EMPLOYMENT AGREEMENT
EXHIBIT
10.03
AGREEMENT,
dated as of
June 25,
1999,
by and
between UNIVERSAL SUPPLY GROUP, INC.,
a
New York corporation with its principal office at 000 Xxxxxxx Xxxx, Xxxxxxxxx,
Xxx Xxxxxx 00000,
(the "Company") and XXXXXXX XXXXX, residing at 00 Xxxxx Xxxx, Xxxxxxx, Xxx
Xxxxxx 00000 (the
"Employee").
ARTICLE
I
1.01.
Employment.
Upon the
terms and conditions hereinafter set forth, the Company
hereby employs the Employee, and the Employee hereby accepts employment, as
Vice
President of the Company.
1.02.
Employee
represents and warrants to the Company that he is free to enter into
this
Agreement in accordance with the terms hereof and is under no restriction,
contractual or otherwise,
which would interfere with his execution hereof or performance
hereunder.
1.3. Term.
The
Employee's employment hereunder shall be for a term (the "Term") commencing
as of this date (the "Commencement Date") and terminating at the close of
business on December
31, 2004.
1.4. Duties.
During
the Term, the Employee shall perform such duties, consistent with his
position
hereunder, as may be assigned to him from time to time by the Board of
Directors. The Employee shall
devote his best efforts and his entire time, attention and energies, during
regular working hours, to the performance of his duties hereunder and to the
furtherance of the business and interests of the Company, its subsidiaries
and affiliate companies. Throughout the Term, Employee shall engage in no other
business activities
other than the passive supervision of his investments.
ARTICLE
II
2.01 Compensation.
For all
services rendered by the Employee hereunder and all covenants and conditions
undertaken by him pursuant to this Agreement, the Company
shall pay, and the Employee shall accept a salary at the rate of $85,000 per
annum. Compensation
shall be payable not less frequently than in bi-weekly installments. The Board
of Directors of the Company may (but shall not be obligated to), at any time
and
from time to time, grant to the Employee
an increase or increases in the compensation otherwise payable pursuant to
this
Section 2.01, but such increase or increases, if any, shall not be deemed to
alter, modify, waive or otherwise affect any other term,
covenant or condition of this Agreement.
2.02 Incentive
Compensation.
For the
balance of the calendar year 1999 and for each of the calendar
years 2000 through 2004, the Employee shall receive, as Incentive Compensation,
a percentage of the
Incentive Compensation Base. Incentive Compensation Base shall mean the
Company's net earnings (as determined by the Company in accordance with
generally accepted auditing standards consistent with those used by Company's
parent company) which are included in the parent company's consolidated audited
financial statements, plus the amount of any deductions from net earnings which
are made in such statements for (i) interest paid or accrued in connection
with
the acquisition of the Company, (ii) Federal income taxes, (iii) parent company
management fees or allocation of overhead from the parent company either paid
or
accrued and (iv) Incentive Compensation under this Agreement. For 1999 account
shall be taken only of net earnings during the period from April 1, 1999 through
December 31, 1999. Earnings of businesses
acquired by the Company shall be included in determining Incentive Compensation
base. Incentive Compensation will be paid within 30 days following receipt
by
the Company of the Independent Accountants' report for the year involved and
said report shall be binding and conclusive on the calculation of net earnings
and Incentive Compensation.
|
Portion
of Incentive
Compensation
Base
|
Additional
Compensation Percentages
|
||||||||
| Up to |
$
|
250,000
|
.25
|
%
|
|||||
|
$
|
251,000
|
to
|
$
|
500,000
|
.50
|
%
|
|||
|
$
|
501,000
|
to
|
$
|
750,000
|
.75
|
%
|
|||
|
$
|
751,000
|
to
|
$
|
1,000,000
|
1.00
|
%
|
|||
|
$
|
1,001,000
|
to
|
$
|
1,250,000
|
1.25
|
%
|
|||
|
$
|
1,251,000
|
to
|
$
|
1,500,000
|
1.50
|
%
|
|||
|
$
|
1,501,000
|
to
|
$
|
1,750,000
|
1.75
|
%
|
|||
|
$
|
1,751,000
|
to
|
$
|
2,000,000
|
2.00
|
%
|
|||
|
$
|
2,001,000
|
and
over
|
2.25
|
%
|
|||||
For
example, if the Incentive Compensation Base is $2,000,000, the additional
compensation would be computed as
follows:
|
Incentive
Compensation
Base
|
Additional
Compensation
Percentages
|
Incentive
Compensation
|
||||||
|
$
|
250,000
|
at
0.25%
|
|
$
|
625
|
|||
|
$
|
250,000
|
at
0.50%
|
|
$
|
1,250
|
|||
|
$
|
250,000
|
at
0.75%
|
|
$
|
1,875
|
|||
|
$
|
250,000
|
at
1.00%
|
|
$
|
2,500
|
|||
|
$
|
250,000
|
at
1.25%
|
|
$
|
3,125
|
|||
|
$
|
250,000
|
at
1.50%
|
|
$
|
3,750
|
|||
|
$
|
250,000
|
at
1.75%
|
|
$
|
4,375
|
|||
|
$
|
250,000
|
at
2.00%
|
|
$
|
5,000
|
|||
|
$
|
2,000,000
|
$
|
22,500
|
|||||
Total
Incentive Compensation in this example would be $22,500.
2.03. Deductions.
The
Company shall deduct from the compensation described in Section 2.01
and
Section 2.02 any Federal, state or local withholding taxes, social security
contributions and any other amounts which may be required to be deducted or
withheld by the Company pursuant to any Federal, state or city laws, rules
or
regulations.
2.04. Disability
Adjustments.
Any
compensation otherwise payable to the Employee
pursuant to Section 2.01 during any Disability Period (as that term is
hereinafter defined) shall be
reduced by any amounts payable to the Employee for loss of earnings or the
like
under any insurance plan
or
policy the premiums for which are paid for in their entirety by the
company.
ARTICLE
III
3.01 Fringe
Benefits.
During
the Term, the Employee shall be entitled to participate, in amounts commensurate
with the Employee's position hereunder, in such group life, health, accident,
disability or hospitalization
insurance plans, subject to underwriting requirements as the Company, or its
parent, may make
available to its other executive employees.
3.02. Expenses.
Upon
presentation of an itemized account thereof, with such substantiation as the
Company shall require, the Company shall pay or reimburse the Employee for
the
reasonable and necessary expenses directly and properly incurred by the Employee
in connection with the performance of his duties hereunder, subject to
guidelines established by the Board of Directors.
3.03 Vacations.
During
the Term, the Employee shall be entitled to paid holidays and paid vacations
in accordance with the policy of the Company as determined by the Board of
Directors provided, however,
that the Employee shall be entitled to not less than four weeks paid vacation
during each year of the
Term,
to be taken at times convenient to the Employee and to the Company.
3.04 Location.
Notwithstanding anything which may be contained herein to the contrary, the
Employee's
office shall be located in northeastern New Jersey area and the performance
of
his duties hereunder
shall not require his continued presence outside of such area if the Employee
shall object thereto.
ARTICLE
IV
4.01. Termination.
The
employment of the Employee, and the obligations of the Employee and the
Company hereunder, shall cease and terminate (except as otherwise specifically
provided in this Agreement)
upon the first to occur on the following dates (the "Termination
Date") described in this Section 4.01:
|
(a)
|
The
date of expiration by its terms of the
Term;
|
|
(b)
|
The
date of death of the Employee
|
|
(c)
|
The
date on which the Company gives to Employee a notice of disability
(a
"Disability Notice").
The Company may give a Disability Notice if the Employee shall become
unable,
by reason of illness or incapacity, to perform the duties required
of him
pursuant
to this Agreement, for a period of (i) ninety (90) consecutive days
or
(ii) for 180
(one hundred eighty) days in any 365 day period, (the "Disability
Period").
|
|
(d)
|
The
date on which the Company by notice terminates Employee's employment
for
cause
in accordance with Article VI.
|
ARTICLE
V
5.01. Non-Disclosure.
During
and after Employee's employment, and whether or not employment
is terminated for cause, without cause or otherwise, the Employee shall not
disclose or furnish to any other person, firm or corporation (the "Entity")
except in the course of the performance of his duties hereunder, the
following:
(a)
any
information relating to any process, technique or procedure used by
the
Company, including, without limitation, computer programs and methods
of evaluation and pricing and marketing techniques; or
(b)
any
information relating to the operations or financial status of the Company,
including, without limitation, all financial data and sources of
financing, which is not specifically a matter of public record; or
(c) any
information of a confidential nature obtained as a result of his prior,
present or future relationship with the Company, which is not specifically
a matter of public record; or
(d) any
trade
secrets of the Company; or
(e) the
name,
address or other information relating to any customer, supplier or debtor of
the
Company or other persons who have or had a business relationship with the
Company.
5.02. Non-Competition.
The
Employee shall not, from the date hereof and until two years following
the termination of his employment with the Company for whatever reason, whether
with or without
cause or otherwise (the "Restriction Period"):
(a) in
any
manner, directly or indirectly, be interested in, employed by, make any loan,
guaranty or
other
financial accommodation for, be engaged in or participate in the ownership,
management, operation
or control of, or act in any advisory, brokerage, finder or other capacity
for
any entity which,
directly or indirectly, then competes with the Company anywhere within the
Territory (as that
term
is hereinafter defined) provided, however, that the Employee may invest in
any
entity which may be deemed to be in competition with the Company hereunder,
the
Common Stock of which
entity is "publicly held", ); provided, however, that the Employee may invest
in
any entity which
is
"publicly held" and files periodic reports under the Securities Act of 1934
so
long as the Employee
does not own or control securities which constitute more than four percent
of
the voting rights
or
equity ownership of such entity. Without limiting the generality of the
foregoing, the Employee
or any entity shall be deemed to compete with the Company if at any time during
the Restriction
Period the Employee or such entity engages in any aspect of the business of
distributing
products or services for heating ventilation and air conditioning ("HVAC")
contractors.
The term "products" includes without limitation heating and air conditioning
equipment,
controls, parts, and accessories. The term "services" includes without
limitation temperature control system design and panel fabrication, technical
field support and technical training.
(b) The
Employee shall not during the Restriction Period:
(i)
in
any manner, directly or indirectly, attempt to seek to cause any entity to
refrain from
dealing or doing business with the Company or assist any entity in doing so
or
attempting
to do so;
(ii)
employ or retain any person who was an employee or consultant to the Company
at
any
time
during the preceding two years; or
(iii)
solicit the business of any person or entity who at any time was a customer
or
active prospect
of the Company.
5.03 Definitions.
As used
in this Article V only: (a) the term "Company" shall include
any parent, subsidiary or affiliate of, or successor to, the Company and (b)
the
term "Territory" shall
mean any state (including the District of Columbia), territory or possession
of
the United States within which
the
Company presently or hereafter does business.
5.04 Breach
of Provisions.
In the
event that the Employee shall breach any of the provisions
of this Article V, or in the event that any such breach is threatened by the
Employee, in addition to and without limiting or waiving any other remedies
available to the Company at law or in equity, the Company
shall be entitled to immediate injunctive relief in any court, domestic or
foreign, having the capacity to grant such relief, to restrain any such breach
or threatened breach to enforce the provisions of this
Article V, without posting bond or security. The Employee agrees and
acknowledges that there is no adequate
remedy at law for any such breach or threatened breach and, in the event that
any action or proceeding
is brought seeking injunctive relief, the Employee shall not use a defense
thereto that there is an adequate remedy at law.
5.05. Reasonable
Restrictions; Court May Reform.
The
parties acknowledge that the foregoing restrictions, the duration and the
territorial scope thereof as set forth in this Article V, are under all of
the
circumstances
reasonable and necessary for the protection of the Company and its business.
The
courts enforcing this Agreement shall be entitled to modify the duration and
scope of any restriction contained herein to the extent such restriction would
otherwise be unenforceable, and such restriction as modified shall
be
enforced.
5.06. Extension
of
Restricted Period. All time periods in this Article shall be computed by
excluding from such computation any time during which Employee is in violation
of any provision of this Agreement and any time during which there is pending
in
any court of competent jurisdiction any action (including any appeal from any
final judgment) brought by any person, whether or not a party to this
Agreement,
in which action the Company seeks to enforce the agreements and covenants in
mis
Agreement or
in
which any person contests the validity of such agreements and covenants or
their
enforceability or seeks
to
avoid then- performance or enforcement.
ARTICLE
VI
6.01. Termination
by the Company for Cause.
At any
time during the term of this Agreement, the Company may discharge the Employee
for cause and terminate this Agreement without any further liability
hereunder
to the Employee or his estate, except to pay any accrued, but unpaid, salary
but
not Incentive Compensation to him. In the event of such termination, Employee
agrees he shall also be deemed to have resigned from the Company and its Parent,
as a President and Employee, effective as of the date of such termination.
For purposes of this Agreement, a "discharge for cause" shall mean termination
of the Employee
upon written notification to the Employee limited, however, to one or more
of
the following reasons:
|
(i)
|
Fraud,
misappropriate or embezzlement by the Employee in connection with
the Company;
or
|
|
(ii)
|
Gross
neglect of duties which has a detrimental effect on the Company after
notice
to the Employee of the particular details thereof and a period of
thirty
(30) days to correct such mismanagement or neglect, if any;
or
|
|
(iii)
|
Conviction
or plea of "no contest" by a court of competent jurisdiction in the
United
States of a felony or a crime involving moral turpitude, including
but not
limited
to drug abuse, violence and sexual
harassment, or
|
|
(iv)
|
Willful
and unauthorized disclosure of confidential, or proprietary trade
secret
information
of the Company; or
|
|
(v)
|
The
Employee's breach of any material term or provision of this agreement,
after notice to the Employee of the particular details thereof
and a period of not less than thirty (30) days thereafter within
which
to cure such breach, if any.
|
ARTICLE
VII
7.01 Assignment.
This
Agreement shall not be assigned by either party, except that the Company
shall have the right to assign its rights hereunder to any parent, subsidiary
and affiliate of, or successor to, the Company.
7.02 Binding
Effect.
This
Agreement shall extend to and be binding upon the Employee, his legal
representatives, heirs and distributees, and upon the Company, its successors
and assigns.
7.03 Notices.
Any
notice required or permitted to be given under this Agreement to either party
shall be sufficient if in writing and if sent by registered or certified mail,
return receipt requested, to the address of such party hereinabove set forth
or
to such other address as such party may hereafter designate by a notice given
to
the other party in the manner provided in this Section 7.03.
7.04 Waiver.
A waiver
by a party hereto of a breach of any term, covenant or condition of this
Agreement
by the other party hereto shall not operate or be construed as waiver of any
other or subsequent breach by such party of the same or any other term, covenant
or condition hereof.
7.05. Prior
Agreements.
Any and
all prior agreements between the Company and the Employee, whether
written or oral, between the parties, relating to any and all matters covered
by, and contained or otherwise
dealt within this Agreement are hereby canceled and terminated.
7.06 Entire
Agreement.
This
Agreement sets forth the entire agreement between the parties with respect
to the subject matter hereof and no waiver, modification, change or amendment
of
any of its provisions
shall be valid unless in writing and signed by the party against whom such
claimed waiver, modification, change or amendment is sought to be
enforced.
7.07 Authority.
The
parties severally represent and warrant that they have the power, authority
and
right to enter into this Agreement and to carry out and perform the terms;
covenants and conditions hereof.
7.08 Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York. The Federal and state courts in Nassau County, New York
shall
have exclusive jurisdiction on all matters relating to this Agreement. TRIAL
BY
JURY IS WAIVED.
7.09 Severability.
In the
event that any of the provisions of this Agreement, or any portion thereof,
shall be held to be invalid or unenforceable, the validity and enforceability
of
the remaining provisions shall not be affected or impaired, but shall remain
in
full force and effect.
7.10 Titles.
The
titles of the Articles and Sections of this Agreement are inserted merely for
convenience
and ease of reference and shall not affect or modify the meaning of any of
the
terms, covenant or conditions of this Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and date first
above written.
|
UNIVERSAL
SUPPLY GROUP
|
|||
|
By:
|
/s/
Xxxxx X. Xxxxxxx
|
||
|
Xxxxx
X. Xxxxxxx, Secretary
|
|||
|
By:
|
/s/Xxxxxxx
Xxxxx
|
||
|
Xxxxxxx
Xxxxx, Employee
|
|||