EXHIBIT 10.34
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of October 24, 1996, by
and between MAINTENANCE SPECIALISTS OF AMERICA, INC., a Texas corporation (the
"Company"), and XXXXXXX X. XXXXX, an individual with an address of c/o
Maintenance Specialists of America, Inc., 0000 Xxxxx Xxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000 (the "Employee").
1. Employment. The Company hereby agrees to employ the Employee and the
Employee hereby agrees to work for the Company upon the terms and conditions set
forth herein.
2. Term of Employment. This Agreement shall continue in effect for an
initial term of three (3) years from the date of this Agreement, unless
terminated in accordance with Section 7, and shall be extended from year to year
thereafter, unless terminated effective as of the end of the initial term or any
one-year extension thereafter by written notice from the Company to Employee, or
by written notice of Employee to the Company, delivered not less than ninety
(90) days prior to the end of the initial term, or the anniversary of such one-
year extension, as applicable.
3. Scope of Duties; Representations and Warranties.
(a) The Employee shall be initially employed by the Company as its
Executive Vice President - Corporate Development and Administration. At all
times, the Employee shall serve under the direction of the Board of Directors of
the Company and shall perform such services as the Board of Directors, in its
sole discretion, shall deem appropriate.
(b) So long as he is employed by the Company, the Employee shall
devote his skill, energy and best efforts to the faithful discharge of his
duties as an employee of the Company. The Employee agrees that in the provision
of all services to the Company, he will comply with and follow all directives,
policies, standards and regulations from time to time established by the Board
of Directors of the Company.
(c) The Employee represents and warrants that he is under no
contractual or other restrictions or obligations which will significantly limit
his activities on behalf of the Company or which will prohibit or limit the
disclosure or use of by the Employee of any information which directly or
indirectly relates to the nature of the Company or the services to be rendered
by the Employee under this Agreement.
(d) To the extent they relate to, or result from, directly or
indirectly, the actual or anticipated operations of the Company, the Employee
hereby agrees that all patents, trademarks, copyrights, trade secrets, and other
intellectual property rights, all inventions, whether or not patentable and any
product, drawing, design, recording, writing, literary work or other author's
work, in any other tangible form developed in whole or in part by Employee
during the term of this Agreement, or otherwise developed, purchased or acquired
by Employer, shall be the exclusive
1
property of the Employer ("Intellectual Property"), and unless otherwise agreed
by Employer, all right, title and interest therein shall remain in Employer.
(e) The Employee will hold all Intellectual Property and Confidential
Information (defined below) in trust for the Company and will deliver all
Intellectual Property and Confidential Information in his possession or control
to the Company upon request and, in any event, at the end of his employment with
the Company. The Employee will promptly disclose to the Company all
Confidential Information, as well as any business opportunity which comes to his
attention during the term of his employment with the Company. The Employee will
not take advantage of or divert any business opportunity for the benefit of
himself or any other party without the prior written consent of the Company.
(f) The Employee shall assign and does hereby assign to the Company
all property rights that he may now or hereafter have in the Intellectual
Property and Confidential Information. The Employee shall take such action,
including, but not limited to, the execution, acknowledgment, delivery and
assistance in preparation of documents, and the giving of testimony, as may be
requested by the Company to evidence, transfer, vest or confirm the Company's
right, title and interest in the Intellectual Property.
(g) The Employee will not contest the validity of any invention, any
copyright, any trademark or any mask work registration owned by or vesting in
the Company under this Agreement.
(h) The terms and conditions of Sections 3(d), (e), (f), and (g) will
survive the termination of this Agreement for any reason whatsoever.
4. Compensation.
(a) During the first year, the Company shall pay the Employee a base
salary, payable semi-monthly, in equal installments at a rate equal to $140,000
per year. In each subsequent year of this Agreement, the Company shall pay to
the Employee a salary equal to the greater of (i) his salary for the immediately
preceding year or (ii) if determined otherwise by the Board of Directors, a
salary determined by the Board of Directors following its annual salary and
performance review.
(b) Employee shall receive an annual cash performance bonus of from
zero-percent (0%) to one hundred percent (100%) of Employee's annual base salary
for the calendar year during the term of this Agreement to be determined
according to the following procedure. The Board of Directors of the Company, or
the Compensation Committee of the Board of Directors, if so authorized, shall
establish specific annual performance goals for the Company and for Employee
with respect to each calendar year during the term of this Agreement commencing
on January 1, 1997. Such goals shall be communicated to Employee not later than
the end of the first quarter of the applicable calendar year. At the end of
each calendar year during the term of this Agreement, or within a reasonable
time thereafter, the Board of Directors of the Company, or the Compensation
Committee of the Board of Directors, if so authorized, shall review the actual
performance of the Company and Employee, giving due consideration to market and
other developments outside of the control or influence of Employee and the
Company, and based upon the extent to which the
2
applicable annual performance goals have been achieved, shall determine in its
sole and absolute discretion, the amount of performance bonus payable to
Employee with respect to such year.
(c) All payments of salary and other compensation to the Employee
shall be made after deduction of any taxes which are required to be withheld
with respect thereto under applicable federal and state laws.
5. Senior Management Stock Options.
(a) Employee is hereby granted options (the "1996 Senior Management
Options") to purchase 100,000 shares of the common stock of the Company as
presently constituted, at an exercise price of $1.231 per share. The 1996
Senior Management Options shall vest ratably as of the earlier of (i) the end of
the three calendar years, 1997, 1998, 1999, or (ii) when and as the Designated
Value of the Company's common stock has achieved the milestones of $7.00, $9.00,
and $11.00 per share, respectively. The 1996 Senior Management Options may be
exercised in whole or in part, from time to time, at any time after vesting
through December 31, 2006 by the payment of cash or the tender of shares of the
Company's common stock (including shares of common stock otherwise receivable as
a result of the exercise of said options or any other options) having a
Designated Value equal to the exercise price of the 1996 Senior Management
Options being exercised. To the extent that certain Shareholders Agreement of
even date herewith among the Corporation and the shareholders of the Company,
including Employee (the "Shareholders Agreement") is in effect at the time
Employee exercises any of the Senior Management Options, such shares of the
Company's common stock issued to Employee shall be subject to the provisions of
the Shareholders Agreement.
(b) Commencing with the Company's initial public offering of Common
Stock and for each partial or full calendar year thereafter during the term
hereof, provided Employee is then serving as an employee of the Company, the
Company shall grant to Employee options (together with the 1996 Senior
Management Options, collectively referred to as the "Senior Management Options")
to purchase such number of additional shares as the Board of Directors of the
Company may determine, on such terms and conditions as shall be established at
such time.
(c) For purposes hereof, "Designated Value" of the shares on a
specified date shall mean (i) the average of the closing prices of the common
stock on the principal market or registered exchange on which the Company's
common stock is traded (or the average of the closing bid and ask prices, if a
single closing price is not reported for such market) on the ten (10)
consecutive trading days next preceding the date for the determination of such
value, provided that the stock is then traded on the over the counter market or
on the NASDAQ System or any registered securities exchange, or (ii) if not
publicly traded, the book value per share of the Company as of the end of the
calendar quarter next preceding the date of determination of such value.
(d) From time to time the Company agrees to register under the
Securities Act of 1933 and all applicable state securities laws and regulations
the shares of common stock issuable upon the exercise of the foregoing Senior
Management Options in the same manner as shares issuable under any other stock
options or stock purchase plans of the Company. Further, the Company agrees to
grant to the Employee "demand" or "piggyback" registration rights with respect
to all such Senior
3
Management Option shares (to the extent same have not been registered), and all
other shares of common stock owned directly or indirectly by the Employee or
Employee's immediate family, equivalent to the "demand" or "piggyback"
registration rights granted under that certain Registration Rights Agreement
dated October 24, 1996, by and among the Company, Xxxxxx Xxxx and other holders
of common stock of the Company.
6. Fringe Benefits; Expenses.
(a) So long as the Employee is employed by the Company, the Employee
shall participate in all employee benefit plans sponsored by the Company for its
executive employees, including but not limited to vacation policy, sick leave
and disability leave, health insurance, dental insurance and pension and/or
profit sharing plans; provided, however, that except as provided below, the
nature, amount and limitations of such plans shall be determined from time to
time by the Board of Directors of the Company.
(b) The Company will reimburse the Employee for all reasonable
business expenses incurred by the Employee in the scope of his employment.
(c) Employees shall be entitled to participate in any other stock
bonus, stock purchase or stock option plan instituted by the Company for its
managers or employees generally in the same manner as any other senior executive
officer of the Company, with proper regard and weight given in the issuance of
shares or the grant of options for the Employee's position (and without
consideration of the above Senior Management Options or any shares of the
Company otherwise owned by Employee directly or indirectly).
(d) The Company shall make reasonable efforts to provide life
insurance payable to Employee's designated beneficiary in an amount at least
three times Employee's annual base salary.
(e) The Company shall make a reasonable effort to maintain disability
insurance on behalf of Employee which, as a goal, shall provide for salary
continuation in the event of permanent disability in an amount not less than 60%
of the Employee's regular base salary.
(f) The Employee shall be entitled to a minimum of three weeks paid
vacation, increasing to four weeks at January 1, 1999.
(g) The Company will pay all license fees, occupation taxes and
reasonable educational costs and expenses necessary to maintain Employee's good
standing under any professional licenses.
7. Termination.
(a) Employee agrees that this Agreement may be terminated by the
Company with or without "Cause" at any time, subject to the terms of this
Section 7. Such termination shall be effective upon delivery of written notice
to Employee of the Company's election to terminate this Agreement under this
Section 7. "Cause" when used in connection with the termination of
4
employment with the Company, shall mean the termination of the Employee's
employment by the Company by reason of (i) the conviction of the Employee of a
crime involving moral turpitude by a court of competent jurisdiction as to which
no further appeal can be taken; (ii) the proven commission by the Employee of an
act of fraud upon the Company; (iii) the willful and proven misappropriation of
any funds or property of the Company by the Employee; (iv) the willful,
continued and unreasonable failure by the Employee to perform material duties
assigned to him and agreed to by him after reasonable notice and opportunity to
cure such performance; (v) the knowing engagement by the Employee in any direct,
material conflict of interest with the Company without compliance with the
Company's conflict of interest policy, if any, then in effect; (vi) the knowing
engagement by the Employee, without the written approval of the Board of
Directors of the Company, in any activity which competes with the business of
the Company or which would result in a material injury to the Company; or (vii)
the knowing engagement in any activity which would constitute a material
violation of the provisions of the Company's Xxxxxxx Xxxxxxx Policy or Business
Ethics Policy, if any, then in effect.
If the Employee's employment terminates, unless the Company terminates
the Employee's employment under this Agreement for Cause or the Employee
resigns, the Company shall, subject to the terms of Section 7(c) below, and only
if and as long as Employee is not in breach of his obligations under this
Agreement, pay to the Employee an amount equal to twelve (12) months
compensation at his then current salary, payable semimonthly, and shall continue
to provide benefits in the kind and amounts provided up to the date of
termination for said twelve (12) month period including, without limitation,
continuation of any Company-paid benefits as described in Section 6 for the
Employee and his family; provided, however, that in the event that Xxxxxx X.
Xxxx elects to cease payments of outstanding installments in compliance with the
Subscription Agreement dated October 24, 1996 with the Company, and the Company
elects to terminate Employee under this Section 7, or Employee resigns within 60
days of such termination, then if Employee is not in breach of his obligations
under this Agreement, the Company shall pay to the Employee, in lieu of the
severance payments described above, three (3) months compensation under this
Agreement, payable semi-monthly, and the Company shall continue to provide
benefits in the kind and amount provided up to the date of termination for said
three (3) month period. Notwithstanding anything in this Agreement to the
contrary, in the event the Employee's employment terminates within six months
after (A) a sale of all or substantially all of the assets of the Company, or
(B) a merger, consolidation, liquidation or reorganization of the Company, in
which the purchaser or the surviving entity, as applicable, adopts the
Company's obligations under this Agreement, the Company shall pay to the
Employee, an amount equal to two times Employee's severance benefits otherwise
available to Employee under this Agreement.
In the event that this Agreement is terminated by Company without Cause,
Employee agrees to accept, in full settlement of any and all claims, losses,
damages and other demands which Employee may have arising out of such
termination as liquidated damages and not as a penalty, the applicable amount
which is set out above. Employee hereby waives any and all rights he may have
to bring any cause of action or proceeding contesting any termination without
Cause, provided, however, that such waiver shall not be deemed to affect
Employee's rights to enforce any other obligations of the Company. Under no
circumstances shall Employee be entitled to any compensation or confirmation
5
of any benefits under this Agreement for any period of time following his date
of termination if his termination is for Cause.
(b) If at any time during the term of this Agreement, Employee is
unable due to physical or mental disability, to perform effectively his duties
hereunder, the Company shall continue payment of compensation as provided in
Section 4 during the first twelve (12) month period of such disability to the
extent not covered by the Company's disability insurance policies. Upon the
expiration of such twelve (12) month period, the Company, at its sole option,
may continue payment of Employee's salary for such additional periods as the
Company elects, or may terminate this Agreement without any further obligations
hereunder. If Employee should die during the term of this Agreement, Employee's
employment and the Company's obligations hereunder shall terminate as of the end
of the month in which Employee's death occurs and there will be no salary and
benefit continuation period pursuant to Section 7(a).
(c) So long as Employee receives a severance as provided in Section
7(a) or (b) above, Employee agrees that he will sign any lock-up letters,
standstill agreements, or other similar documentation required by an underwriter
in connection with a public offering of securities by the Company or take other
actions reasonably related thereto as requested by the Board of Directors of the
Company. Failure to take any such action shall cause Employee to forfeit any
further rights to the salary continuation payments in Section 7(a) or (b). In
addition, Employee agrees that in such event the Company can seek and obtain
specific performance of such covenant, including any injunction requiring
execution thereof, and the Employee hereby appoints the then current president
of the Company to sign any such documents on his behalf so long as such
documents are prepared on the same basis as other shareholders generally or as
all management shareholders.
8. Covenant Not to Compete.
(a) During the term of this Agreement, Employee will not compete with
the Company or its affiliates, directly or indirectly, either for himself or as
a member of a partnership or as a stockholder (except as a stockholder of less
than one percent (1 %) of the issued and outstanding stock of a publicly-held
company whose gross assets exceed one hundred million dollars), investor, owner,
officer or director of a company or other entity, or as an employee, agent,
associate or consultant of any person, partnership, corporation or other entity,
in any business in competition with that carried on by the Company or any of its
affiliates.
(b) Employee further agrees that, for a period of six (6) months from
and after the date of termination of Employee's employment under this Agreement,
regardless of the reason for such termination, he will neither represent the
Company nor engage in or carry on, directly or indirectly, either for himself or
as a member of a partnership or as a stockholder (other than as a stockholder of
less than one percent (1 %) of the issued and outstanding stock of a publicly-
held company whose gross assets exceed one hundred million dollars), investor,
owner, officer or director of a company or other entity, or as an employee,
agent, associate or consultant of any person, partnership, corporation or other
entity, any business in any State of the United States or in any other part of
the world which directly competes with any services or products produced, sold,
conducted, developed, or in the process of development by the Company or its
affiliates on the date of
6
termination of Employee's employment. Notwithstanding the foregoing, nothing
herein shall prevent Employee from working in the indoor air quality, heating,
ventilation and air conditioning or plumbing maintenance services industry,
provided that such activities are in areas not in direct competition with any
services or products produced, sold, conducted, developed, or in the process of
development by the Company or its affiliates on the date of termination of
Employee's employment.
(c) Employee agrees that the limitations set forth herein on his
rights to compete with the Company and its affiliates are reasonable and
necessary for the protection of the Company and its affiliates. In this regard,
Employee specifically agrees that the limitations as to period of time and
geographic area, as well as all other restrictions on his activities specified
herein, are reasonable and necessary for the protection of the Company and its
affiliates. In particular, Employee acknowledges that the parties anticipate
that the Employee will be actively seeking markets for the Company's products
throughout the United States during his employment with the Company.
(d) Employee agrees that the remedy at law for any breach by him of
this Section 8 will be inadequate and that the Company shall also be entitled to
injunctive relief.
9. Confidential Information and Results of Services. Employee agrees
that during the term of this Agreement, and for five (5) years after his
termination of employment, he will not make use of or disclose, without the
prior consent of the Company, Confidential Information (as hereinafter defined)
relating to the Company, or any of its affiliates, and further agrees, that he
will return to the Company all written materials in his possession embodying
such Confidential Information. For purposes of this Agreement, "Confidential
Information" includes information conveyed or assigned to the Company by
Employee or conceived, compiled, created, developed, discovered or obtained by
Employee from and during his employment relationship with the Company, whether
solely by the Employee or jointly with others, which concerns the affairs of the
Company or its affiliates and which the Company could reasonably be expected to
desire be held in confidence, or the disclosure of which would likely be
embarrassing, detrimental or disadvantageous to the Company or its affiliates
and without limiting the generality of the foregoing includes information
relating to inventions, and the trade secrets, technologies, algorithms,
products, services, finances, business plans, marketing plans, legal affairs,
supplier lists, client lists, potential clients, business prospects, business
opportunities, personnel assignments, contracts and assets of the Company and
information made available to the Company by other parties under a confidential
relationship. Confidential Information, however, shall not include information
(a) which is, at the time in question, in the public domain through no wrongful
act of Employee, (b) which is later disclosed to Employee by one not under
obligations of confidentiality to the Company or Employee, (c) which is required
by court or governmental order, law or regulation to be disclosed, or (d) which
the Company has expressly given Employee the right to disclose pursuant to
written agreement. Employee agrees that the remedy at law for any breach by him
of this Section 9 will be inadequate and that the Company shall also be entitled
to injunctive relief.
10. Notice. All notices, requests, demands and other communications
required by or permitted under this Agreement shall be in writing and shall be
sufficiently delivered if delivered by hand, by courier service, or sent by
registered or certified mail, postage prepaid, to the parties at their
respective addresses listed below:
7
(a) If to the Employee, to the address set out in the beginning of
this Agreement;
(b) If to the Company:
Maintenance Specialists of America, Inc.
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Either party may change such party's address by such notice to the
other parties.
11. Assignment. This Agreement is personal to the Employee, and he shall
not assign any of his rights or delegate any of his duties hereunder without the
prior written consent of the Company. Neither the employee nor his spouse will
have the right to commute, encumber, or otherwise dispose of any payments under
this Agreement. The Company shall have the right to assign this Agreement to a
successor in interest in connection with a merger, sale of substantially all
assets, or the like; provided however, that an assignment of this Agreement to
an entity with operations, products or services outside of the industries in
which the Company is then active shall not be deemed to expand the scope of
Employee's covenant not to compete with such operations, products or services
without Employee's written consent.
12. Survival. The provisions of this Agreement shall survive the
termination of the Employee's employment hereunder in accordance with their
terms.
13. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of Texas.
14. Binding Upon Successors. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Employee with respect to the terms of employment of
the Employee by the Company and supersedes all prior agreements and
understandings, whether written or oral, between them concerning such terms of
employment.
16. Waiver and Amendments; Cumulative Rights and Remedies.
(a) This Agreement may be amended, modified or supplemented, and any
obligation hereunder may be waived, only by a written instrument executed by the
parties hereto. The waiver by either party of a breach of any provision of this
Agreement shall not operate as a waiver of any subsequent breach.
(b) No failure on the part of any party to exercise, and no delay in
exercising, any right or remedy hereunder shall operate as a waiver hereof, nor
shall any single or partial exercise of any such right or remedy by such party
preclude any other or further exercise thereof or the exercise
8
of any other right or remedy. All rights and remedies hereunder are cumulative
and are in addition to all other rights and remedies provided by law, agreement
or otherwise.
(c) The Employee's obligations to the Company and the Company's rights
and remedies hereunder are in addition to all other obligations of the Employee
and rights and remedies of the Company created pursuant to any other agreement.
17. Construction. Each party to this Agreement has had the opportunity to
review this Agreement with legal counsel. This Agreement shall not be construed
or interpreted against any party on the basis that such party drafted or
authored a particular provision, parts of or the entirety of this Agreement.
18. Severability. In the event that any provision or provisions of this
Agreement is held to be invalid, illegal or unenforceable by any court of law or
otherwise, the remaining provisions of this Agreement shall nevertheless
continue to be valid, legal and enforceable as though the invalid or
unenforceable parts had not been included therein. In addition, in such event
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible with respect
to those provisions which were held to be invalid, illegal or unenforceable.
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement under seal on the date first above written.
MAINTENANCE SPECIALISTS OF AMERICA
INC., A TEXAS CORPORATION
By: /s/ J. Xxxxxxx Xxxxxxxx, Xx.
-------------------------------
J. Xxxxxxx Xxxxxxxx, Xx., President
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxx
--------------------------
Xxxxxxx X. Xxxxx
9
