EXHIBIT (c)(3)
SEVERANCE, CONSULTING AND NON-COMPETITION AGREEMENT
THIS SEVERANCE, CONSULTING AND NON-COMPETITION AGREEMENT (this
"Agreement"), dated as of ______________, 199_ is by and between ATC Group
Services Inc. with its principal office at 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (the "Company") and Xxxxxx Xxxxx [address] ("Employee").
RECITALS
WHEREAS, Employee serves as a Director and Chairman of the Board and
is employed by the Company as Secretary;
WHEREAS, Employee is currently compensated at the rate of $300,000 per
year with a bonus equal to 2.5% of the Company's pre-tax profits (in the
aggregate, the "Compensation");
WHEREAS, the Employee desires to resign his employment with the
Company and his position as Director as of the effective date of the proposed
merger between Acquisition Holdings, Inc. or an affiliate thereof and the
Company (the "Effective Date");
WHEREAS, the parties desire to set forth their respective rights and
obligations in respect of Employee's resignation from the above positions; and
WHEREAS, the Company and Employee desire to enter into a consulting
agreement as set forth herein.
NOW, THEREFORE, in consideration of the covenants and conditions set
forth herein, the parties, intending to be legally bound, agree as follows:
AGREEMENT
1. Resignation.
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(a) Employee hereby resigns from his employment with the Company with
effect on and as of the Effective Date. It is agreed by the parties that, on
and as of the Effective Date, all rights and obligations of Employee and the
Company with respect to such employment shall terminate.
(b) Employee hereby resigns as Director and Chairman of the Board of
the Company with effect on and as of the Effective Date.
2. Consulting Services. For a period of three (3) years after the
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Effective Date, Employee agrees to make himself available at reasonable times
and locations (taking
necessary account of Employee's business commitments) to perform consulting
services as reasonably requested by the Company provided, (i) the Employee shall
be given at least 48 hours prior written notice of the requested services, (ii)
all such consulting services shall be rendered in The City of New York and (iii)
Employee shall not be required to devote more than 10 hours per month to the
business of the Company. All consulting services rendered to the Company by
Employee shall be performed as an independent contractor, and Employee shall not
for any purpose be deemed to be an employee of the Company.
3. Benefits.
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(a) Payment. In consideration of the agreements of Employee herein
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and without diminution because of the ability or inability of Employee to
perform any consulting services that may be requested by the Company, the
Company agrees to pay Employee (or his assigns or, in the event of his death,
his executor) the aggregate sum of three million two hundred ten thousand two
hundred ninety dollars ($3,210,290), less applicable withholdings for federal,
state and local taxes, to be paid as follows: (i) $1,550,000 shall be paid on
the Effective Date and (ii) $276,715 shall be paid on each January 1, April 1,
July 1, and October 1, commencing on the first such day that occurs at least one
month following the Effective Date and ending with the sixth such payment. Any
tax liability incurred by Employee in respect of consideration received
hereunder hereof shall be borne by him. The parties hereto agree that (x)
$986,000 of the aggregate amount payable hereunder shall be allocated to
severance payments; (y) $300,000 shall be allocated as a pro rata bonus for the
fiscal year ending February 28, 1998; and (z) $1,924,290 of the aggregate amount
payable hereunder shall be allocated to Employee's covenant not to compete in
Section 6 herein.
(b) Health Insurance. For the three (3) year period commencing on the
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Effective Date, Employee and the members of his immediate family shall be
entitled to participate in and receive benefits under: (i) ATC Management
Inc.'s health coverage plan with Unicare or any health insurance plan
subsequently adopted by the Company in its place; and (ii) the Executive
Supplement Plan to ATC Management Inc.'s health coverage plan with Unicare as
long as the Company is able to obtain coverage for Employee under the
supplemental plan; provided, that, the Company shall use commercially reasonable
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efforts to maintain substantially similar coverage during the term of this
Agreement. During such period, Employee shall pay all premiums, deductibles and
other charges arising out of or associated with the coverage of Employee and his
immediate family under the insurance plans described in clauses (i) and (ii)
hereof; provided, that, such premiums, deductibles and other charges do not
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increase
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disproportionately for Employee as compared with other senior executives of the
Company.
(c) Car Lease. On the Effective Date, Employee shall return to the
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Company the Range Rover vehicle leased by the Company and used by the Employee.
4. Expenses. All reasonable expenses incurred by Employee in
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connection with the provision of consulting services requested hereunder,
including for airfare, hotel accommodations, meals and the like, shall be
reimbursed by the Company within seven (7) days after presentation by Employee
of receipts and other supporting documentation, provided that such expense had
been approved in advance by the Company.
5. No Solicitation of Employees. Employee hereby represents and
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warrants that he has not solicited for employment or induced any person employed
by the Company to terminate employment during the sixty-day period preceding the
date hereof.
6. Covenant Not to Compete.
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(a) Employee hereby covenants and agrees that Employee shall not,
alone or in conjunction with any other person or entity, whether as a principal,
agent, stockholder, director, officer, manager, trustee, representative,
employee, executive or consultant or in any other capacity, for whatever reason,
directly or indirectly: (i) for a period of four (4) years after the Effective
Date, compete or assist any person or entity in competing with the Company in
all aspects of the business as conducted by the Company on the Effective Date in
any manner in the United States, except as permitted in clauses (iii) and (iv)
below; provided, that, upon written notice by the Company of Employee's breach
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of this Section 6(a)(i), Employee shall have 10 (ten) business days from the
date of notice to cure any such breach; (ii) for a period of four (4) years
after the Effective Date, request or cause any person employed by the Company on
or after the date hereof to terminate employment, subject to clauses (iii) and
(iv) below; (iii) for a period three (3) years after the Effective Date, compete
or assist any person or entity in competing with ATC InSys Technology Inc.
("InSys") or 3D Information Services Inc. ("3D") or assist any person or entity
in competing with InSys or 3D anywhere within the legal boundaries of the State
of New Jersey; or (iv) for a period three (3) years after the Effective Date,
solicit on behalf of himself or any other person or entity, within The City of
New York, any of the following customers of InSys: (A) X.X. Xxxxxx & Co.
Incorporated, (B) Xxxxxxx, Xxxxx & Co. (C) The Long Island Rail Road Co. and (D)
The Chase Manhattan Bank; provided, however, that the immediately preceding
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clause (iv) shall apply only to products or services that are competitive with
those of InSys. This Section 6 shall not be deemed to
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prohibit the Employee from owning up to 5% of the outstanding voting securities
of any issuer whose securities are listed or traded on a U.S. national stock
exchange, the Nasdaq National Market System or a comparable foreign exchange or
system.
(b) If the scope of any restriction contained in this Agreement is too
broad to permit enforcement of such restriction to its fullest extent, then such
restriction shall be enforced to the maximum extent permitted by law, and
Employee hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction. Employee
acknowledges and agrees that the covenants contained herein are necessary for
the protection of the Company's legitimate business interests and are reasonable
in scope and content. Employee further acknowledges and understands that the
remedy at law for any breach by him of this Section 6 will be inadequate, and
that the damages flowing from such breach are not readily susceptible to being
measured in monetary terms. Accordingly, it is acknowledged that upon
Employee's violation of any provision of this Section 6, the Company shall be
entitled to immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach. Nothing in this Section 6 shall
be deemed to limit the Company's remedies at law or in equity for any breach by
Employee of any of the provisions of Section 6 which may be pursued or availed
of by the Company.
7. Release. The Company hereby releases the Employee and the
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Employee hereby releases the Company and its affiliates and its and their
present and former stockholders, directors, officers, employees, agents,
attorneys, successors and assigns (together, the "Company Released Parties"),
from any and all claims that each of the Employee or the Company Released
Parties has or may have arising in any way out of Employee's employment with the
Company and service as Director and Chairman of the Board and the cessation
thereof, including, but not limited to, any and all claims each of the Employee
or the Company had, has or may have with respect to the Compensation.
Notwithstanding the above, this provision is not intended to release any claims
that may arise after the date Employee executes this Agreement, including claims
to enforce this Agreement.
8. Retained Property. Employee represents that he has returned all
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property of the Company in his possession, including but not limited to credit
cards, security key cards, telephone cards, car service cards, computer software
or hardware, company identification cards, Company records and copies of
records, correspondence and copies of correspondence and other books or manuals
issued by the Company. Employee also warrants that he has no debts to or loans
from the Company. Notwithstanding the foregoing, Employee shall have the right
to retain (i) duplicate photocopies of books and
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records of the Company that do not fall within the category of "Confidential
Information" (as defined below) and (ii) all personal property of the Employee
located on the premises of the Company.
9. Confidentiality. Employee acknowledges that he has had and may in
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the performance of consulting services hereunder continue to have access to
Confidential Information (as hereinafter defined) of the Company. Employee
agrees not to disclose, communicate or divulge to, or use for the direct or
indirect benefit of, any person (including Employee), firm, association or other
entity (other than the Company or its affiliates) any Confidential Information.
"Confidential Information" includes, but is not limited to, business methods,
business policies, procedures, techniques, research or development projects or
results, trade secrets (which Employee agrees include the Company's customer and
prospective customer lists), pricing policies, business plans, computer
software, intellectual property, and other such information not otherwise
available to the general public, unless the information is disclosed to Employee
without confidential or proprietary restriction by the Company or a third party
who rightfully possesses the information (without confidential or proprietary
restriction) and did not learn of it, directly or indirectly, from the Company.
If any person (including any government employee) requests the disclosure or
release of Confidential Information, Employee shall (i) promptly notify the
Company of such request so that the Company may pursue any available remedies to
prevent the disclosure or release of such Confidential Information and (ii)
furnish the Company a copy of all written materials pertaining to such request
for Confidential Information as the Company shall deem appropriate.
10. No Claims. Employee represents and warrants that he has not
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filed any charges, claims or complaints against the Company Released Parties,
and he represents and warrants that he will not initiate or voluntarily
participate or assist in any charge, claim, or complaint against the Company
Released Parties, it being understood that this provision does not affect
Employee's right to enforce this Agreement, or legal obligation, if any, to
appear as a witness if subpoenaed for examination before trial or subpoenaed for
trial or hearing or, if required, to provide information to the Equal Employment
Opportunity Commission or to an equivalent state or local administrative agency
in response to a demand for information.
11. Benefits Terminated. Employee acknowledges that he is not
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entitled to receive benefits from the Company other than as set forth in Section
3 of this Agreement, except for any vested benefits to which Employee is
entitled in the Company's 401(k) Plan and except for any other benefits afforded
Employee by applicable law.
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12. No Inducements. Employee warrants that he is entering into this
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Agreement voluntarily, and that, except as set forth herein, no promises or
inducements for this Agreement have been made, and he is entering into this
Agreement without reliance upon any statement or representation by any of the
Company Released Parties or any other person, concerning any fact material
hereto.
13. Integration. This Agreement constitutes the entire agreement
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between the parties with respect to the subject matter hereof, and supersedes
any and all prior agreements or understandings between the parties arising out
of or relating to the Employee's employment and the cessation thereof. This
Agreement may only be changed by written agreement executed by the parties.
14. Governing Law. This Agreement shall be governed by the laws of
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the State of New York, without giving effect to the conflicts of law principles
thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATC GROUP SERVICES INC.
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By:
Name:
EMPLOYEE
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Xxxxxx Xxxxx
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