called upon by Executive on behalf
of the Company or any other member of the Comfort Group or was the
subject of an acquisition analysis made by Executive on behalf of
the Company or any other member of the Comfort Group for the purpose
of acquiring such acquisition candidate.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Executive from acquiring as an investment not more than 1% of any
class of securities of a competing business whose securities are traded on
a national securities exchange or on an over-the-counter or similar
market.
(2) NO VIOLATION. It is specifically agreed that the period during
which the agreements and covenants of Executive made in this Section 4
shall be effective shall be computed by excluding from such computation
any time during which Executive is in violation of any provision of this
Section 4.
5. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this Agreement
shall begin on the date hereof and continue for five years (the "Term"), unless
terminated sooner as herein provided. This Agreement and Executive's employment
may be terminated in any one of the following ways:
(1) DEATH. The death of Executive shall immediately terminate this
Agreement with no severance compensation due to Executive's estate.
(2) DISABILITY. If, as a result of incapacity due to physical or
mental illness or injury, Executive shall have been absent from
Executive's full-time duties hereunder for four consecutive months, then
30 days after receiving written notice (which notice may occur before or
after the end of such four-month period, but which shall not be effective
earlier than the last day of such four-month period), the Company may
terminate Executive's employment hereunder, provided Executive is unable
to resume his full-time duties at the conclusion of such notice period. In
the event this Agreement is terminated as a result of Executive's
disability, Executive shall receive from the Company Executive's base
salary at the rate then in effect for the lesser of the time period
remaining under the Term or one year, and such amount shall be payable
during such period in a manner consistent with Company's standard pay
practices. The amount payable hereunder shall be decreased by the amount
of benefits otherwise actually paid by the Company to Executive or on
Executive's behalf or under any insurance procured by the Company.
(3) CAUSE. The Company may terminate this Agreement 10 days after
written notice to Executive for cause, which shall be any of the
following: (i) Executive's willful or material breach of this Agreement,
which breach is not cured within 10 days after written notice by the
Company to Executive; (ii) Executive's gross negligence in the performance
of any of Executive's material duties and responsibilities hereunder,
which gross negligence is not cured within 10 days after written notice by
the Company to Executive; (iii) Executive's intentional nonperformance of
any of Executive's material duties and responsibilities hereunder, which
nonperformance is not cured within 10 days after written notice by the
Company to Executive; (iv) Executive's willful dishonesty, fraud or
misconduct with respect to the business or affairs of the Company or any
other member of the Comfort Group; (v) Executive's conviction of a felony
crime; (vi) Executive's confirmed positive illegal drug test result; (vii)
sexual harassment by Executive; or (viii) willful or material failure by
Executive to comply with Comfort's Corporate Compliance Policy. In the
event of a termination for cause, as enumerated above, Executive shall
have no right to any severance compensation.
(4) WITHOUT CAUSE. At any time after the commencement of Executive's
employment, Executive or the Company may, without cause, terminate this
Agreement and Executive's employment, effective 30 days after receipt of
written notice. Should Executive be terminated by the Company without
cause during the first three years of the Term (the "Initial Term"),
Executive shall receive from the Company Executive's base salary at the
rate then in effect for the greater of the time period remaining under the
Initial Term or for one year, and such amount shall be payable in a
lump-sum payment due on the effective date of termination. Should
Executive be terminated by the Company without cause during the final two
years of the Term, Executive shall receive from the Company Executive's
base salary at the rate then in effect for one year, and such amount shall
be payable during such period in a manner consistent with the Company's
standard pay practices. If Executive resigns or otherwise terminates
Executive's employment, Executive shall receive no severance compensation.
6. RETURN OF COMPANY PROPERTY. All records, plans, manuals, "field
guides", memoranda, lists, documents, statements and other property delivered to
Executive by or on behalf of the Company or any other member of the Comfort
Group, by any customer of the Company or any other member of the Comfort Group
(including, but not limited to, any such customers obtained by Executive), by
any acquisition candidate of the Company or any other member of the Comfort
Group, and all records compiled by Executive which pertain to the business or
activities of the Company or any other member of the Comfort Group shall be and
remain the property of the Company and shall be subject at all times to its
discretion and control. Likewise, all correspondence with customers,
representatives or acquisition candidates, reports, records, charts, advertising
materials, and any data collected by Executive or by or on behalf of the Company
or any other member of the Comfort Group or any representative of any of them
shall be delivered promptly to the Company without request by it upon
termination of Executive's employment with the Company.
7. 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 Executive's
employment with the Company or within one year thereafter, and which are
directly related to the business or activities of the Company or which Executive
conceives as a result of his employment by the Company. Executive hereby assigns
and agrees to assign all Executive's 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.
8. TRADE SECRETS. Executive agrees that Executive will not, during or
after the Term, disclose the specific terms of the Company's or any other member
of the Comfort Group's relationships or agreements with significant vendors or
customers or any other significant and material trade secret of the Company or
any other member of the Comfort Group, whether in existence or proposed, to any
person, firm, partnership, corporation or business for any reason or purpose
whatsoever.
9. NO PRIOR AGREEMENTS. Executive hereby represents and warrants to the
Company that the execution of this Agreement by Executive and Executive's
employment by the Company and the performance of Executive's duties hereunder
will not violate or be a breach of any agreement with a former employer, client
or any other person or entity. Further, Executive agrees to indemnify the
Company for any claim, including, but not limited to, attorneys' fees and
expenses of investigation, by any such third party that such third party may now
have or may hereafter come to have against the Company based upon or arising out
of any non-competition agreement, invention or secrecy agreement between
Executive and such third party which was in existence as of the date of this
Agreement.
10. ASSIGNMENT; BINDING EFFECT. Executive understands that Executive has
been selected for employment by the Company on the basis of Executive's personal
qualifications, experience and skills. Executive agrees, therefore, that
Executive cannot assign all or any portion of Executive's performance under this
Agreement. Executive, Executive's spouse and the estate of each shall not have
any right to encumber or dispose of any right to receive payments hereunder, it
being understood that such payments and the right thereto are nonassignable and
nontransferable; PROVIDED, HOWEVER, that in the event of the death of Executive,
any payments that Executive is entitled to receive may be assigned to the
beneficiaries of Executive's estate. Subject to the preceding three sentences
and the express provisions of Section 11, 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.
11. COMPLETE AGREEMENT. Executive has no oral representations,
understandings or agreements with the Company or any of its officers, directors
or representatives covering the same subject matter as this Agreement. This
Agreement is the final, complete and exclusive statement and expression of the
agreement between the Company 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.
12. AMENDMENT; WAIVER. This Agreement may not be modified except in a
writing signed by the parties, and no term of this Agreement may be waived
except by a writing signed by the party waiving the benefit of such term.
13. NOTICE. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: Xxxxxxxxx & Son, Inc.
0000 Xxxxxxxxxxx Xxxxx
Xx. Xxxxx, XX 00000
Attention: President
with a copy to: Comfort Systems USA, Inc.
000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: General Counsel
To Executive: Xxxx Xxxxxxxxx
0000 Xxxx Xxxxx Xxxxxxx Xxxx
Xx. Xxxxx, XX 00000
Notice shall be deemed given and effective on the earlier of five 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 Section 13.
14. SEVERABILITY; ENFORCEABILITY. 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.
Moreover, in the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in any covenant contained
herein 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 this Agreement shall thereby be reformed. Each of the covenants contained in
this Agreement 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, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
such covenants.
15. SURVIVAL. The provisions of Sections 3, 4, 6, 7 and 8 shall survive
the termination of this Agreement.
16. SPECIFIC PERFORMANCE. Because of the difficulty of measuring economic
losses to the Company as a result of a breach of the covenants contained in
Sections 3, 4, 6, 7 and 8 and because of the immediate and irreparable damage
that could be caused to the Company for which it would have no other adequate
remedy, Executive agrees that the Company shall be entitled to specific
performance and that such covenants may be enforced by the Company in the event
of any breach or threatened breach by Executive, by injunctions, restraining
orders and other appropriate equitable relief. Executive further agrees to waive
any requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief.
17. ARBITRATION. With the exception of Sections 4 and 8, any unresolved
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration, conducted by a single arbitrator in the
State of Indiana, in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association ("AAA") then in
effect, provided that the parties may agree to use an arbitrator other than
those provided by the AAA. The arbitrator shall not have the authority to add
to, detract from, or modify any provision hereof nor to award punitive damages
to any injured party. The arbitrator shall have the authority to order back-pay,
severance compensation, reimbursement of costs, including those incurred to
enforce this Agreement, and interest thereon. A decision by a the arbitrator
shall be final and binding. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. Responsibility for bearing the cost of the
arbitration shall be determined by the arbitrator and shall be proportional to
the arbitrator's decision on the merits.
18. ATTORNEYS' FEES. If any litigation is instituted to enforce or
interpret the provisions of this Agreement or the transactions described herein,
the prevailing party in such action shall be entitled to recover such party's
reasonable attorneys' fees and other costs from the other party hereto.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Indiana.
20. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
XXXXXXXXX & SON, INC.
By: /s/
Xxxxxxx Xxxxxx, Vice President
EXECUTIVE:
/s/
Xxxx Xxxxxxxxx
