EXHIBIT 10.12
Xxxxxx X. XxXxxx
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is entered into as of
November 1, 1996 (the "Effective Date") by and between AMERICAN RESIDENTIAL
SERVICES, INC., a Delaware corporation (the "Company"), and XXXXXX X. XXXXXX
(the "Employee").
RECITALS
In entering into this Agreement, the Company desires to provide the
Employee with substantial incentives to serve the Company as a senior executive
performing at the highest levels of leadership and stewardship, without
distraction or concern over minimum compensation, benefits or tenure, to develop
and implement the Company's initial development plan and thereafter managing the
Company's future growth and development and maximizing the returns to the
Company's stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
provisions contained herein, and for other good and valuable consideration, the
parties hereto agree with each other as follows:
1. CERTAIN DEFINITIONS
A. CERTAIN DEFINITIONS. As used herein, the following terms have the
meanings assigned to them below:
"ACQUIRING PERSON" means any Person who or which, together with all
Affiliates and Associates of such Person, is or are the Beneficial Owner
of twenty-five percent (25%) or more of the shares of Common Stock then
outstanding, but does not include any Exempt Person; provided, however,
that a Person shall not be or become an Acquiring Person if such Person,
together with its Affiliates and Associates, shall become the Beneficial
Owner of twenty-five percent (25%) or more of the shares of Common Stock
then outstanding solely as a result of a reduction in the number of shares
of Common Stock outstanding due to the repurchase of Common Stock by the
Company, unless and until such time as such Person or any Affiliate or
Associate of such Person shall purchase or otherwise become the Beneficial
Owner of additional shares of Common Stock constituting one percent (1%)
or more of the then outstanding shares of Common Stock or any other Person
(or Persons) who is (or collectively are) the Beneficial Owner of shares
of Common Stock constituting one percent (1%) or more of the then
outstanding shares of Common Stock shall become an Affiliate or Associate
of such Person, unless, in either such case, such Person, together with
all Affiliates and Associates of such Person, is not then the Beneficial
Owner of twenty-five percent (25%) or more of the shares of Common Stock
then outstanding.
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"ACTIVE STATUS" means the Employee's Employment status from the
Effective Date to and including the first to occur of (a) the Part-time
Employment Effective Date or (b) the Termination Date.
"AFFILIATE" has the meaning ascribed to that term in Exchange Act
Rule 12b-2.
"ANNUAL CASH COMPENSATION" of the Employee for any Compensation Year
means the sum of the salary and bonus earned by the Employee during that
Compensation Year, including all amounts deferred at the election of the
Employee pursuant to a Compensation Plan intended to qualify as a plan
under Section 401(k) of the Code or otherwise. If salary or bonus is paid
in whole or in part in property other than cash (such as Common Stock) the
amount so paid shall be the fair market value thereof on the date of
payment.
"ASSOCIATE" means, with reference to any Person, (a) any
corporation, firm, partnership, association, unincorporated organization
or other entity (other than the Company or a subsidiary of the Company) of
which that Person is an officer or general partner (or officer or general
partner of a general partner) or is, directly or indirectly, the
Beneficial Owner of 10% or more of any class of its equity securities, (b)
any trust or other estate in which that Person has a substantial
beneficial interest or for or of which that Person serves as trustee or in
a similar fiduciary capacity and (c) any relative or spouse of that
Person, or any relative of that spouse, who has the same home as that
Person.
"AVERAGE ANNUAL CASH COMPENSATION" of the Employee means, as of the
Part-time Employment Effective Date, the average of (a) the Annual Cash
Compensation earned by the Employee in each of the two (2) Compensation
Years next preceding that date or, if less than two (2) Compensation Years
have occurred prior to that date and since the Effective Date, (b) the
Annual Cash Compensation in each whole Compensation Year, if any, and,
restated on an annualized basis, the Annual Cash Compensation in each
partial Compensation Year (up to a maximum of two (2) partial Compensation
Years) next preceding the Part-time Employment Effective Date.
"BASE SALARY" means: (a) prior to the Part-time Employment Effective
Date, the guaranteed minimum annual salary payable by the Company to the
Employee pursuant to Section 4(A); and (b) on and after the Part-time
Employment Effective Date, the guaranteed minimum annual salary payable by
the Company to the Employee pursuant to Section 5(E).
A specified Person is deemed the "BENEFICIAL OWNER" of, and is
deemed to "beneficially own," any securities:
(a) of which that Person or any of that Person's Affiliates or
Associates, directly or indirectly, is the "beneficial owner" (as
determined pursuant to Exchange Act Rule 13d-3) or otherwise has the
right to vote or dispose of, including pursuant
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to any agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under
this subparagraph (a) as a result of an agreement, arrangement or
understanding to vote that security if that agreement, arrangement
or understanding: (1) arises solely from a revocable proxy or
consent given in response to a public (that is, not including a
solicitation exempted by Exchange Act Rule 14a-2(b)(2)) proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the Exchange Act; and (2) is not then
reportable by such Person on Exchange Act Schedule 13D (or any
comparable or successor report);
(b) which that Person or any of that Person's Affiliates or
Associates, directly or indirectly, has the right or obligation to
acquire (whether that right or obligation is exercisable or
effective immediately or only after the passage of time or the
occurrence of an event) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or on the exercise of
conversion rights, exchange rights, other rights, warrants or
options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own,"
securities tendered pursuant to a tender or exchange offer made by
that Person or any of that Person's Affiliates or Associates until
those tendered securities are accepted for purchase or exchange; or
(c) which are beneficially owned, directly or indirectly, by
(1) any other Person (or any Affiliate or Associate thereof) with
which the specified Person or any of the specified Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy or
consent as described in the proviso to subparagraph (a) of this
definition) or disposing of any voting securities of the Company or
(2) any group (as that term is used in Exchange Act Rule 13d-5(b))
of which that specified Person is a member;
provided, however, that nothing in this definition shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting
until the expiration of forty (40) days after the date of that
acquisition. For purposes of this Agreement, "voting" a security shall
include voting, granting a proxy, acting by consent, making a request or
demand relating to corporate action (including, without limitation,
calling a stockholder meeting) or otherwise giving an authorization
(within the meaning of Section 14(a) of the Exchange Act) in respect of
such security.
"BOARD" means the entire Board of Directors of the Company.
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"BUSINESS REASON" for the Company's termination of the Employee's
Employment means any lawful reason other than Cause.
"CAUSE" for the Company's termination of the Employee's Employment
means: (a) the Employee's final conviction of a felony crime that enriched
the Employee at the expense of the Company; or (b) the Employee's
deliberate and intentional continuing failure to substantially perform his
duties and responsibilities hereunder (except by reason of the Employee's
incapacity due to physical or mental illness or injury) for a period of
forty-five (45) days after the Required Board Majority has delivered to
the Employee a written demand for substantial performance hereunder which
specifically identifies the bases for the Required Board Majority's
determination that the Employee has not substantially performed his duties
and responsibilities hereunder (such period being the "Grace Period");
provided, that for purposes of this clause (b), the Company shall not have
Cause to terminate the Employee's Employment unless (1) at a meeting of
the Board called and held following the Grace Period in the city in which
the Company's principal executive offices are located of which the
Employee was given not less than ten (10) days' prior written notice and
at which the Employee was afforded the opportunity to be represented by
counsel, appear and be heard, the Required Board Majority shall adopt a
written resolution which (A) sets forth the Required Board Majority's
determination that the failure of the Employee to substantially perform
his duties and responsibilities hereunder has (except by reason of his
incapacity due to physical or mental illness or injury) continued past the
Grace Period and (B) specifically identifies the bases for that
determination and (2) the Company, at the written direction of the
Required Board Majority, shall deliver to the Employee a Notice of
Termination for Cause to which a copy of that resolution, certified as
being true and correct by the secretary or any assistant secretary of the
Company, is attached. Cause of the type referred to in clause (a) of the
preceding sentence is a "Type I Cause," while Cause of the type referred
to in clause (b) of the preceding sentence is a "Type II Cause." For
purposes of determining whether a Type II Cause has occurred, no act or
failure to act on the part of the Employee shall be considered "deliberate
and intentional" unless it is taken or omitted to be taken by the Employee
in bad faith or without a reasonable belief that the Employee's act or
omission was in the best interests of the Company.
"CHANGE OF CONTROL" means the occurrence of any of the following
events that occurs after the Effective Time: (a) any Person becomes an
Acquiring Person; (b) at any time the then Continuing Directors cease to
constitute a majority of the members of the Board; (c) a merger of the
Company with or into, or a sale by the Company of its properties and
assets substantially as an entirety to, another Person occurs and,
immediately after that occurrence, any Person, other than an Exempt
Person, together with all Affiliates and Associates of such Person, shall
be the Beneficial Owner of twenty-five percent (25%) or more of the total
voting power of the then outstanding Voting Shares of the Person surviving
that transaction (in the case or a merger or consolidation) or the Person
acquiring those properties and assets substantially as an entirety.
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"CHANGE OF CONTROL PAYMENT" means at any time the amount equal to
three (3) times the Employee's then highest Base Salary during the term of
this Agreement.
"CODE" means the Internal Revenue Code of 1986.
"COMMON STOCK" means the common stock of the Company.
"COMPANY" means (a) American Residential Services, Inc., a Delaware
corporation, and (b) any Person that assumes the obligations of "the
Company" hereunder, by operation of law, pursuant to Section 9(D)(iii) or
otherwise.
"COMPENSATION PLAN" means any compensation arrangement, plan,
policy, practice or program established, maintained or sponsored by the
Company or any subsidiary of the Company, or to which the Company or any
subsidiary of the Company contributes, on behalf of any Executive Officer
or any member of the family of any Executive Officer, (a) including (i)
any "employee pension benefit plan" (as defined in Section 3(2) of ERISA)
or other "employee benefit plan" (as defined in Section 3(3) of ERISA),
(ii) any other retirement and savings plan, including any supplemental
benefit arrangement relating to any plan intended to be qualified under
Section 401(a) of the Code or whose benefits are limited by the Code or
ERISA, (iii) any "employee welfare plan" (as defined in Section 3(1) of
ERISA), (iv) any arrangement, plan, policy, practice or program providing
for severance pay, deferred compensation or insurance benefit, (v) any
Incentive Plan and (vi) any arrangement, plan, policy, practice or program
(A) authorizing and providing for the payment or reimbursement of expenses
attributable to first-class air travel and first-class hotel occupancy
while on travel or (B) providing for the payment of business luncheon and
country club dues, long-distance charges, mobile phone monthly air time or
other recurring monthly charges or any other fringe benefit, allowance or
accommodation of employment, but (b) excluding any compensation
arrangement, plan, policy, practice or program to the extent it provides
for annual base salary.
"COMPENSATION COMMITTEE" means the committee of the Board to which
the Board has delegated duties respecting the compensation of Executive
Officers and the administration of Incentive Plans, if any, intended to
qualify for the Exchange Act Rule 16b-3 exemption.
"COMPENSATION YEAR" means any calendar year.
"CONFIDENTIAL INFORMATION" means, with respect to the Company or any
subsidiary of the Company, all trade secrets and other confidential,
nonpublic and/or proprietary information of that Person, including
information derived from reports, investigations, research, work in
progress, codes, marketing and sale programs, customer lists, records of
customer service requirements, capital expenditure projects, cost
summaries, pricing formulae, contract analyses, financial information,
projections, confidential filings with any
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governmental authority and all other confidential, nonpublic concepts,
methods of doing business, ideas, materials or information prepared or
performed for, by or on behalf of that Person.
"CPI" means for any period the Consumer Price Index for All Urban
Consumers--All Items Index for Houston, Texas (or any substantially
similar index published for the same area), as published by the United
States Department of Labor, Bureau of Labor Statistics (or its successor)
for that period.
"CONTINUING DIRECTOR" means at any time any individual who then (a)
is a member of the Board and was a member of the Board as of the Effective
Time or whose nomination for his first election, or that first election,
to the Board following that date was recommended or approved by a majority
of the then Continuing Directors (acting separately or as a part of any
action taken by the Board or any committee thereof) and (b) is not an
Acquiring Person, an Affiliate or Associate of an Acquiring Person or a
nominee or representative of an Acquiring Person or of any such Affiliate
or Associate.
"DISABILITY" of the Employee means the Employee has been determined
(which determination shall be final and binding on all Persons, absent
manifest error), as a result of a physical or mental illness or personal
injury he has incurred (including illness or injury resulting from any
substance abuse), by a Qualified Physician (who may be the doctor treating
or otherwise acting as the Employee's doctor in connection with the
illness or injury in question) selected by the Employee with the consent
of the Company, or by the Company at its expense and with the consent of
the Employee (which consent shall not be unreasonably withheld in either
case), to be unable to perform, at the time of that determination and, in
all reasonable medical likelihood, indefinitely thereafter, the normal
duties then most recently assigned, under and in accordance with the terms
hereof, to the Employee while on Active Status; provided that, the
determination whether the Employee has incurred a Disability shall be made
by a majority of three (3) Qualified Physicians, (a) one (1) of whom shall
be selected by the Employee, (b) one (1) of whom shall be selected by the
Company and (c) the remaining one (1) of whom shall be selected by the
Qualified Physicians selected by the Employee and the Company pursuant to
clauses (a) and (b) of this proviso and the fees and expenses of whom will
be shared and paid in equal amounts by the Employee and the Company if:
(1) (A) the Company has reasonably withheld its consent to the Qualified
Physician, if any, selected by the Employee, or (B) the Employee has
reasonably withheld his consent to the Qualified Physician, if any,
selected by the Company and (2) the Qualified Physicians selected by the
Employee and the Company disagree as to whether the Employee has incurred
a Disability. For purposes of this definition, if the Employee is unable
by reason of illness or injury to give an informed consent to the
performance of the treatment of that illness or injury, a Qualified
Physician selected by any Person who is authorized by applicable law to
give that consent will be deemed to have been selected by the Employee.
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"ERISA" means the Employee Retirement Income Security Act of 1974.
"EMPLOYMENT" means the salaried employment of the Employee by the
Company or a subsidiary of the Company hereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXECUTIVE OFFICER" means any of the chairman of the board, the
chief executive officer, the chief operating officer, the chief financial
officer, the president, any executive or senior vice president or the
general counsel of the Company.
"EXEMPT PERSON" means (a) (1) the Company, any subsidiary of the
Company, any employee benefit plan of the Company or of any subsidiary of
the Company and (2) any Person organized, appointed or established by the
Company for or pursuant to the terms of any such plan or for the purpose
of funding any such plan or funding other employee benefits for employees
of the Company or any subsidiary of the Company and (b) the Employee, any
Affiliate or Associate of the Employee or any group (as that term is used
in Exchange Act Rule 13d-5(b)) of which the Employee or any Affiliate or
Associate of the Employee is a member.
"GOOD REASON" for the Employee's termination of his Employment
means: (a) any violation hereof in any material respect by the Company;
(b) either (1) a failure of the Company to continue in effect any
Compensation Plan in which the Employee was participating or (2) the
taking of any action by the Company which would adversely affect the
Employee's participation in or materially reduce the Employee's benefits
under, any such Compensation Plan, unless (A) in the case of either
subclause (1) or (2) of this clause, there is substituted a comparable
Compensation Plan that is at least economically equivalent, in terms of
the benefit offered to the Employee, to the Compensation Plan being ended
or in which the Employee's participation is being adversely affected or
the Employee's benefits are being materially reduced or (B) in the case of
that subclause (1), the failure, or in the case of that subclause (2), the
taking of action, adversely affects Executive Officers generally; or (c)
the assignment to the Employee of duties inconsistent in any material
respect with the Employee's then current positions (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities or any other action by the Company which results in a
material diminution in those positions, authority, duties or
responsibilities.
"INCENTIVE PLAN" means any compensation arrangement, plan, policy,
practice or program established, maintained or sponsored by the Company or
any subsidiary of the Company, or to which the Company or any subsidiary
of the Company contributes, on behalf of any Executive Officer and which
provides for incentive, bonus or other performance-based awards of cash,
securities or the phantom equivalent of securities, including any stock
option, stock appreciation right and restricted stock plan, but excluding
any plan intended to qualify as a plan under any one or more of Sections
401(a), 401(k) or 423 of the Code.
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"NONTERMINATING PARTY" means the Employee or the Company, as the
case may be, to which the Terminating Party delivers a Notice of
Termination.
"NOTICE OF TERMINATION" to or from the Employee means a written
notice that: (a) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
the Employee's Employment, and if the Termination Date is other than the
date of receipt of the notice, (b) sets forth that Termination Date.
"OUTSIDE DIRECTOR" means at any time a member of the Board at that
time who is not then an employee of the Company or any subsidiary of the
Company.
"PART-TIME EMPLOYMENT EFFECTIVE DATE" means, (a) if the Company
elects pursuant to any applicable provision hereof to terminate the
Employee's Employment other than for Cause or (b) if the Employee elects
pursuant to the applicable provision hereof to terminate his Employment
for Good Reason or by reason of his Disability, the date the
Nonterminating Party receives the Terminating Party's Notice of
Termination.
"PART-TIME EMPLOYMENT PERIOD" means the period of time which begins
on the Parttime Employment Effective Date and ends on the first to occur
of (a) the third (3rd) anniversary of that Part-time Employment Effective
Date, (b) the termination by the Company of the Employee's Employment for
Type I Cause or (c) the death or Retirement of the Employee.
"PERSON" means any natural person, sole proprietorship, corporation,
partnership of any kind having a separate legal status, limited liability
company, business trust, unincorporated organization or association,
mutual company, joint stock company, joint venture, estate, trust, union
or employee organization or governmental authority.
"QUALIFIED PHYSICIAN" means, in the case of any determination
whether the Employee has sustained a Disability, a physician (a) holding
an M.D. degree from a medical school located in the United States, (b)
specializing and board-certified in the treatment of the injury or illness
that has or may have caused that Disability and (c) having admission
privileges to one or more hospitals located in Texas or in the state in
which the Employee then is domiciled.
"REQUIRED BOARD MAJORITY" means at any time a majority of the
members of the Board at that time which includes at least a majority of
the Outside Directors at that time.
"RETIREMENT" of the Employee means the Employee terminates his
Employment on or after the date he has attained age 65.
"SECURITIES ACT" means the Securities Act of 1933.
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"TERMINATING PARTY" means the Employee or the Company, as the case
may be, who or which terminates the Employee's Employment by means of a
Notice of Termination.
"TERMINATION DATE" means: (a) if the Employee's Employment is
terminated by reason of the Employee's death or Retirement, the date of
that death or Retirement; (b) if the Employee's Employment is terminated
by reason of the Employee's giving a Notice of Termination following a
Change of Control pursuant to Section 5(B)(i)(b), the first date on which
the Company pays to the Employee in full the amounts owed to the Employee
pursuant to Section 5(B)(iii); (c) if the Employee's Employment is
terminated by reason of the Employee's giving a Notice of Termination
without Good Reason and other than for Disability pursuant to Section
5(B)(i)(c), the elapse of the thirtieth (30th) day after the Company
receives that notice; (d) if the Employee's Employment is terminated by
the Company at any time for Type I Cause or, prior to the Part-time
Employment Effective Date, at any time for Type II Cause, the date the
Employee receives the Company's Notice of Termination for Cause; and (e)
if the Employee's Employment is terminated for any other reason, at the
expiration of the Part-time Employment Period.
"TYPE I CAUSE" means Cause of the type referred to in clause (a) of
the first sentence of the definition of Cause herein.
"TYPE II CAUSE" means Cause of the type referred to in clause (b) of
the first sentence of the definition of Cause herein.
"VOTING SHARES" means: (a) in the case of any corporation, stock of
that corporation of the class or classes having general voting power under
ordinary circumstances to elect a majority of that corporation's board of
directors; and (b) in the case of any other entity, equity interests of
the class or classes having general voting power under ordinary
circumstances equivalent to the Voting Shares of a corporation.
B. OTHER DEFINITIONAL PROVISIONS. (i) Except as otherwise specified
herein, all references herein to any statute defined or referred to herein,
including the Code, ERISA and the Exchange Act, shall be deemed references to
that statute or any successor statute, as the same may have been or may be
amended or supplemented from time to time, and any rules or regulations
promulgated thereunder.
(ii) When used in this Agreement, the words "herein," "hereof" and
"hereunder" and words of similar import shall refer to this Agreement as a whole
and not to any provision of this Agreement, and the word "Section" refers to a
Section of this Agreement unless otherwise specified.
(iii) Whenever the context so requires, the singular number includes
the plural and vice versa, and a reference to one gender includes each other
gender and the neuter.
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(iv) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any description
preceding such word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
2. EMPLOYMENT
A. On the terms and subject to the conditions hereinafter set forth,
and beginning as of the Effective Date, the Company will employ the Employee as
Director of Market Development of the Company in the Houston metropolitan area
and the Employee will serve in the Company's employ in that position. The
Employee shall perform such duties, and have such powers, authority, functions,
duties and responsibilities for the Company and corporations affiliated with the
Company as are commensurate and consistent with his employment as Director of
Market Development of the Company. The Employee also shall have such additional
powers, authority, functions, duties and responsibilities as may be assigned to
him by the Board; provided that, without the Employee's written consent, such
additional powers, authority, functions, duties and responsibilities shall not
be inconsistent or interfere with, or detract from, those herein vested in, or
otherwise then being performed for the Company by, the Employee.
B. The Employee shall not, at any time during his Employment, engage
in any other activities unless those activities do not interfere materially with
the Employee's duties and responsibilities for the Company at that time, except
that the Employee shall be entitled, subject to the provisions of Section 7, (a)
to continue with such activities as the Employee has carried on prior to the
Effective Date, including making and managing his personal investments and
participating in other business or civic activities and (b) to serve on
corporate or other business, civic or charitable boards or committees and trade
association or similar boards or committees.
3. TERM OF EMPLOYMENT
Subject to the provisions of Section 5, the term of the Employee's
Employment shall be for a continually renewing term of three (3) years
commencing on the Effective Date and renewing each day thereafter for an
additional day without any further action by either the Company or the Employee,
it being the intention of the parties that there shall be continuously a
remaining term of three (3) years' duration of the Employee's Employment until
an event has occurred as described in, or one of the parties shall have made an
appropriate election pursuant to, the provisions of Section 5. When the
Termination Date shall have occurred and the Company shall have paid to the
Employee all the applicable amounts Section 5 provides the Company shall pay as
a result of the termination of the Employee's Employment, including all amounts
accruing during the Part-time Employment Period, if any, this Agreement will
terminate and have no further force or effect, except that Sections 4(c), 8, 9,
10 and 11 shall survive that termination indefinitely and Section 7 shall
survive for the period of time provided for therein.
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4. COMPENSATION
A. BASE SALARY. A Base Salary shall be payable to the Employee by
the Company as a guaranteed minimum annual amount hereunder for each
Compensation Year during the period from the Effective Date to the first to
occur of the Part-time Employment Effective Date or the Termination Date . That
Base Salary shall be payable in the intervals consistent with the Company's
normal payroll schedules (but in no event less infrequently than semi-monthly),
shall be payable initially at the annual rate of $150,000 and shall be increased
(but not decreased or adjusted other than as provided in Section 5) as follows:
(i) on the first and each subsequent anniversary of the Effective
Date, by the same percentage increase (if any) in the CPI for the twelve
(12) month period immediately preceding such anniversary;
(ii) on the first and each subsequent anniversary of the Effective
Date, by such additional amount as shall be determined in the sole
discretion of the Compensation Committee, but only in such form and to
such extent as the Compensation Committee may from time to time approve,
as evidenced by the written minutes or records of the Compensation
Committee and its written notices of such determinations or approvals to
the Employee; and
(iii) if the Employee relocates from a state without a personal
income tax at the time of his relocation to a state having a personal
income tax, or if the Employee resides in a state without a personal
income tax on the date hereof which subsequently adopts a personal income
tax, then, in either case, the Base Salary in effect at the time of such
relocation or adoption, as applicable, shall immediately be increased by
the amount equal to the Base Salary immediately prior to this increase
multiplied by seventy percent (70%) of the highest personal income tax
rate of such state; for example, if the Employee relocates from a state
without a personal income tax to a state having a personal income tax and
the highest rate of that tax is six percent (6%) when the Base Salary is
$200,000, then the Base Salary will be increased by $8,400 (computed at
70% x 6% x $200,000).
Effective as of the Part-time Employment Effective Date, the Base Salary
theretofore in effect shall be adjusted as provided in Section 5(E).
B. OTHER COMPENSATION. The Employee shall be entitled to participate
in all Compensation Plans from time to time in effect while he remains on Active
Status, regardless of whether the Employee is an Executive Officer. All awards
to the Employee under all Incentive Plans shall take into account the Employee's
positions with and duties and responsibilities to the Company and its
subsidiaries.
C. TAX INDEMNITY. Should any of the payments of Base Salary, other
incentive or supplemental compensation, benefits, allowances, awards, payments,
reimbursements or other
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perquisites, or any other payment in the nature of compensation, singly, in any
combination or in the aggregate, that are provided for hereunder to be paid to
or for the benefit of the Employee be determined or alleged to be subject to an
excise or similar purpose tax pursuant to Section 4999 of the Code, or any
successor or other comparable federal, state or local tax law by reason of being
a "parachute payment" (within the meaning of Section 280G of the Code), the
Company shall pay to the Employee such additional compensation as is necessary
(after taking into account all federal, state and local taxes payable by the
Employee as a result of the receipt of such additional compensation) to place
the Employee in the same after-tax position (including federal, state and local
taxes) he would have been in had no such excise or similar purpose tax (or
interest or penalties thereon) been paid or incurred. The Company hereby agrees
to pay such additional compensation within the earlier to occur of (i) five (5)
business days after the Employee notifies the Company that the Employee intends
to file a tax return taking the position that such excise or similar purpose tax
is due and payable in reliance on a written opinion of the Employee's tax
counsel (such tax counsel to be chosen solely by the Employee) that it is more
likely than not that such excise tax is due and payable or (ii) twenty-four (24)
hours of any notice of or action by the Company that it intends to take the
position that such excise tax is due and payable. The costs of obtaining the tax
counsel opinion referred to in clause (i) of the preceding sentence shall be
borne by the Company, and as long as such tax counsel was chosen by the Employee
in good faith, the conclusions reached in such opinion shall not be challenged
or disputed by the Company. If the Employee intends to make any payment with
respect to any such excise or similar purpose tax as a result of an adjustment
to the Employee's tax liability by any federal, state or local tax authority,
the Company will pay such additional compensation by delivering its cashier's
check payable in such amount to the Employee within five (5) business days after
the Employee notifies the Company of his intention to make such payment. Without
limiting the obligation of the Company hereunder, the Employee agrees, in the
event the Employee makes any payment pursuant to the preceding sentence, to
negotiate with the Company in good faith with respect to procedures reasonably
requested by the Company which would afford the Company the ability to contest
the imposition of such excise or similar purpose tax; provided, however, that
the Employee will not be required to afford the Company any right to contest the
applicability of any such excise or similar purpose tax to the extent that the
Employee reasonably determines (based upon the opinion of his tax counsel) that
such contest is inconsistent with the overall tax interests of the Employee.
5. TERMINATION, PART-TIME EMPLOYMENT PERIOD, DISABILITY AND
DEATH
A. TERMINATION OF EMPLOYMENT BY THE COMPANY. (i) The Company shall
be entitled, if acting at the direction of the Required Board Majority, to
terminate the Employee's Employment (a) at any time for Type I Cause or (b) at
any time prior to the Part-time Employment Effective Date for Type II Cause or
for any Business Reason. If the Employee is neither a member of the Board nor an
Executive Officer, the Company shall be entitled, if acting at the direction of
the chief executive officer of the Company, to terminate the Employee's
Employment at any time prior to the Part-time Employment Effective Date for any
Business Reason. The Company's termination of the Employee's Employment for
Cause will be effective on the date the Company delivers a
12
Notice of Termination for Cause to the Employee pursuant to this Section
5(A)(i)(together, in the case of a termination for Type II Cause, with the
certified resolution referred to in clause (b) of the definition herein of
Cause), while the Company's termination of the Employee's Employment for a
Business Reason will be effective on the third (3rd) anniversary of the date the
Company delivers a Notice of Termination for a Business Reason to the Employee
pursuant to this Section 5(A)(i).
(ii) If the Company terminates the Employee's Employment for Cause,
the Company promptly thereafter, and in any event within five (5) business days
thereafter, shall pay the Employee his Base Salary to and including the
Termination Date and the amount of all compensation previously deferred by the
Employee (together with any accrued interest or earnings thereon), in each case
to the extent not theretofore paid, and, when that payment is made, the Company
shall, notwithstanding Section 3, have no further or other obligations hereunder
to the Employee.
(iii) If the Company terminates the Employee's Employment for a
Business Reason, the respective rights and obligations of the Company and the
Employee during the Part-time Employment Period will be as set forth in Section
5(E).
B. TERMINATION OF EMPLOYMENT BY THE EMPLOYEE. (i) The Employee shall
be entitled to terminate his Employment (a) for a Good Reason at any time within
one hundred eighty (180) days after the facts or circumstances constituting that
Good Reason first exist and are known to the Employee, (b) by reason of a Change
of Control at any time within three hundred sixty-five (365) days after that
Change of Control occurs (provided, however, that the Employee shall not be
entitled to terminate his Employment by reason of that Change of Control if it
occurs (1) during the thirty (30) day period following the Company's receipt of
the Employee's Notice of Termination without Good Reason and other than for
Disability pursuant to this Section 5(B)(i), (2) after (A) the receipt by the
Nonterminating Party of the Terminating Party's Notice of Termination pursuant
to Section 5(C) or (B) the Employee's receipt of the Company's Notice of
Termination for a Business Reason (other than in connection with that Change of
Control) pursuant to Section 5(A) or (3) more than three hundred sixty-five
(365) days after the Company's receipt of the Employee's Notice of Termination
for Good Reason pursuant to this Section 5(B)(i)) or (c) without Good Reason and
other than for Disability at any time. The Employee's termination of his
Employment for Good Reason will be effective on the third (3rd) anniversary of
the date the Employee delivers a Notice of Termination for Good Reason to the
Company pursuant to this Section 5(B)(i). The Employee's termination of his
Employment by reason of a Change of Control will be effective on the first date
on which the Change of Control Payment shall have been paid in full to the
Employee. The Employee's termination of his Employment without Good Reason and
other than for Disability will be effective on the thirtieth (30th) day
following the Employee's delivery of a Notice of Termination without Good Reason
and other than for Disability pursuant to this Section 5(B)(i).
(ii) If the Employee terminates his Employment for Good Reason, the
respective rights and obligations of the Company and the Employee during the
Part-time Employment Period will be as set forth in Section 5(E).
13
(iii) If the Employee terminates his Employment by reason of a
Change of Control, the Company shall pay to the Employee in a cash lump sum
within five (5) business days after the date the Company receives the Employee's
Notice of Termination by reason of that Change of Control the amount equal to
the sum of (a) the portion of the Base Salary to and including the Termination
Date which has not yet been paid, (b) all compensation previously deferred by
the Employee (together with any accrued interest and earnings thereon), (c) any
accrued but unpaid vacation pay and (d) the Change of Control Payment.
(iv) If the Employee terminates his Employment without Good Reason
and other than for Disability, the Company shall pay to the Employee, in a cash
lump sum within five (5) business days after the Termination Date, the amount
equal to the sum of (a) the portion of the Base Salary to and including the
Termination Date which has not yet been paid, (b) all compensation previously
deferred by the Employee (together with any accrued interest and earnings
thereon) which has not yet been paid, (c) any accrued but unpaid vacation pay
and (d) the amount equal to fifty percent (50%) of the Base Salary being paid
for the Compensation Year in which the Company receives the Employee's Notice of
Termination without Good Reason and other than for Disability; provided,
however, that if the Employee terminates his Employment without Good Reason and
other than for Disability within six (6) months of the theretofore scheduled
final day of the Part-time Employment Period, the amount payable pursuant to
clause (d) of this sentence shall be the amount determined pursuant to that
clause multiplied by a fraction the numerator of which is the number of days
from and excluding the date the Company receives the Notice of Termination to
and including that final day and the denominator of which is one hundred
eighty-two (182). For purposes of this Section 5(B)(iv), if the anniversary of
the Effective Date in the Compensation Year in which the Company receives the
Notice of Termination without Good Reason and other than for Disability has not
occurred on or prior to the date of that receipt, the Base Salary for that
Compensation Year will be calculated on the assumption that no increase in the
amount thereof would be made effective as of that anniversary pursuant to
Section 4(A) or 5(E)(i), as applicable.
C. TERMINATION BY REASON OF DISABILITY. If the Employee incurs any
Disability while on Active Status, either the Employee or the Company may
terminate the Employee's Employment effective on the third (3rd) anniversary of
the date the Nonterminating Party receives a Notice of Termination from the
Terminating Party pursuant to this Section 5(C). If the Employee's Employment is
terminated by reason of the Employee's Disability, the respective rights and
obligations of the Company and the Employee during the Part-time Employment
Period will be as set forth in Section 5(E).
D. TERMINATION OF EMPLOYMENT BY DEATH. The Employee's Employment
shall terminate automatically at the time of his death. If the Employee's
Employment is terminated by reason of the Employee's death, the Company shall
pay to the Person the Employee has designated in a written notice delivered to
the Company as his beneficiary entitled to such payment, if any, or to the
Employee's estate, as applicable, in a cash lump sum within thirty (30) days
after the Termination Date, the amount equal to the sum of (i) the portion of
the Base Salary through the end of the month in which the Termination Date
occurs which has not yet been paid, (ii) all
14
compensation previously deferred by the Employee (together with any accrued
interest or earnings thereon) which has not yet been paid, (iii) any accrued but
unpaid vacation pay (if the Employee dies while on Active Status) and (iv) (a)
if the Employee dies while on Active Status, the product of the Base Salary
being paid for the Compensation Year in which he dies multiplied by three (3) or
(b) if the Employee dies during the Part-time Employment Period, the product of
one-twelfth (1/12th) of the Base Salary being paid for the Compensation Year in
which the Employee dies multiplied by the number of whole and partial calendar
months in the period beginning with the first calendar month after the calendar
month in which he dies and ending with the last calendar month in which the
Termination Date would have occurred if the Employee's Employment were to have
continued to the end of the Part-time Employment Period. For purposes of this
Section 5(D), if the anniversary of the Effective Date in the Compensation Year
in which the Employee dies has not occurred on or before the Termination Date,
the Base Salary for that Compensation Year will be calculated on the assumption
that no increase in the amount thereof would be made effective as of that
anniversary pursuant to Section 4(A) or 5(E)(i), as applicable.
E. EMPLOYEE'S RIGHTS DURING THE PART-TIME EMPLOYMENT PERIOD. (i) The
Company shall pay the Employee a Base Salary, in the intervals consistent with
the Company's normal payroll schedules (but in no event less frequently than
semi-monthly) from the Part-time Employment Effective Date to and including the
Termination Date in the amounts determined from time to time as follows:
Effective as of the Part-time Employment Effective Date, the Base Salary payable
by the Company to the Employee for the period from and including that date to
and excluding the third (3rd) anniversary of that date shall be as follows:
(a) if the Part-time Employment Effective Date occurs as a result of
the receipt by the Nonterminating Party of a Notice of Termination for a
Business Reason pursuant to Section 5(A) or a Notice of Termination for
Good Reason pursuant to Section 5(B)(i), the amount equal to the Average
Annual Cash Compensation of the Employee determined as of the Part-time
Employment Effective Date; and (b) if the Part-time Employment Effective
Date occurs as a result of the receipt by the Nonterminating Party of a
Notice of Termination for Disability pursuant to Section 5(C), the amount
equal to the amount by which (1) seventy-five percent (75%) of the Average
Annual Cash Compensation of the Employee determined as of the Part-time
Employment Effective Date exceeds (2) the aggregate amount of periodic
payments the Employee receives during the twelve (12) months beginning on
that date under Compensation Plans then in effect and providing for the
payment to the Employee solely as a result or on account of disability;
and
(b) on the first and each subsequent anniversary of the Part-time
Employment Effective Date, the Base Salary payable pursuant to this
Section 5(E) shall be increased (but not decreased) by the same percentage
increase (if any) in the CPI for the twelve (12) month period immediately
preceding that anniversary.
(ii)(a)The Employee shall continue to participate in all
Compensation Plans from time to time in effect during the Part-time Employment
Period, provided, however, that: (1) the
15
Employee shall not be entitled to receive any new award or grant under any
Incentive Plan, and any such new award or grant shall be at the sole discretion
of the Compensation Committee or the Board, as applicable, with respect to that
Incentive Plan; and (2) if (A) the terms of any such plan preclude the
Employee's continued participation therein or (B) his continued participation in
any such plan would or reasonably could be expected to disqualify that plan
under the Code, the Employee shall not be entitled to participate in that plan,
but the Company instead shall provide the Employee with the after-tax equivalent
of the benefits that would have been provided to the Employee were he a
participant in that plan.
(b) For purposes of determining eligibility (including years of
service) for retirement benefits payable under any Compensation Plan, the
Employee shall be deemed to have retired at the Termination Date.
(iii) Subject to the provisions of Section 7, the Employee shall not
be (A) prevented from accepting other employment or engaging in (and devoting
substantially all his time to) other business activities or (B) required to
perform any regular duties for the Company (except to provide such services
consistent with the Employee's educational background, experience and prior
positions with the Company as may be acceptable to the Employee) or to seek or
accept additional employment with any other Person. If the Employee, at his
discretion, shall accept any such additional employment or engage in any such
other business activity there shall be no offset, reduction or effect upon any
rights, benefits or payments to which the Employee is entitled pursuant to this
Agreement. Furthermore, the Employee shall have no obligation to account for,
remit, rebate or pay over to the Company any compensation or other amounts
earned or derived in connection with such additional employment or business
activity. The Employee shall, however, make himself generally available for
special projects or to consult with the Company and its employees at such times
and at such places as may be reasonably requested by the Company and which shall
be reasonably satisfactory to the Employee and consistent with the Employee's
regular duties and responsibilities in the course of his then new occupation or
other employment, if any.
(iv) Unless and until the Employee shall have sustained a
Disability, the Company shall continue to provide the Employee with either the
same or, at the Company's election, at a different location within 35 miles of
the Employee's principal residence, in any case reasonably acceptable to the
Employee, alternate but comparable office space, furnishings, facilities,
reserved parking, supplies, services, equipment, secretarial and administrative
assistance that are in each case at least commensurate with the size and quality
of that which were provided to the Employee during the Compensation Year
immediately preceding the Part-time Employment Effective Date pursuant to
Section 6(C), but in no event less than are being furnished or provided on the
date hereof. The Company and Employee may mutually agree upon an equivalent
monthly cash allowance in lieu of the Employee being provided all or any part of
these items.
(v) The Employee shall remain entitled to the benefits of
Section 4(C).
16
F. RETURN OF PROPERTY. On termination of the Employee's Employment,
however brought about, the Employee (or his representatives) shall promptly
deliver and return to the Company all the Company's property that is in the
possession or under the control of the Employee.
G. STOCK OPTIONS. Notwithstanding any provision of this Agreement to
the contrary: (i) except in the case of a termination of the Employee's
Employment for Cause, all stock options previously granted to the Employee under
Incentive Plans that have not been exercised and are outstanding as of the time
immediately prior to the Termination Date shall, notwithstanding any contrary
provision of any applicable Incentive Plan, remain outstanding (and continue to
become exercisable pursuant to their respective terms) until exercised or the
expiration of their term, whichever is earlier; and (ii) in the case of a
termination of the Employee's Employment for Cause, all stock options previously
granted to Employee under Incentive Plans that have not been exercised and are
outstanding as of the time immediately prior to the Termination Date shall,
notwithstanding any contrary provision of any applicable Incentive Plan, remain
outstanding and continue to be exercisable until exercised or the date that is
ten (10) days after the Termination Date, whichever is earlier. No stock option
previously granted to the Employee under any Incentive Plan shall,
notwithstanding any contrary provision of that Incentive Plan, expire or fail to
become exercisable or, if exercisable, cease to be exercisable by reason of
either (i) the occurrence of the Employee's Part-time Employment Effective Date
or (ii) the Employee's service during the Employee's Part-time Employment Period
being less than full-time.
6. OTHER EMPLOYEE RIGHTS
A. PAID VACATION; HOLIDAYS. The Employee shall be entitled to not
less than four (4) weeks of annual vacation and all legal holidays during which
times his applicable compensation shall be paid in full.
B. BUSINESS EXPENSES. The Employee is authorized to incur, and will
be entitled to receive prompt reimbursement for, all reasonable expenses
incurred by the Employee in performing his duties and carrying out his
responsibilities hereunder, including business meal, entertainment and travel
expenses, provided that the Employee complies with the applicable policies,
practices and procedures of the Company relating to the submission of expense
reports, receipts or similar documentation of those expenses. The Company shall
either pay directly or promptly reimburse the Employee for such expenses not
more than twenty (20) days after the submission to the Company by the Employee
from time to time of an itemized accounting of such expenditures for which
direct payment or reimbursement is sought. Unpaid reimbursements after such
20-day period shall accrue interest in accordance with Section 9(K).
C. SUPPORT. While on Active Status, the Employee shall be provided
by the Company with office space, furnishings, and facilities, reserved parking,
secretarial and administrative assistance, supplies and other support equipment
(including a computer, facsimile machine and photocopier).
17
D. NO FORCED RELOCATION. The Employee shall not be required to move
his principal place of residence from the Houston metropolitan area or to
perform regular duties that could reasonably be expected to require either such
move against his wish or to spend amounts of time each week outside the Houston
metropolitan area which are unreasonable in relation to the duties and
responsibilities of the Employee hereunder, and the Company agrees that, if it
requests the Employee to make such a move and the Employee declines that
request, (i) that declination shall not constitute any basis for a determination
that Type II Cause exists and (ii) no animosity or prejudice will be held
against Employee.
7. COVENANT NOT TO COMPETE
A. The Employee recognizes that in each of the highly competitive
businesses in which the Company is engaged, personal contact is of primary
importance in securing new customers and in retaining the accounts and goodwill
of present customers and protecting the business of the Company. The Employee,
therefore, agrees that during the term of his Employment and for a period of one
(1) year after the Termination Date, he will not, within fifty (50) miles of the
geographic location in which the he has devoted substantial attention at such
location to the material business interests of the Company: (i) accept
employment or render service to any Person that is engaged in a business
directly competitive with the business then engaged in by the Company or (ii)
enter into or take part in or lend his name, counsel or assistance to any
business, either as proprietor, principal, investor, partner, director, officer,
employee, consultant, advisor, agent, independent contractor, or in any other
capacity whatsoever, for any purpose that would be competitive with the business
of the Company.
B. If the provisions of this Section 7 are violated in any material
respect, the Company shall be entitled, upon application to any court of proper
jurisdiction, to a temporary restraining order or preliminary injunction
(without the necessity of posting any bond with respect thereto) to restrain and
enjoin the Employee from that violation. If the provisions of this Section 7
should ever be deemed to exceed the time, geographic or occupational limitations
permitted by the applicable law, the Employee and the Company agree that such
provisions shall be and are hereby reformed to the maximum time, geographic or
occupational limitations permitted by the applicable law.
8. CONFIDENTIAL INFORMATION
A. The Employee acknowledges that he has had and will continue to
have access to various Confidential Information. The Employee agrees, therefore,
that he will not at any time, either while employed by the Company or
afterwards, knowingly make any independent use of, or knowingly disclose to any
other person (except as authorized by the Company) any Confidential Information.
Confidential Information shall not include (i) information that becomes known to
the public generally through no fault of the Employee, (ii) information required
to be disclosed by law or legal process or the order of any governmental
authority under color of law, provided, that prior to disclosing any information
pursuant to this clause (ii), the Employee shall, if possible, give prior
18
written notice thereof to the Company and provide the Company with the
opportunity to contest such disclosure, or (iii) the Employee reasonably
believes that such disclosure is required in connection with the defense of a
lawsuit against the Employee. In the event of a breach or threatened breach by
the Employee of the provisions of this Section 8(A) with respect to any
Confidential Information, the Company shall be entitled to a temporary
restraining order and a preliminary and permanent injunction (without the
necessity of posting any bond in connection therewith) restraining the Employee
from disclosing, in whole or in part, that Confidential Information. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
available remedy for that breach or threatened breach, including the recovery of
damages.
B. The Employee shall disclose promptly to the Company any and all
conceptions and ideas for inventions, improvements, and valuable discoveries,
whether patentable or not, which are conceived or made by the Employee solely or
jointly with any other Person or Persons during the period of his Employment and
which pertain primarily to the material business activities of the Company, and
the Employee hereby assigns and agrees to assign all his interests therein to
the Company or to its nominee; whenever requested to do so by the Company, the
Employee shall execute any and all applications, assignments or other
instruments which the Company shall deem necessary to apply for and obtain
Letters of Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein. These obligations shall (i) continue
beyond the Termination Date with respect to inventions, improvements, and
valuable discoveries, whether patentable or not, conceived, made or acquired by
the Employee during the period of his Employment and (ii) be binding upon the
Employee's assigns, executors, administrators and other legal representatives.
9. GENERAL PROVISIONS
A. SEVERABILITY. If any one or more of the provisions of this
Agreement shall, for any reason, be held or found by final judgment of a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, (i) such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, (ii) this Agreement shall be construed
as if such invalid, illegal or unenforceable provision had never been contained
herein (except that this clause (ii) shall not prohibit any modification allowed
under Section 7(B)) and (iii) if the effect of a holding or finding that any
such provision is invalid, illegal or unenforceable is to modify to the
Employee's detriment, reduce or eliminate any compensation, reimbursement,
payment, allowance or other benefit to the Employee intended by the Company and
Employee in entering into this Agreement, the Company shall, within thirty (30)
days after the date of such finding or holding, negotiate and expeditiously
enter into an agreement with the Employee which contains alternative provisions
(reasonably acceptable to the Employee) that will restore to the Employee (to
the extent lawfully permissible) substantially the same economic, substantive
and income tax benefits and legal rights the Employee would have enjoyed had
such provision been upheld as legal, valid and enforceable.
19
B. NONEXCLUSIVITY OF RIGHTS. Nothing herein shall prevent or limit
the Employee's continuing or future participation in any Compensation Plan or,
subject to Section 9(N), limit or otherwise affect such rights as the Employee
may have under any other contract or agreement with the Company. Vested benefits
and other amounts to which the Employee is or becomes entitled to receive under
any Compensation Plan on or after the Termination Date shall be payable in
accordance with that Compensation Plan, except as expressly modified hereby.
C. FULL SETTLEMENT. The Company's obligations to make the payments
provided for in, and otherwise to perform its undertakings in, this Agreement
shall not be affected by any right of set-off, counterclaim, recoupment, defense
or other action, claim or right the Company may have against the Employee or
others. In no event shall the Employee be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Employee under any provision hereof, and those amounts shall not be reduced,
regardless of whether the Employee obtains other employment or becomes
self-employed.
D. SUCCESSORS. (i) This Agreement is personal to the Employee and,
without the prior written consent of the Company, is not assignable by the
Employee otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit and be enforceable by the Employee's legal
representatives acting in their capacities as such pursuant to applicable law.
(ii) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns. If the Employee is not an
Executive Officer, but is an officer of a subsidiary of the Company, the Company
shall be entitled to assign all its obligations hereunder to that subsidiary and
treat the Employee as an employee of that subsidiary for all purposes, but the
Company shall remain liable for the full, timely performance of all the
obligations so assigned as if the assignment had not been made.
(iii) The Company shall require any successor (direct or indirect
and whether by purchase, merger, consolidation, share exchange or otherwise) to
the business, properties and assets of the Company substantially as an entirety
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent the Company would have been required to perform it had no
such succession taken place.
E. AMENDMENTS; WAIVERS. This Agreement may not be amended or
modified except by a written agreement executed and delivered by the parties
hereto or their respective successors or legal representatives acting in their
capacities as such pursuant to applicable law.
F. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery or by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the appropriate Person at the address of such Person set forth
below (or at such other address as such Person may designate by written notice
to each other party in accordance herewith):
20
(a) if to the Employee, addressed as follows:
Xxxxxx X. XxXxxx
0000 Xxxxxxxxx Xxxx Xxxxx
Xxxxx Xxxx, Xxxxx 00000
; and
(b) if to the Company, addressed as follows:
American Residential Services, Inc.
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Corporate Secretary
G. NO WAIVER. The failure of the Company or the Employee to insist
on strict compliance with any provision of, or to assert any right under, this
Agreement (including the right of the Employee to terminate his Employment for
Good Reason or by reason of a Change of Control pursuant to Section 5(B) (i))
shall not be deemed a waiver of that provision or of any other provision of or
right under this Agreement.
H. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ANY
PRINCIPLES OF CONFLICTS OF LAWS.
I. JURISDICTION AND VENUE. The Company irrevocably consents with
respect to any action, suit or other legal proceeding pertaining directly to
this Agreement or to the interpretation or enforcement of any of Employee's
right hereunder to service of process in the State of Texas and hereby waives
any right to contest or oppose receipt of such service of process. The Company
irrevocably (i) agrees that any such action, suit or other legal proceeding may
be brought in the courts of such state or in the courts of the United States
sitting in such state, (ii) consents to the jurisdiction of each such court in
any such action, suit or other legal proceeding and (iii) waives any objection
it may have to the laying of venue of any such action, suit or other legal
proceeding in any of such courts.
J. HEADINGS. The headings of Sections and subsections hereof are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
K. INTEREST. If any amounts required to be paid or reimbursed to the
Employee hereunder are not so paid or reimbursed at the times provided herein
(including amounts required to be paid by the Company pursuant to Sections 6 and
10, those amounts shall accrue interest
21
compounded daily at the annual percentage rate which is three percentage points
(3%) above the interest rate announced by Texas Commerce Bank National
Association, Houston, Texas, (or its successor) from time to time, as its Base
Rate (or prime lending rate), from the date those amounts were required to have
been paid or reimbursed to the Employee until those amounts are finally and
fully paid or reimbursed; provided, however, that in no event shall the amount
of interest contracted for, charged or received hereunder exceed the maximum
non-usurious amount of interest allowed by applicable law.
L. PUBLICITY. The Company agrees with the Employee that, except to
the extent required by law or legal process (including the Exchange Act and the
Securities Act), it will not make or publish, without the prior written consent
of the Employee, any written or oral statement concerning the terms of the
Employee's employment relationship with the Company and will not, if a Notice of
Termination is given by either the Company or the Employee for any reason,
publish or cause to be published any statement concerning the Employee,
including his work-related performance or the reasons or basis for the giving of
that Notice of Termination.
M. TAX WITHHOLDING. Notwithstanding any other provision hereof, the
Company may withhold from amounts payable hereunder all Federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.
N. ENTIRE AGREEMENT. The Company and the Employee agree that this
Agreement supersedes all prior written and oral agreements between them with
respect to the employment of the Employee by the Company, but has no effect on
any Compensation Plan in which the Employee was participating prior to the
Effective Date or on the Agreement and Plan of Reorganization dated as of
October 31, 1996 to which the Company and the Employee are parties.
10. INTENDED BENEFITS TO EMPLOYEE; PAYMENT OF EXPENSES;
RESOLUTION OF DISPUTES
A. INTENDED BENEFITS; PAYMENT OF EXPENSES. In entering into this
Agreement the Company intends that the Employee receive without reduction or
delay all the intended benefits of this Agreement and that those benefits, and
the terms and conditions hereof, be construed in a manner most favorable to the
Employee; the Company, therefore, agrees that it will strive expeditiously and
in good faith to construe and resolve in the Employee's favor and to his benefit
any ambiguities or uncertainties that may be created by the express language
hereof. If, however, at any time during the term hereof or afterwards: (i) there
should exist a dispute or conflict between the Employee and the Company or
another Person as to the validity, interpretation or application of any term or
condition hereof, or as to the Employee's entitlement to any benefit intended to
be bestowed hereby, which is not resolved to the satisfaction of the Employee,
(ii) the Employee must (A) defend the validity of this Agreement, (B) contest
any determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Employee or (C) determine in any tax year of
the Employee the tax consequences to the Employee of any amounts payable (or
reimbursable) under Section 4(C) or 4(B)(iii), or (iii) the Employee must
prepare responses to an
22
Internal Revenue Service ("IRS") audit of, or otherwise defend, his personal
income tax return for any year the subject of any such audit, or an adverse
determination, administrative proceedings or civil litigation arising therefrom
that is occasioned by or related to an audit by the IRS of the Company's income
tax returns, then the Company hereby unconditionally agrees: (a) on written
demand of the Company by the Employee, to provide sums sufficient to advance and
pay on a current basis (either by paying directly or by reimbursing the
Employee) not less than thirty (30) days after a written request therefor is
submitted by the Employee, the Employee's out of pocket costs and expenses
(including attorney's fees, expenses of investigation, travel, lodging, copying,
delivery services and disbursements for the fees and expenses of experts, etc.)
incurred by the Employee in connection with any such matter; (b) the Employee
shall be entitled, upon application to any court of competent jurisdiction, to
the entry of a mandatory injunction without the necessity of posting any bond
with respect thereto which compels the Company to pay or advance such costs and
expenses on a current basis; and (c) the company's obligations under this
Section 10(A) will not be affected if the Employee is not the prevailing party
in the final resolution of any such matter.
B. RESOLUTION OF DISPUTES. If a dispute of any type referred to in
Section 10(A) arises between the Company and the Employee and they fail to
resolve that dispute by direct negotiation, the Company and the Employee agree
that the next step taken to resolve that dispute, prior to either party
initiating any litigation to resolve that dispute (not including any litigation
that may be required to enforce the Employee's rights to the payment or
advancement of expenses and legal fees on a current basis pursuant to Section
10(A)) shall be to submit the dispute to an agreed Alternative Dispute
Resolution ("ADR") process, to which process the parties shall strive diligently
in good faith to agree within ten (10) business days after either party has
given written notice to the other party that it is unable to concur in the other
party's final proposed negotiated resolution of the dispute. If the Company and
the Employee are unable to agree in writing to an acceptable ADR process within
that ten (10) business day period, then the parties shall submit to a mandatory
ADR process by making joint application to the then Chief United States Federal
District Judge in the Southern District of Texas for the selection of an ADR
process for the parties. The parties shall diligently in good faith participate
in the ADR process chosen by that judge. If the parties are unable to resolve
their dispute after diligent good faith participation in the ADR process, then
either party shall be free to initiate such litigation as that party deems
appropriate under the circumstances. Under no circumstances shall the Employee
be obligated to pay for the cost of any ADR process or to pay or reimburse the
Company for any attorneys' fees, costs or other expenses incurred by the Company
in connection with any process undertaken by the Employee to resolve disputes
under this Agreement. As used in this Section 10, the term "Employee" includes,
if the Employee has died or become incompetent as a matter of applicable law,
the Employee's legal representative acting in his capacity as such under
applicable law.
11. INDEMNIFICATION
The Employee shall be indemnified by the Company to the maximum
extent permitted by the law of Delaware, the state of the Company's
incorporation, and the law of the state
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of incorporation of any subsidiary of the Company of which the Employee is a
director or an officer or employee, as the same may be in effect from time to
time.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year indicated above.
AMERICAN RESIDENTIAL SERVICES, INC.
By: C. Xxxxxxxx Xxxxxx, Xx.
Chief Executive Officer
EMPLOYEE
Xxxxxx X. XxXxxx
Employee's Permanent Address:
0000 Xxxxxxxxx Xxxx Xxxxx
Xxxxx Xxxx, Xxxxx 00000
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