EXHIBIT 10.28
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made effective as of June 1,
1997, by and between GROUP MAINTENANCE AMERICA CORP., a Texas corporation (the
"Company"), and XXXXX XXXXXX, an individual with an address of 0000 00xx Xxxxxx,
X.X., Xx. 0000, Xxxxxxxxxx, X.X. 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
Chairman of the Board. At all times, the Employee shall serve under the
direction of the Board of Directors of the Company and shall perform the
functions set forth on Exhibit A and such other 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 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
Xxxxxx Employment Agreement/Page 1
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 $150,000
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) Commencing with calendar year 1998, Employee shall receive an
annual cash performance bonus for each 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 January 1, 1998). 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
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. The Board of Directors may also declare
bonuses for fiscal year 1997, in its discretion.
Xxxxxx Employment Agreement/Page 2
(c) Notwithstanding the foregoing, so long as Employee is employed by
Company, Employee shall be entitled to receive a minimum bonus of $25,000 during
the period ending May 31, 1998, and shall be entitled to draw against his
minimum bonus payment at the rate of $1,000 per calendar month ("Bonus Draws"),
in accordance with the following provisions. If the Board of Directors declares
one or more bonuses payable to Employee on or prior to May 31, 1998
("Discretionary Bonuses"), at each such payment date, Employee will be paid the
amount of such Discretionary Bonus minus the amount of Bonus Draws previously
paid to Employee and not previously offset against a prior Discretionary Bonus
payment ("Discretionary Payments"). If the sum of Bonus Draws and Discretionary
Payments paid to Employee on or prior to May 31, 1998 is less than $25,000, the
Company shall pay to Employee, as a bonus, the amount of such difference (the
"Special Bonus Payment"). If at any time the Employee has received bonus
payments (Discretionary or Special) plus Bonus Draws equal to $25,000, the
payment of subsequent Bonus Draws shall cease. With respect to any bonuses
declared with respect to the calendar year 1998 and paid after May 31, 1998
(including bonuses with respect to calendar year 1998 performance, which may
actually be paid in 1999), the amount actually payable to Employee will be
reduced by the sum of (i) all Bonus Draws paid in calendar 1998 and not applied
as an offset against a Discretionary Bonus payment, plus (ii) the Special Bonus
Payment. Commencing in calendar year 1999 with respect to performance for 1999
and subsequent periods, Employee shall be entitled to such bonuses as the Board
of Directors may establish without further reduction for any portion of the
Bonus Draws or the Special Bonus Payment not offset in or with respect to
calendar year 1998.
(d) 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) The Company will grant the Employee non-qualified stock options
(the "Initial Senior Management Options") to purchase 70,000 shares of the
common stock of the Company as presently constituted, at an exercise price of
$1.231 per share on the terms set forth in the form of Option Agreement proposed
to be executed between the Company and the Employee in the form attached hereto
as Exhibit B (the "Option Agreement"). Subject to the Option Agreement, the
Initial Senior Management Options will vest ratably as of June 1 of the three
calendar years, 1998, 1999, and 2000. The Initial Senior Management Options
shall have a term of ten (10) years from the date of grant, and may be exercised
in whole or in part, from time to time, at any time after vesting by the payment
of cash or the tender of shares of the Company's common stock having a
Designated Value equal to the exercise price of the Initial Senior Management
Options being exercised, all as set forth in the Option Agreement. Upon the
issuance of shares of Common Stock in connection with the exercise of the
Initial Senior Management Options and as a condition precedent to receiving
certificates representing such Common Stock, Option Holder shall become a party
to that certain Shareholders Agreement dated October 24, 1996 (the
"Shareholders'
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Agreement"), by executing and delivering (and by causing his spouse to execute
and deliver) a counterpart of the Shareholders Agreement provided same is then
in effect.
(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 Initial 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 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.
Xxxxxx Employment Agreement/Page 4
(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 June 1, 2000.
(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 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.
Xxxxxx Employment Agreement/Page 5
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 (each a "Xxxx Termination Event"), 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 (other than as a result of a Xxxx Termination Event) within twelve
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 thirty six (36) months compensation at Employee's
then current annual salary, payable semimonthly, and shall continue to provide
benefits in the kind and amounts provided up to the date of termination for such
thirty six (36) month period.
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 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
Xxxxxx Employment Agreement/Page 6
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 termination of Employee's employment. Notwithstanding
the
Xxxxxx Employment Agreement/Page 7
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
Xxxxxx Employment Agreement/Page 8
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:
(a) If to the Employee, to the address set out in the beginning of
this Agreement;
(b) If to the Company:
Group Maintenance America Corp.
0000 Xxxx Xxxx Xxxxx, Xxxxx 0000
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.
Xxxxxx Employment Agreement/Page 9
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 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.
Xxxxxx Employment Agreement/Page 10
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement under seal on the date first above written.
GROUP MAINTENANCE AMERICA CORP., A
TEXAS CORPORATION
By:_________________________________________
J. Xxxxxxx Xxxxxxxx, Xx., President
EMPLOYEE:
____________________________________________
Xxxxx Xxxxxx
Xxxxxx Employment Agreement/Page 11
EXHIBIT A
DUTIES AND FUNCTIONS
EXHIBIT B
FORM OF STOCK OPTION AGREEMENT
