EX-10.2
SEVERANCE AGREEMENT
THIS AGREEMENT dated as of April , 2005, is made by and between EMCOR Group,
Inc., a Delaware corporation (the "Company"), and Xxxxx X. XxxXxxxx (the
"Executive").
WHEREAS the Company considers it essential to the best interests of its
stockholders to xxxxxx the continuous employment of key management personnel;
and
WHEREAS the Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of Executive to
his assigned duties;
NOW THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the Company and Executive hereby agree as follows:
1. DEFINED TERMS. The definitions of capitalized terms used in this
Agreement are provided in Article 20 hereof.
2. COMPANY'S COVENANTS SUMMARIZED. In order to induce Executive to remain
in the employ of the Company and its consideration of Executive's covenants set
forth in Article 6 hereof, the Company agrees, subject to the terms and
conditions hereof, to pay Executive the "Severance Payments" described in
Article 3 hereof and the other payments and benefits described herein in the
event Executive's employment with the Company is terminated under certain
circumstances. No amount or benefit shall be payable under this Agreement unless
there shall have been a termination of Executive's employment with the Company,
as described in Articles 3, 4 or 5 hereof. This Agreement shall not be construed
as creating an express or implied contract of employment, and, except as
otherwise agreed in writing between Executive and the Company, Executive shall
not have any right to be retained in the employ of the Company and the Company
may terminate Executive's employment at any time and Executive may terminate his
employment at any time.
3. SEVERANCE PAYMENTS.
3.01. Subject to Sections 6.04 and 6.05 hereof, the Company shall pay
Executive the amounts, and provide the benefits, described in this Article 3
(the "Severance Payments") upon the termination of Executive's employment with
the Company, unless such termination is by the Company for Cause, by reason of
death or Permanent Disability of Executive, or by Executive without Good Reason.
3.02. In lieu of any further salary payments or bonuses to Executive for
periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Executive, the Company shall pay to Executive
(A) two times Executive's Base Salary in effect immediately prior to the
occurrence of the event or circumstance upon which the Notice of Termination is
based and (B) an amount equal to Executive's target bonus for the calendar year
in which his employment terminates, multiplied by a fraction, the numerator of
which is number of days in such calendar year Executive was an employee of the
Company, and the denominator of which is 365. Subject to the provisions of
Sections 6.04 and 6.05, the amount set forth in clause (A) of the immediately
preceding sentence shall be payable in advance in 8 equal quarterly installments
commencing with the Date of Termination and on each succeeding 90th day
thereafter, and the amount set forth in clause (B) of the immediately preceding
sentence shall be payable on the Date of Termination. Notwithstanding the
foregoing, if any payment hereunder would cause the Executive to be subject to
tax under Section 409A of the Code, then such payment shall be deferred until
the earliest such date that such payment can be made without the Executive
incurring such tax.
3.03. In addition to the amounts described in Section 3.02 above, Executive
shall be entitled to receive:
(a) until 18 months from the Date of Termination, Executive (and, to the
extent applicable, Executive's dependents) shall continue to be covered, at the
Company's expense, under the Company's medical, dental and hospitalization
insurance plans and until 12 months from the Date of Termination, Executive
shall continue to be covered, at the Company's expense, under the Company's
group life and accidental death and dismemberment insurance plans; provided that
if Executive is provided with comparable coverage by a successor employer any
such coverage by the Company shall cease;
(b) all payments to which Executive has vested rights as of the Date of
Termination under any employee benefit, disability, insurance and similar plans
which provide for payments beyond the period of employment; and
(c) all unpaid amounts, as of the Date of Termination, in respect of any
bonus for any calendar year ending before the calendar year in which the Date of
Termination occurs, which would have been payable had Executive remained in the
Company's employ until such bonus would have been paid.
4. PERMANENT DISABILITY.
4.01. The Company may terminate Executive's employment by reason of his
Permanent Disability, and in such case the compensation to which Executive is
entitled shall be paid through the last day of the month in which the notice is
given. In addition, in such case Executive shall be entitled to receive:
(a) all unpaid amounts, as of the Date of Termination, in respect of any
bonus for any calendar year ending before the calendar year in which such
termination occurs, which would have been payable had Executive remained in the
Company's employ until the date such bonus would otherwise have been paid, plus
an amount equal to Executive's target bonus for the calendar year in which his
employment terminates, multiplied by a fraction, the numerator of which is the
number of days in such calendar year Executive was an employee of the Company,
and the denominator of which is 365;
(b) for 18 months from the Date of Termination , Executive (and, to the
extent applicable, Executive's dependents) shall continue to be covered, at the
Company's expense, under the Company's medical, dental, hospitalization
insurance plans, and until 12 months from the Date of Termination Executive
shall continue to be covered, at the Company's expense, under the Company's
group life and accidental death and dismemberment insurance plans;
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provided that if Executive is provided with comparable coverage by a successor
employer any such coverage by the Company shall cease; and
(c) all amounts payable under the Company's disability plans, in accordance
with their terms.
4.02. Nothing herein contained shall affect Executive's right to any benefits
that may accrue under the terms of any other Company benefit plans by reason of
the Executive's Permanent Disability.
5. DEATH.
5.01. In the event of Executive's death while an employee of the Company,
Executive's estate or designated beneficiaries shall receive (i) payments of
Executive's Base Salary for a period of three months after the date of death;
(ii) all unpaid amounts, as of the date of death, in respect of any bonus for
any calendar year ending before the calendar year in which such death occurs,
which would have been payable had Executive remained in the Company's employ
until the date such bonus would otherwise have been paid, plus an amount equal
to Executive's target bonus for the calendar year in which his death occurs,
multiplied by a fraction, the numerator of which is the number of days in such
calendar year Executive was an employee of the Company, and the denominator of
which is 365; and (iii) any death benefits provided under the employee benefit
programs, in accordance with their terms.
5.02. Nothing herein contained shall affect Executive's rights to any
benefits that may accrue under the terms of any other Company death benefit plan
or life insurance policy or programs by reason of Executive's death.
6. CONFIDENTIAL INFORMATION, NON-COMPETITION, NON-SOLICITATION, ETC.
6.01. Executive hereby acknowledges and agrees that all personal property,
including, without limitation, all books, manuals, records, reports, notes,
contracts, lists, and other documents, equipment and other Confidential
Information furnished to or prepared by Executive in the course of or incident
to his employment, belong to the Company and shall be promptly returned to the
Company upon termination of his employment with the Company. Executive agrees
not to disclose to any person (other than an employee or agent of the Company or
any affiliate of the Company entitled to receive the same) any Confidential
Information relating to the business of the Company and obtained by him while
providing services to the Company, without the consent of the Board, or until
such information ceases to be confidential.
(a) Upon termination of his employment by the Company, Executive shall be
deemed to have resigned from all offices and directorships then held with the
Company or any subsidiary or affiliate thereof.
(b) Executive and the Company shall not (except as required by law)
directly or indirectly make any statement or release any information, or
encourage others to make any statement or release any information that is
designed to embarrass or criticize the other (or their respective employees,
directors or shareholders).
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6.02. During the period of Executive's employment by the Company and for two
years following the Date of Termination, Executive shall not, in any state in
the United States where a member of the Restricted Group conducts business,
directly or indirectly own, manage, operate, conduct, control or participate as
a director, officer, employee, consultant, partner, or equity owner or
otherwise, in the ownership, management, operation, conduct or control, or
accept employment with, or be connected in any other manner with, any business
(a "Business") that is in competition with any member of the Restricted Group,
except for ownership of no more than 2% of the debt or equity securities of
corporations listed on a registered securities exchange, provided, however, that
a Business shall not be deemed to be in competition with any members of the
Restricted Group if (i) no more than 20% of the annual consolidated revenues of
such Business (based upon its most recently completed fiscal year) are
attributable to one or more business activities ("Incidental Competitive
Activity") that are in competition with any member of the Restricted Group and
(ii) the Executive is not engaged, directly or indirectly, in such Incidental
Competitive Activity and has no direct or indirect responsibility for, or
oversight of, such Incidental Competitive Activity. Notwithstanding the
foregoing, the provisions of this Section 6.02 shall not apply if (A) in the
case of any Notice of Termination given by the Executive for Good Reason or (B)
in the case of any Notice of Termination given by the Company without Cause,
Executive prior to the receipt of any Severance Payments or portion thereof
irrevocably and unconditionally waives in writing the right to receive any
Severance Payments and accompanies such waiver with an executed form of release
attached hereto as Appendix A which release is not thereafter revoked.
6.03. For one year following the Date of Termination, Executive shall not
(without the prior written consent of the Company), either on his or her own
behalf or on behalf of any person, firm or company, directly or indirectly (a)
solicit, encourage or participate in soliciting or encouraging any customer or
supplier of any member of the Restricted Group, or any other person or entity to
terminate (or otherwise adversely alter) such person or entity's customer,
supplier or other relationship with such member of the Restricted Group, and/or
(b) hire any person who is at the time of the offer of employment, or within six
months prior to such offer was, an employee of any member of the Restricted
Group or encourage or participate in soliciting or encouraging any employee of
any member of the Restricted Group to terminate (or otherwise adversely alter)
such person's employment relationship with such member of the Restricted Group.
6.04. As a condition of receiving payments and benefits under this Agreement,
Executive agrees to sign the form of release attached hereto as Appendix A.
6.05. Executive and the Company agree that the covenants set forth in this
Article 6 are reasonable covenants under the circumstances, and further agree
that, if in the opinion of any court of competent jurisdiction, such restraint
is not reasonable in any respect, this Agreement shall be deemed modified to the
least degree necessary to make the Agreement reasonable and fully enforceable.
Executive agrees that any breach of the covenants contained in this Article 6
would irreparably injure the Company. Accordingly, Executive agrees that the
Company may, in addition to pursuing any other remedies it may have in law or in
equity, cease making any payments and/or providing benefits otherwise required
by this Agreement, including those provided for in Article 3 hereof, and obtain
an injunction against Executive from any court having jurisdiction over the
matter restraining any further violation of this Agreement by Executive.
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7. TERMINATION PROCEDURES.
7.01. Any purported termination of Executive's employment with the Company
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
Article 9 hereof. For purposes of this Agreement a "Notice of Termination", in
the case of termination for Cause, shall mean delivery to Executive of a copy of
a resolution duly adopted by the Board at a meeting of the Board called and held
for that purpose (after not less than 10 days notice to Executive ("Preliminary
Notice") and reasonable opportunity for Executive, together with the Executive's
counsel, to be heard before the Board prior to such vote) finding, that in good
faith opinion of the Board, Executive was guilty of conduct constituting Cause
and specifying the particulars thereof in detail. The Board shall not later than
30 days after the receipt of the Preliminary Notice by Executive communicate its
findings to Executive. A failure by the Board to make its finding of Cause or to
communicate its conclusions within such 30-day period shall be deemed to be a
finding that Executive was not guilty of conduct constituting Cause.
7.02. "Date of Termination", with respect to any purported termination of the
Executive's employment, shall mean (a) if the Executive's employment is
terminated for Permanent Disability, thirty (30) days after the Company shall
have given the Executive a Notice of Termination for disability; provided that
the Executive shall not have returned, within such 30-day period, to the
full-time performance of the Executive's duties, and (b) if the Executive's
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a termination by the Company, shall not be
less than thirty (30) days (except in the case of a termination for Cause) and,
in the case of a termination by the Executive, shall not be less than thirty
(30) days nor more than sixty (60) days, respectively, from the date such Notice
of Termination is given).
8. NO MITIGATION; GENERALLY NO OFFSET. The Company agrees that, if the
Executive's employment is terminated, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Article 3. Further, the amount of any
payment or benefit provided for in Article 4 (other than as provided in Sections
3.03(a) and 4.01(b)) shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to
the Company or any of its subsidiaries, or otherwise.
9. NOTICES. All notices or communications hereunder shall be in writing,
addressed as follows:
to Executive:
0 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
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to Company:
Xxxxxxx X. Xxxxxxxx, Esq.
Executive Vice President and General Counsel
EMCOR Group, Inc.
000 Xxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Any such notice or communication shall be delivered by hand or sent certified or
registered mail, return receipt requested, postage prepaid, addressed as above
(or to such other address as such party may designate in a notice duly delivered
as described above), and the actual date of delivery or mailing shall determine
the time at which notice was given.
10. AGREEMENT TO PERFORM NECESSARY ACTS. Each party agrees to perform any
further acts and to execute and deliver any further documents that may be
reasonably necessary to carry out the provisions of this Agreement.
11. SEPARABILITY; LEGAL ACTIONS; LEGAL FEES. If any provision of this
Agreement shall be declared to be invalid or unenforceable, in whole or in part,
such invalidity or unenforceability shall not affect the remaining provisions
hereof, which shall remain in full force and effect. Any controversy or claim
arising out of or relating to this Agreement or the breach of this Agreement
that cannot be resolved by Executive and the Company, including any dispute as
to the calculation of Executive's benefits or any payments hereunder, shall be
submitted to arbitration in New York, New York in accordance with the laws of
the State of New York and the procedures of the American Arbitration
Association, except that if Executive institutes an action relating to this
Agreement, Executive may, at Executive's option, bring that action in any court
of competent jurisdiction. Judgment may be entered on an arbitrator(s) award in
any court having jurisdiction.
In addition to all other amounts payable to Executive under this
Agreement, the Company shall pay or reimburse the Executive for legal fees
(including without limitation, any and all court costs and attorneys' fees and
expenses) incurred by the Executive in connection with or as a result of any
claim, action or proceeding brought by the Company or Executive with respect to
or arising out of this Agreement or any provision hereof, unless, in the case of
an action brought by Executive, it is determined by an arbitrator or by a court
of competent jurisdiction that such action was frivolous and was not brought in
good faith. Such legal fees shall be paid or reimbursed by the Company to
Executive from time to time within five business days following receipt by the
Company of copies of bills for such fees and if the Company fails to make such
payment within such five day period, the Company shall pay the Executive
interest thereon at the rate of 5% per annum. All other expenses relating to any
arbitration or court proceedings shall be paid by the Company.
12. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights hereunder
shall be assignable or otherwise subject to hypothecation by Executive (except
by will or by operation of the laws of intestate succession) or by the Company
(any such purported assignment by either shall be null and void), except that
the Company may
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assign this Agreement to any successor (whether by merger, purchase or
otherwise) to all or substantially all of the stock, assets or business of the
Company.
13. AMENDMENT; WAIVER. The Agreement may be amended at any time, but only
by mutual written agreement of the parties hereto. Any party may waive
compliance by the other party with any provision hereof, but only by an
instrument in writing executed by the party granting such waiver.
14. ENTIRE AGREEMENT. Except as otherwise provided in the Change of Control
Agreement dated as of June 22, 1998, as amended, between the Company and
Executive and any plans or programs providing for perquisites, options and/or
other equity grants otherwise provided to the Executive, the terms of this
Agreement are intended by the parties to be the final expression of their
agreement with respect to the employment and/or termination of employment of
Executive by the Company, and the parties hereto agree that the Employment
Agreement dated as of January 1, 2002 between the Company and Executive is
superceded and of no further force and effect. This Agreement shall not apply at
all if the Change of Control Agreement is applicable to the Executive due to a
Change of Control.
15. DEATH OR INCOMPETENCE. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his estate or other legal
representative.
16. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Article are in addition to the survivorship provisions of any
other Article of this Agreement.
17. GOVERNING LAW. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of the State of New York without reference
to rules relating to conflicts of law.
18. WITHHOLDINGS. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
20. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings indicated below:
(a) "Base Salary" shall mean Executive's regular basic annual rate of
compensation prior to any reduction therein under a salary reduction agreement
pursuant to Section 401(k) or Section 125 of the Code, and shall not include
(without limitation) cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
(b) "Board" shall mean the Board of Directors of the Company.
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(c) "Cause" for termination by the Company of the Executive's employment,
shall mean (a) an action by Executive involving willful malfeasance in
connection with his employment which results in material harm to the Company,
(b) a material and continuing breach by Executive of the terms of this Agreement
which breach is not cured within 60 days after Executive receives written notice
from the Company of any such breach or (c) Executive being convicted of a
felony. Termination of Executive for Cause shall be communicated by a Notice of
Termination given within six months after the Board both (i) had knowledge of
conduct or an event allegedly constituting Cause and (ii) had reason to believe
that such conduct or event could be grounds for Cause. For purposes of this
definition, no act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive not in good faith
and without reasonable belief that Executive's act, or failure to act, was in
the best interest of the Company and its subsidiaries.
(d) "Change of Control" shall have that meaning set forth in the Change of
Control Agreement referred to in Article 14 hereof.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Company" shall mean EMCOR Group, Inc. and any successor to its
business and/or assets which assumes and agrees to perform this Agreement by
operation of law or otherwise.
(g) "Confidential Information" shall mean non-public information concerning
the financial data, strategic business plans, product development (or other
proprietary product data), customer lists, marketing plans and other non-public,
proprietary and confidential information of any member of the Restricted Group
or the customers of any member of the Restricted Group, that, in any case, is
not otherwise available to the public (other than by Executive's breach of the
terms hereof).
(h) "Date of Termination" shall have the meaning stated in Section 7.02
hereof.
(i) "Good Reason" for termination by the Executive of Executive's
employment shall mean the occurrence (without the Executive's express written
consent) of any one of the following acts, or failure to act, unless, in the
case of any act or failure to act described in clause (1), (2), (3) or (4)
below, such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination by Executive given in respect thereof:
(1) any reduction by the Company of his authority, duties, or
responsibilities as, or any removal of the Executive from the position of,
Chairman of the Board and Chief Executive Officer, except in connection
with the termination of the Executive's employment (A) for Cause, (B) as a
result of the Executive's Permanent Disability (as hereafter defined) or
death or (C) by the Executive other than for Good Reason;
(2) a reduction by the Company in Executive's Base Salary as in
effect on the date hereof or as the same may be increased from time to time
except in connection with a similar reduction in salary that is applicable
to all senior executives of the Company;
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(3) the failure by the Company or a subsidiary to pay to Executive
any portion of Executive's current compensation that is already earned and
due;
(4) the failure by the Company to obtain the assumption (either
specifically or by operation of law) of this Agreement by any successor or
assign of the Company or any person acquiring substantially all of the
Company's assets; or
(5) the termination of the Indemnity Agreement effective as of the
date hereof between Executive and the Company.
Executive's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any act or failure to act constituting Good Reason
hereunder, but Executive shall only be considered to have terminated employment
for "Good Reason" if Executive gives a Notice of Termination within 90 days
after Executive becomes aware of the event or events constituting Good Reason.
(j) "Notice of Termination" shall have the meaning stated in Section 7.01
hereof.
(k) "Permanent Disability" shall be deemed to exist, if, as a result of
Executive's incapacity due to physical or mental illness, Executive shall have
been absent from his duties with the Company on a full-time basis for a period
of six (6) consecutive months.
(l) "Restricted Group" shall mean the Company, its subsidiaries and their
affiliates.
(m) "Severance Payments" shall mean those payments described in Article 3
hereof.
IN WITNESS WHEREOF, the parties hereto have executed this amended and
restated employment agreement as of the date first above written.
EMCOR GROUP, INC.
By:
----------------------------------------
EXECUTIVE
-------------------------------------------
Xxxxx X. XxxXxxxx
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APPENDIX A
FORM OF RELEASE
For and in consideration of the payments and other benefits described in the
Severance Agreement dated as of ______________, 2005, between EMCOR Group, Inc.
(the "Company") and me (the "Agreement"), and for other good and valuable
consideration, I hereby release the Company, its divisions, affiliates,
subsidiaries, parents, branches, predecessors, successors, assigns, officers,
directors, trustees, employees, agents, shareholders, administrators,
representatives, attorneys, insurers and fiduciaries, past, present and future
(the "Released Parties") from any and all claims of any kind which I now have or
may have against the Released Parties, whether known or unknown to me, by reason
of facts which have occurred on or prior to the date that I have signed this
Release (except a claim for the payments described in the Agreement). Such
released claims include, without limitation, any and all claims under federal,
state or local laws pertaining to employment, including the Age Discrimination
in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, 42
U.S.C. Section 2000e et seq., the Fair Labor Standards Act, as amended, 29
U.S.C. Section 2601 et seq., and Connecticut General Statutes, Section 46a-60 et
seq., and any and all state or local laws regarding employment discrimination
and/or federal, state or local laws of any type or description regarding
employment, including but not limited to any claims arising from or derivative
of my employment with the Company and its subsidiaries, as well as any and all
claims under state contract or tort law.
I have read this Release carefully, acknowledge that I have been given at least
21 days to consider all of its terms, and have been advised to consult with an
attorney and any other advisors of my choice prior to executing this Release,
and I fully understand that by signing below I am voluntarily giving up any
right which I may have to xxx or bring any other claims against the Released
Parties, including any rights and claims under the Age Discrimination in
Employment Act. I also understand that I have a period of 7 days after signing
this Release within which to revoke my agreement, and that neither the Company
nor any other person is obligated to make any payments or provide any other
benefits to me pursuant to the attached Agreement until 8 days have passed since
my signing of this Release without my signature having been revoked. Finally, I
have not been forced or pressured in any manner whatsoever to sign this Release,
and I agree to all of its terms voluntarily.
Notwithstanding anything else herein to the contrary, this Release shall not
affect: the obligations of the Company set forth in the Agreement or other
obligations that, by their terms, are to be performed after the date hereof
(including, without limitation, obligations to me under any stock option, stock
award or incentive plans or agreements or litigations under any person plan or
other benefit or deferred compensation plan, all of which shall remain in effect
in accordance with their terms); obligations to indemnify me respecting acts or
omissions in connection with my service as an officer or employee of the Company
and its subsidiaries; or any right I may have to obtain contribution in the
event of the entry of judgment against me as a result of any act or failure to
act for which both I and the Company are jointly responsible.
This Release, and the attached Agreement, are final and binding and may not be
changed or modified except in a writing signed by both parties.
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