EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between
American Plumbing and Mechanical, Inc., a Delaware corporation (the "Company" or
"AMPAM") and all its subsidiaries, and Xxxxx X. Xxxxx ("Executive") is hereby
entered into effective as of the date of the closing of the transactions
contemplated in the Agreement and Plan of Merger dated February 14, 2000 between
AMPAM, LDI Mechanical, Inc., Xxxxx Xxxxxx Industries, Inc., LDI Heating & Air
Conditioning, LDI Mechanical, Xxxxxxxxxx Plumbing Incorporated, Xxxxxxxxxx Fire
Sprinklers LLC and Green Valley Plumbing, Inc. and the stockholders and members
of the acquired companies (the "Effective Date").
RECITALS
The following statements are true and correct:
Whereas, as of the Effective Date, the Company and the
subsidiaries of the Company (the Company and such subsidiaries being
collectively, the "AMPAM Companies") provide plumbing and mechanical contracting
services; and
Whereas, the Company wishes to employ Executive, and Executive
wishes to be employed by the Company, on the terms set forth herein; and
Whereas, in the course of his employment with the Company,
Executive will become familiar with and aware of information as to the AMPAM
Companies' customers and specific manner of doing business, including the
processes, techniques and trade secrets used by the AMPAM Companies, and future
plans with respect thereto, all of which has been and will be established and
maintained at great expense to the AMPAM Companies and which constitutes trade
secrets and the valuable goodwill of the AMPAM Companies.
Therefore, in consideration of the mutual promises, terms,
covenants and conditions set forth herein and the performance of each, it is
hereby agreed as follows:
AGREEMENTS
1. Employment and Duties.
a. The Company hereby employs Executive as President of LDI
Mechanical, Inc., a Delaware corporation, and National Director of
Heating and Air Conditioning of the Company. As such, Executive shall
have the responsibilities, duties and authority customarily
appertaining to such office and such other duties as may be reasonably
we assigned to Executive and which are consistent with such position.
In his capacity as National Director of Heating and Air Conditioning of
the Company, Executive shall report to the Chief Operating Officer of
the Company unless otherwise directed by the Board of Directors.
Executive hereby accepts this employment upon the terms and
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conditions herein contained and, subject to paragraph 1.c., agrees to
devote substantially all of his time, attention and efforts during
normal business hours, excluding any periods of vacation or sick leave,
to promote and further the business and interests of the Company and
its affiliates.
b. Executive shall faithfully adhere to, execute and fulfill
all reasonable and lawful policies established by the Company, to the
extent such policies have been communicated to Executive in writing and
are not inconsistent with any of the terms of this Agreement.
c. Executive shall not, during the term of his employment
hereunder, engage in any other business activity pursued for gain,
profit or other pecuniary advantage to the extent such activity
interferes materially with Executive's duties and responsibilities
hereunder. The foregoing limitations shall not prohibit Executive from
making personal investments in such form or manner as will not
materially interfere with Executive's performance of his duties under
this Agreement.
d. Executive shall be entitled to four weeks of paid vacation
per calendar year.
2. Compensation. For all services rendered by Executive, the Company
shall compensate Executive as follows:
a. Base Salary. The base salary payable to Executive during
the term shall be $200,000.00 per year ("Base Salary") payable in
accordance with the Company's payroll procedures for officers, but not
less frequently than twice monthly. On an annual basis such base salary
shall be reviewed by the Board of Directors of the Company (the
"Board"), and may be adjusted at its discretion in light of the
Executive's position, responsibilities, performance and such other
reasonable, job related factors that the Board deems appropriate;
provided, however, as adjusted Base Salary may not be less than that
amount in effect on the Effective Date.
b. Annual Bonus. The Company will adopt an incentive bonus
plan under which Executive and other officers of the Company will be
eligible to receive annual bonus awards in amounts that are competitive
with those provided to similarly situated executives and commensurate
with the performance of the AMPAM Companies, as reasonably determined
by the Board. Executive will be entitled to and will be paid a bonus
under such plan for the period that begins on and following the
Effective Date.
c. Executive Perquisites and Benefits. Executive shall be
entitled to receive additional benefits and compensation from the
Company in the form and to the extent specified below:
1. Executive shall be reimbursed for all business
travel and other out-of-pocket expenses reasonably incurred by
Executive in the performance of his duties pursuant to this
Agreement and in accordance with the Company's policy for its
officers, including, without limitation, continuing education,
license and
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administrative fees. All such expenses shall be appropriately
documented in reasonable detail by Executive upon submission
of any request for reimbursement, and in a format and manner
consistent with the Company's expense reporting policy.
2. Executive shall be entitled to participate in all
bonus and incentive compensation plans and to receive all
fringe benefits and perquisites offered by the Company to any
of the Company's similarly situated executives, including,
without limitation, participation in the various employee
benefit plans or programs provided to the employees of the
Company in general, subject to the regular eligibility
requirements with respect to each of such benefit plans or
programs, and such other benefits or perquisites as may be
approved for Executive by the Board during the term of this
Agreement, all on a basis as favorable to Executive as may be
provided or offered by the Company to other comparable
officers (in terms of position) of the Company.
Notwithstanding the above, until the Company establishes
employee welfare and pension benefit plans for its officers,
Executive shall participate in such plans of the AMPAM
Companies as may be designated.
The Company shall provide Executive with such other
perquisites as may be deemed appropriate for Executive by the
AMPAM Board during the term of this Agreement.
3. Notwithstanding the above, the Board may offer or
provide to Executive, or to any other officer or executive of
the Company or any AMPAM Company, special compensation,
benefits, and/or perquisites, in order to attract or retain
that executive or officer where the Board determines, in its
discretion, that the offer or provision of such special
compensation, benefits, and/or perquisites are in the best
interests of AMPAM or any AMPAM Company. Should the Board make
such determination and offer or provide special compensation,
benefits and/or perquisites to an officer or executive,
Executive will not automatically be entitled to such special
compensation, benefits and/or perquisites.
3. Non-Competition Agreement.
a. Executive acknowledges that as a consequence of his
employment with the Company, he will be furnished or have access to
Confidential Information (as defined below). Executive further
recognizes that the Company's willingness to enter into this Agreement
is based in material part on Executive's agreement to the provisions of
this paragraph 3 and that Executive's breach of the provisions of this
paragraph 3 could materially damage the Company. Subject to the further
provisions of this Agreement, Executive will not, during the term of
his employment with the Company and for a period of two years
immediately following the termination of such employment for any
reason, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, company, partnership, corporation or
business of whatever nature:
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1. engage, as an officer, director, shareholder,
owner, partner, joint venture, or in a managerial capacity,
whether as an employee, independent contractor, consultant or
advisor, or as a sales representative, whether paid or unpaid,
in any plumbing, piping, mechanical, heating, ventilation or
air-conditioning contracting, installation or services
business directly related thereto (such business and
operations referred to herein as the "Plumbing and Mechanical
Business"), in direct competition with any of the AMPAM
Companies within 100 miles of where any of the AMPAM Companies
conducts business including any territory serviced by any of
the AMPAM Companies during the term of Executive's employment
(the "Territory");
2. call upon any person who is, at that time, an
employee of the AMPAM Companies for the purpose or with the
intent of enticing such employee away from or out of the
employ of the AMPAM Companies;
3. call upon any person or entity which is, at that
time, or which has been, within one year prior to that time, a
customer of the AMPAM Companies within the Territory for the
purpose of soliciting customers, orders or contracts for any
Plumbing and Mechanical Business within the Territory;
4. call upon any prospective acquisition candidate,
on Executive's own behalf or on behalf of any competitor,
which candidate was, to Executive's knowledge after due
inquiry, either called upon by the AMPAM Companies or for
which the AMPAM Companies made an acquisition analysis, for
the purpose of acquiring such entity;
5. disclose customers, whether in existence or
proposed, of the AMPAM Companies to any person, firm,
partnership, corporation or business for any reason or purpose
whatsoever except to the extent that the AMPAM Companies has
in the past disclosed such information to the public, any
person, firm, partnership, corporation, business, or other
entity, for valid business reasons; or
6. testify as an expert witness in plumbing and
mechanical services matters for an adverse party to any of the
AMPAM Companies in litigation; provided that nothing contained
in this paragraph 3.a.6. shall interfere with Executive's
duty to testify as a witness if required by law.
Notwithstanding the above, the foregoing covenant
shall not be deemed to prohibit Executive from (i) acquiring
as an investment not more than 1% of the capital stock of a
company engaged in the Plumbing and Mechanical Business, whose
stock is traded on a national securities exchange, the NASDAQ
Stock Market or on an over-the-counter or similar market, (ii)
acquiring as an investment not more than 1% of the capital
stock of a competing business whose stock is not publicly
traded if the Board consents to such acquisition, or (iii)
engaging in activities, directly or indirectly, related to
owning, leasing, developing, or selling real estate. ANY
OWNERSHIP INTEREST IN ANY BUSINESS
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WHICH IS IN COMPETITION WITH THE AMPAM COMPANIES SHALL
IMMEDIATELY BE DISCLOSED TO THE BOARD BY EXECUTIVE.
b. Because of the difficulty of measuring economic losses to
the Company as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to
the Company for which they would have no other adequate remedy,
Executive agrees that foregoing covenant may be enforced by the
Company, in the event of breach by him, by injunctions, restraining
orders, and orders of specific performance issued by a court
of competent jurisdiction. Executive further agrees to waive any
requirement for the Company's securing or posting of any bond in
connection with such remedies.
c. It is agreed by the parties that the foregoing covenants in
this paragraph 3 impose a reasonable restraint on Executive in light of
the activities and business of the AMPAM Companies on the date of the
execution of this Agreement and the current plans of the AMPAM
Companies; but it is also the intent of the Company and Executive that,
subject to paragraph 3.d. hereof, such covenants be construed and
enforced in accordance with the changing activities, business and
locations of the AMPAM Companies throughout the term of this covenant,
whether before or after the date of termination of the employment of
Executive, unless the Executive was conducting such new business prior
to the AMPAM Companies conducting such new business. For example, if,
during the term of Executive's employment, any of the AMPAM Companies
engages in new and different activities, enters a new business or
establishes new locations for its current or new activities or business
in addition to or other than the activities or business enumerated
under the Recitals above or the locations currently established
therefor, then, subject to paragraph 3.d. hereof, through the term of
this covenant Executive will be precluded from soliciting the customers
or employees of such new activities or business or from such new
location and from directly competing with such new business activities,
or locations within 100 miles of where such new activities, business or
locations are conducted, unless Executive was conducting such new
activities or business prior to any of the AMPAM Companies conducting
such new activities or business.
d. It is further agreed by the parties hereto that, in the
event that Executive shall cease to be employed hereunder and shall
enter into a business or pursue other activities not in competition
with the Plumbing and Mechanical Business of the AMPAM Companies or
related activities or business in locations the operation of which,
under such circumstances, does not violate clause a.1. of this
paragraph 3, and in any event such new business, activities or
location are not in violation of this paragraph 3 or of Executive's
obligations under this paragraph 3, if any, Executive shall not be
chargeable with a violation of this paragraph 3 if the AMPAM Companies
shall at any time after the termination of Executive's employment
enter the same, similar or a competitive (i) business, (ii) course of
activities or (iii) location, as applicable.
e. The covenants in this paragraph 3 are severable and
separate, and the non-enforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope,
time or territorial restrictions set forth are unreasonable, then it is
the intention
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of the parties that such restrictions be enforced to the fullest extent
which the court deems reasonable, and the Agreement shall thereby be
reformed.
f. All of the covenants in this paragraph 3 shall be construed
as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Executive against
any of the AMPAM Companies, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the
Company of such covenants. It is specifically agreed that the period of
two years (subject to the further provisions of this Agreement)
following termination of employment stated at the beginning of this
paragraph 3, during which the agreements and covenants of Executive
made in this paragraph 3 shall be effective, shall be computed by
excluding from such computation any time during which Executive is in
violation of any provision of this paragraph 3.
g. The Company and the Executive hereby agree that this
covenant is a material and substantial part of this transaction.
4. Term; Termination; Rights on Termination. The term of this Agreement
shall begin on the Effective Date and continue for five years (the "Initial
Term"), unless terminated sooner as herein provided; however, beginning on the
fifth anniversary of the Effective Date and on each anniversary thereafter the
term shall automatically continue for one year on the same terms and conditions
contained herein in effect as of the time of renewal (the "Extended Term")
unless not less than six months prior to any such anniversary either party shall
give written notice to the other party that the term shall not be so extended;
provided further, however, upon a Change in Control (as defined in paragraph 11
..c.) during the Initial Term or any Extended Term the term of this Agreement
shall automatically continue following such Change in Control for a period equal
to the then remaining term or two years, whichever period is longer (such longer
period being an Extended Term), unless earlier terminated as provided in
paragraph 11. This Agreement and Executive's employment may be terminated in any
one of the followings ways:
a. Death. The death of Executive shall immediately terminate
this Agreement with no severance compensation due Executive's estate;
provided, however, for the 90-day period following Executive's death,
the Company, at its sole cost and expense, shall continue to provide
Executive's then qualified beneficiaries with coverage under the
Company's group health plan in which Executive participated immediately
prior to Executive's death or a successor plan thereto, subject to the
tans of such plan as it may be amended ("Company Health Plan").
Thereafter, the Company shall provide continuation of coverage
elections to such qualified beneficiaries as are required by law.
b. Disability. If Executive becomes entitled to and receives
benefits under an insured long term disability plan of the AMPAM
Companies (incurs a "Disability"), the Company, with the approval of a
majority of the members of the Board, may terminate this Agreement and
Executive's employment hereunder. In the event this Agreement is
terminated as a result of Executive's Disability, Executive shall have
no right to any severance compensation; provided, however, (i) for 12
months thereafter or until Executive's death, if earlier, the Company
shall continue to pay Executive an amount equal to Executive's monthly
adjusted Base Salary (computed by reference to
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Executive's annual adjusted Base Salary at the time of his termination)
reduced by any cash benefits payable to Executive under such long term
disability plan and (ii) the Company, at its sole cost and expense,
shall continue the coverage of Executive and his qualified
beneficiaries (for as long as they are qualified beneficiaries
thereunder) under the Company Health Plan for as long as Executive
continues to qualify for and receive benefits under such long term
disability plan, but not to exceed five years. Thereafter, the Company
shall provide continuation of coverage elections to Executive and his
qualified beneficiaries as required by law.
c. Cause. The Company may terminate this Agreement and
Executive's employment for "Cause", which shall be: (I) Executive's
willful and material breach of this Agreement (which remains uncured
for 30 days after Executive's receipt of written notice of need to
cure); (2) Executive's gross negligence in the performance or
intentional nonperformance (in either case continuing for 30 days after
Executive's receipt of written notice of need to cure) of any of
Executive's material duties and responsibilities hereunder; (3)
Executive's dishonesty or fraud with respect to the business,
reputation or affairs of the AMPAM Companies; or (4) Executive's
conviction of a felony crime involving moral turpitude. Any termination
for Cause must be approved by a majority of the eligible members of the
Board (FOR THIS PURPOSE, ANY MEMBER OF THE BOARD REASONABLY BELIEVED BY
A MAJORITY OF THE BOARD TO BE AT FAULT IN THE EVENTS LEADING THE BOARD
TO CONSIDER TERMINATING EXECUTIVE FOR CAUSE SHALL ALSO BE EXCLUDED,
INCLUDING EXECUTIVE IF EXECUTIVE IS A MEMBER OF THE BOARD.). For
purposes hereof, no act, or failure to act, on Executive's part shall
be deemed "willful" unless done, or omitted to be don; by Executive not
in good faith and/or without reasonable belief that Executive's action
or omission was in the best interest of the Company. Notwithstanding
the foregoing, Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to Executive
a Notice of Termination and a copy of a resolution duly adopted by the
Board, finding that in the good faith opinion of the Board, Executive
was guilty of conduct set forth above and specifying the particulars
thereof in detail. In the event of a termination for Cause, Executive
shall have no right to any severance compensation.
d. Without Cause or For Good Reason. Executive may only be
terminated without Cause and other than due to Disability by the
Company during either the Initial Term or Extended Term if such
termination is approved by a majority of the members of the Board.
Executive may, with Good Reason, terminate this Agreement and
Executive's employment, effective two (2) weeks after delivery of
written notice to the Company. Should Executive be terminated by the
Company without Cause and other than due to Disability or should
Executive terminate with Good Reason during the Initial Term, Executive
shall receive from the Company, in addition to any accrued but unpaid
salary, bonus and benefits, in a lump sum payment due on the effective
date of termination, an amount equivalent to the annual adjusted Base
Salary at the rate then in effect for (i) whatever dine period is
remaining under the Initial Term (but in no event more than two years)
or (ii) for one year, whichever amount is greater. Should Executive be
terminated by the Company without Cause and other than due to
Disability or should Executive terminate with Good Reason during the
Extended Term, Executive shall receive from the Company, in a lump sum
payment due on the effective date of
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termination, an amount equivalent to the adjusted Base Salary at the
rate then in effect for one year. Further, any termination by the
Company without Cause or due to Disability or by Executive for Good
Reason Whether during the Initial Term or any Extended Term shall
operate to shorten the period set forth in paragraph 3.a. and during
which the terms of paragraph 3 apply to one year from the date of
termination of employment If Executive resigns or otherwise terminates
his employment without Good Reason, rather than the Company terminating
his employment pursuant to that paragraph 4.d., Executive shall receive
no severance compensation.
e. Executive shall have "Good Reason" to terminate his
employment hereunder and may terminate for Good Reason, effective upon
two weeks notice, as a consequence of any of the following events,
unless such event is agreed to in writing by Executive: (a) a material
reduction in his authority, title, responsibilities or duties; (B)
Executive's adjusted Base Salary is reduced below that in effect on the
Effective Date; (c) the relocation of the Company's principal executive
offices or Executive's principal office to a location outside of
Riverside County or Orange County in the state of California; (d) the
assignment to Executive of any duties or responsibilities which are
materially inconsistent with Executive's title, position or
responsibilities as in effect immediately prior to such assignment; or
(e) any material breach by the Company of any provision of this
Agreement; provided, however, Good Reason shall exist with respect to a
matter only if such matter is not corrected by the Company within 30
days of its receipt of written notice of such matter from Executive,
and in no event shall a termination by Executive occurring more than 60
days following the date of an event described above be a termination
for Good Reason due to such event.
f. Resignation Without Good Reason. Executive may, without
Good Reason (as hereinafter defined), terminate this Agreement and
Executive's employment, effective 30 days after written notice is
provided to the Company. If Executive resigns or otherwise terminates
his employment without Good Reason, rather than the Company terminating
his employment pursuant to tat paragraph 4.d., Executive shall receive
all accrued but unpaid salary, bonus and benefits. Under no
circumstance where Executive terminates Executive's employment without
Good Reason, shall Executive be entitled to any pro rata share or
payment of any bonus or other compensation which has not yet been
determined or which requires employment at the time of the
determination or award for eligibility.
g. Upon termination of this Agreement for any reason provided
above, in addition to the above payments, if any, Executive shall be
entitled to receive all compensation earned, accrued vacation and
reimbursements due through the effective date of termination, paid to
Executive in a lump sum on the effective date of termination. In
addition, a termination of this Agreement shall not alter or impair any
of Executive's vested rights or benefits, if any, under any (i)
employee benefit plan of the AMPAM Companies or (ii) deferred
compensation plan, including, without limitation, any stock option
plan, of the AMPAM Companies. All other rights and obligations of the
on Company and Executive under this Agreement shall cease as of the
effective date of termination, except that Executive's obligations
under paragraphs 3, 5, 6, 7, and 8 herein and the Company's obligations
under paragraphs 11.d. and 14 shall survive such
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termination in accordance with their terms, unless or except as
expressly provided otherwise in this Agreement.
5. Return of Company Property. All records, designs, patents,
business plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of any of the
AMPAM Companies or their representatives, vendors or customers which pertain to
the business of any AMPAM Companies shall be and remain the property of the
AMPAM Companies, as the case may be, and be subject at all times to their
discretion and control. Likewise, all correspondence, reports, records, charts,
advertising materials and other similar data pertaining to the business,
activities or future plans of the AMPAM Companies which is collected by
Executive shall be delivered promptly to the Company without request by it upon
termination of Executive's employment and Executive shall not retain any copies
of the same.
6. Intellectual Property. Executive shall disclose promptly to the
Company any and all conceptions, ideas, designs, plans, know-how, processes,
improvements and other discoveries, whether patentable or not, which (i) are
conceived or made by Executive, solely or jointly with another, during the
period of employment or thereafter, (ii) are directly related to the plumbing
and mechanical business or activities of the AMPAM Companies, and (iii)
Executive conceives as a result of his employment by the Company, including any
predecessor (collectively, the "Intellectual Property"). Executive hereby
assigns and agrees to assign all his interests therein to the Company or its
nominee. Whenever requested to do so by the Company, Executive shall execute any
and all applications, assignments or other instruments that the Company shall
deem necessary to apply for and obtain Letters Patent of the United States or
any foreign country or to otherwise protect the Company's interest therein.
Executive must also render to the Company, at the Company's expense, assistance
in the perfection, enforcement and defense of any Intellectual Property.
7. Trade Secrets. Executive agrees that he will not, during or after
the term of this Agreement, disclose the specific terms of the AMPAM Companies'
relationships or agreements with its respective vendors or customers or any
other trade secret of the AMPAM Companies, whether in existence or proposed, to
any person, firm, partnership, corporation or business for any reason or purpose
whatsoever, except as required by law and prior to any such disclosure Executive
shall give the Company prior written notice thereof and the opportunity to
contest such disclosure.
8. Confidentiality.
a. Executive acknowledges and agrees that all Confidential
Information (as defined below) of the Company is confidential and a
valuable, special and unique asset of the Company that gives the
Company an advantage over its actual and potential, current and
future competitors. Executive further acknowledges and agrees that
Executive owes the Company a fiduciary duty to preserve and protect
all Confidential Information from 7 unauthorized disclosure or
unauthorized use, that certain Confidential Information constitutes
"trade secrets" under applicable laws and, that unauthorized
disclosure or unauthorized use of the Confidential Information would
irreparably injure the Company.
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b. Both during the term of Executive's employment and after
the termination of Executive's employment for any reason (including
wrongful termination), Executive shall hold all Confidential
Information in strict confidence, and shall not use any Confidential
Information except for the benefit of the Company, in accordance with
the duties assigned to Executive. Executive shall not, at any time
(either during or after the term of Executive's employment), disclose
any Confidential Information to any person or entity (except other
employees of the Company who have a need to know the information in
connection with the performance of their employment duties, and who
have been informed of the confidential nature of the confidential
information and have agreed to keep it confidential), or copy,
reproduce, modify, transmit, including electronic transmission,
decompile or reverse engineer any Confidential Information, or remove
any Confidential Information from the Company's premises, without the
prior written consent of the Board, or permit any other person to do
so. Executive shall take reasonable precautions to protect the physical
security of all documents and other material containing Confidential
Information (regardless of the medium on which the Confidential
Information is stored). This Agreement applies to all Confidential
Information, whether now known or later to become known to Executive.
c. Upon the termination of Executive's employment with the
Company for any reason, and upon written request of the Company at any
other time, Executive shall promptly surrender and deliver to the
Company all documents and other written material of any nature
containing or pertaining to any Confidential Information and shall not
retain any such document or other material. Within ten days of a
written request by the Company, Executive shall certify to the Company
in writing that all such materials have been returned.
d. As used in this Agreement, the term "Confidential
Information" shall mean any information or material known to or used by
or for the AMPAM Companies (whether or not owned or developed by the
AMPAM Companies and whether or not developed by Executive) that is not
generally known to persons in the Plumbing and Mechanical Business,
except as provided in this paragraph. Confidential Information
includes, but is not limited to, the following: all trade secrets of
the AMPAM Companies; all information that the AMPAM Companies have
marked as confidential or has otherwise described to Executive (either
in writing or orally) as confidential; all nonpublic information
concerning the AMPAM Companies' products, services, prospective
products or services, research, product designs, prices, discounts,
costs, marketing plans, marketing techniques, market studies, test
data, customers, customer lists and records, suppliers and contracts;
all AMPAM Companies' business records and plans; all AMPAM Companies'
personnel files; all financial information of or concerning the AMPAM
Companies; all information relating to operating system software,
application software, software and system methodology, hardware
platforms, technical information, inventions, computer programs and
listings, source codes, object codes, copyrights and other intellectual
property; all technical specifications; any proprietary information
belonging to the AMPAM Companies; all computer hardware or software
manuals; all training or instruction manuals; and all data and all
computer system passwords and user codes. For purposes hereof,
Confidential Information shall not include such information (i) which
becomes or is already known to the public or some
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other party through no fault of Executive; or (ii) the disclosure of
which (x) is required by law (including regulations and rulings) or the
order of any competent governmental authority or (y) Executive
reasonably believes is required in connection with the defense of a
lawsuit against Executive, provided that in either case, prior to
disclosing any information, Executive shall give prior written notice
thereof to the Company and provide the Company with the opportunity to
contest such disclosure.
9. No Prior Agreements. Executive hereby represents and warrants to the
Company that the execution of this Agreement by Executive and his employment by
the Company and the performance of his duties hereunder will not violate or be a
breach of any agreement, including any non-competition agreement, invention or
secrecy agreement, with a former employer, client or any other person or entity.
Further, Executive agrees to indemnify the Company for any loss, including, but
not limited to, reasonable attorneys' fees and expenses, the Company may incur
based upon or arising out of Executive's breach of this paragraph 9.
10. Assignment; Binding Effect. Executive understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, that he
cannot assign all or any portion of his performance under this Agreement.
Subject to the preceding two sentences and the express provisions of paragraph
12 below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective hefts, legal
representatives, successors and assigns. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and assets of the Company to expressly
assume and agree in writing reasonably satisfactory to Executive to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such written agreement prior to the effectiveness of any such
succession shall be a material breach of this Agreement.
11. Change in Control.
a. Executive understands and acknowledges that the Company may
be merged or consolidated with or into another entity and that such
entity shall automatically succeed to the rights and obligations of the
Company hereunder or that the Company may undergo a Change in Control
(as defined below). In the event a Change in Control is initiated or
occurs during the Initial Term or an Extended Term, then the provisions
of this paragraph 11 shall be applicable.
b. In the event of a Change in Control wherein the Company and
Executive have not received written notice at least ten business days
prior to the date of the event giving rise to the Change in Control
from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing
to assume and agrees to perform, or continue to cause the Company to
perform, the Company's obligations under this Agreement in the same
manner and to the same extent that the Company is hereby required to
perform, then Executive may, at Executive's sole discretion, elect to
terminate Executive's employment on the effective date of such Change
in Control by providing written notice to the Board at least five
business days
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prior to the closing of the transaction giving rise to the Change in
Control. In such case, Executive shall be deemed to have terminated
Executive's employment for Good Reason on such date; provided, however,
the amount of the lump sum severance payment due Executive shall be
triple the amount calculated under the terms of paragraph 4.d.
c. A "Change in Control" shall be deemed to have occurred if:
1. any person, entity or group (as such terms are
used in Sections 13d. and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Act")), other than persons and
entities which owned any capital stock of the Company at the
closing date of the transactions contemplated in the
Acquisition Agreements, the AMPAM Companies or an employee
benefit plan of the AMPAM Companies, acquires, directly or
indirectly, the beneficial ownership (as defined in Section
13(d) of the Act) of any voting security of the Company and
immediately after such acquisition such person, entity or
group is, directly or indirectly, the beneficial owner of
voting securities representing 50% or more of the total voting
power of all of the then outstanding voting securities of the
Company entitled to vote generally in the election of
directors;
2. upon the first purchase of the Company's common
stock pursuant to a tender or exchange offer (other than a
tender or exchange offer made by the Company);
3. the stockholders of the Company shall approve a
merger, consolidation, recapitalization or reorganization of
the Company, or a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not obtained, other than any such
transaction which would result in at least 75% of the total
voting power represented by the voting securities of the
surviving entity outstanding immediately after such
transaction being beneficially owned by the holders of all of
the outstanding voting securities of the Company immediately
prior to the transactions with the voting power of each such
continuing holder relative to other such continuing holders
not substantially altered in the transaction;
4. the stockholders of the Company shall approve a
plan of complete liquidation or dissolution of the Company or
an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets; or
5. if, at any time during any period of two
consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute
at least a majority thereof, unless the election or nomination
for the election by the Company's stockholders of each new
director was approved a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of the period.
d. If it shall be determined that any payment made or benefit
provided to Executive in connection with a change in control (as
defined in Section 280G of the
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Internal Revenue Code of 1986, as amended (the "Code"), or any
successor thereto) of the Company occurring after the Effective Date
and on or before the termination of this Agreement, whether or not made
or provided pursuant to this Agreement, is subject to the excise tax
imposed by Section 4999 of the Code, the Company shall pay Executive an
amount of cash (the "Additional Amount") such that the net amount
received by Executive after paying all applicable taxes on such
Additional Amount and any penalties, interest and other reasonable
costs incurred as a result of such excise tax or additional payment,
shall be equal to the amount that Executive would have received if
Section 4999 were not applicable.
12. No Mitigation or Offset. Executive shall not be required to
mitigate the amount of any Company payment provided for in this Agreement by
seeking other employment or otherwise. The amount of any payment required to be
paid to Executive by the Company pursuant to this Agreement shall not be reduced
by any amounts that are owed to the Company by Executive, provided that
Executive (i) executes and delivers to the Company a promissory note evidencing
a promise by Executive to pay the full amount of any amounts owed to the Company
within 12 months from the date of Executive's termination of employment and (ii)
provides such collateral reasonably satisfactory to the Company to ensure
payment of such promissory note.
13. Release. Notwithstanding anything in this Agreement to the
contrary, Executive shall not be entitled to receive any severance payments
pursuant to paragraphs 4 or 11 of this Agreement unless Executive has executed
(and not revoked) a general release of all claims, known or unknown, Executive
may have against the Company, its subsidiaries, their directors, officers, and
employees, in a form of such release reasonably acceptable to the Company.
14. Indemnification. In the event Executive is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
derivative, subrogation, criminal, administrative or investigative (other than
an action by the Company against Executive and a derivative action shall not be
considered an action by the Company), by reason of the fact that he is or was
performing services for the Company or any of the AMPAM Companies or any present
or future subsidiary thereof, or as an executive officer of the AMPAM Companies
prior to the date of this Agreement, then the Company shall indemnify Executive
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, as actually and reasonably incurred by Executive in
connection therewith. In the event that both Executive and the Company are made
a party to the same third-party action, complaint, suit or proceeding, the
Company agrees to engage competent legal representation, and Executive agrees to
use the same representation, provided that if counsel selected by the Company
shall have a conflict of interest that prevents such counsel from representing
Executive, Executive may engage separate counsel and the Company shall pay as
incurred all reasonable attorneys' fees and reasonable expenses of such separate
counsel, provided further that Executive may at anytime, at Executive's sole
expense, hire separate counsel to represent Executive in such matter. Further,
while Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement Executive cannot be held liable to the
Company for errors or omissions made in good faith where Executive has not
exhibited gross, willful and wanton negligence and misconduct nor performed
criminal and fraudulent acts which materially damage the business of the
Company. The Company shall indemnify Executive against and hold Executive
harmless
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from any costs, expenses (including reasonable attorneys' fees as provided in
this paragraph), liabilities, losses and exposures for Executives s services as
an employee, officer and director of the Company (or any of AMPAM Companies or
any successor) to the maximum extent permitted under applicable law. The
indemnification required by this paragraph 14. shall be made by the Company by
periodic payments promptly as and when bills are received or liabilities are
incurred. The provisions of this paragraph shall survive the termination of this
Agreement.
15. Complete Agreement. This Agreement supersedes, and replaces in
full, all representations, understandings and agreements (oral or written)
between Executive and the Company or any of the AMPAM Companies or any of their
officers, directors or representatives existing as of the Effective Date and
covering the same subject matter as this Agreement, but excluding the Agreement
and Plan of Merger among AMPAM, LDI Mechanical, Inc., Xxxxx Xxxxxx Industries,
Inc., LDI Heating & Air Conditioning, LDI Mechanical, Xxxxxxxxxx Plumbing
Incorporated, Xxxxxxxxxx Fire Sprinklers LLC and Green Valley Plumbing, Inc.
and the stockholders and members of the acquired companies dated February 14,
2000, which shall not be affected by this Agreement. This written Agreement is
the final, complete and exclusive statement and expression of the agreement
between the Company and Executive and of all the terms of this Agreement, and it
cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
modified after the Effective Date except by a further writing signed by a duly
authorized officer of the Company and Executive, and no term of this Agreement
may be waived except by writing signed by the party waiving the benefit of such
term. Without limiting the generality of the foregoing, either party's failure
to insist on strict compliance with this Agreement shall not be deemed a waiver
thereof.
16. Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: American Plumbing and Mechanical, Inc.
0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxx Xxxxxxxx
To Executive: Xx. Xxxxx X. Xxxxx
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Notice shall be deemed given and effective on the earlier of three days
after the deposit in the U.S. mail of a writing addressed as above and
sent first class mail, certified, return receipt requested, or when
actually received. Either party may change the address for notice by
notifying the other party of such change in accordance with this
paragraph 16.
17. Severability: Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are
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not intended in any way to describe, interpret, define or limit the extent or
intent of the Agreement or of any part hereof.
18. Dispute Resolutions. Except with respect to injunctive relief as
provided in paragraph 3.b., neither party shall institute a proceeding in any
court or administrative agency to resolve a dispute between the parties before
that party has sought to resolve the dispute through direct negotiation with the
other party. If the dispute is not resolved within two weeks after a demand for
direct negotiation, the parties shall attempt to resolve the dispute through
mediation. If the parties do not promptly agree on a mediator, the parties shall
request the Association of Attorney Mediators in Xxxxxx County, Texas (or if the
Company's principal offices are not in Xxxxxx County, a similar organization in
the county in which the Company's principal offices are located) to appoint a
mediator certified by the Supreme Court of Texas. If the mediator is unable to
facilitate a settlement of the dispute within a reasonable period of time, as
determined by the mediator, the mediator shall issue a written statement to the
parties to that effect and any unresolved dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a single arbitrator in the city in which the
Company has its principal offices, in accordance with the Commercial Arbitration
~Rules of the American Arbitration Association then in effect. The arbitrator
shall have the authority to order back-pay, severance compensation, vesting of
options (or cash compensation in lieu of vesting of options), reimbursement of
costs and expenses, including those incurred to enforce this Agreement including
reasonable attorneys' fees and interest thereon in the event the arbitrator
determines that Executive was involuntarily terminated by the Company without
Disability or Cause, as defined in paragraphs 4%. and 4.c., respectively, or
that the Company has otherwise materially breached this Agreement. A decision by
the arbitrator shall be final and binding. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The costs and expenses,
including reasonable attorneys' fees, of the prevailing party in any dispute
arising under this Agreement will be promptly paid by the other party.
19. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Texas without regard to its conflicts of
law provisions.
20. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective for all purposes as of the Effective Date.
Date: , 2000
---------------
AMERICAN PLUMBING AND MECHANICAL, INC.
By
-----------------------------------------
/s/ XXXXX X. XXXXXXX
-----------------------------------------
Xxxxx X. Xxxxxxx, Chief Financial Officer
Date: February 29, 2000
EXECUTIVE
/s/ XXXXX X. XXXXX
-----------------------------------------
Xx. Xxxxx X. Xxxxx
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