EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of March,
1996, between PAMECO CORPORATION, a Delaware corporation (the "COMPANY"), and
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XXXXXX X. XXXXXXXX ("EXECUTIVE").
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W I T N E S S E T H:
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WHEREAS, the parties hereto desire to enter into an agreement for
Company's employment of Executive on the terms and conditions contained herein;
WHEREAS, the Company is engaged in the business of the marketing, sale
and distribution of heating and air conditioning equipment and components (the
"COMPANY BUSINESS"); and
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WHEREAS, Executive possesses significant knowledge and information
with respect to the Company Business, which knowledge and information will be
increased, developed and enhanced by his employment;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions of this
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Agreement, the Company hereby employs Executive, and Executive hereby accepts
employment, as the Company's Chairman and Chief Executive Officer ("CEO"); and
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in such capacity Executive shall report to the Board of Directors of the parent
of the Company, Pameco Holdings, Inc. ("PAMECO"), and shall perform such
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services and duties as the Board of Directors of Pameco may from time to time
designate during the term hereof. Executive's employment under this Agreement
shall be for a term of three (3) years commencing on March 1, 1996. Thereafter,
the term shall be automatically renewed for additional one (1) year terms,
provided that either party may terminate this Agreement by giving written notice
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thereof to the other party at least one hundred eighty (180) days prior to the
expiration of the then-current term. The "TERM" shall include the initial term
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of Executive's employment hereunder and any renewal term thereof.
2. TERMINATION.
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(a) The Company may terminate Executive's employment under this
Agreement at any time during the Term (i) for Cause, as defined herein, (ii) if
Executive becomes Completely Disabled, as defined herein, (iii) upon Executive's
death, or (iv) for the inability of Executive to carry out effectively his
duties hereunder, as determined in good faith by the Board of Directors of
Pameco.
(b) Executive shall have the right to terminate his employment
hereunder if (i) the Company fails to make any payments due to Executive
hereunder and such failure is not
remedied within thirty (30) days after written notice of such failure is
provided by Executive to the Board of Directors of Pameco, or (ii) the Company
materially breaches this Agreement and such breach is not cured within forty-
five (45) days after written notice of such breach is given by Executive to the
Company.
3. DUTIES. Executive hereby agrees that during the term of this
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Agreement he will devote his full time, attention and energies to the diligent
performance of his duties as an Executive of the Company. Executive shall not,
without the prior written consent of the Company, directly or indirectly, at any
time during the term of his employment with the Company: (a) accept employment
with or render services of a business, professional or commercial nature to any
other Person; (b) engage in any venture or activity which the Company may in
good faith consider to be competitive with or adverse to the Company Business,
or the business of any affiliate of the Company, whether alone, as a partner, or
as an officer, director, employee or shareholder or otherwise, except that the
ownership of not more than two percent (2%) of the stock or other equity
interest of any publicly traded corporation or other entity shall not be deemed
a violation of this Section 3; or (c) engage in any venture or activity which
the Company may in good faith consider to interfere with Executive's performance
of his duties hereunder.
4. COMPENSATION. In consideration of Executive's services
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hereunder, Company shall pay to Executive the compensation described below:
4.1 ANNUAL SALARY. During the term of his employment hereunder, the
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Company shall pay to Executive a salary at the rate of $315,000.00 per annum, in
equal installments at such times as the Company shall make payments of salary
and wages to its employees generally. The Board of Directors of Pameco shall
review Executive's salary on an annual basis.
4.2 OTHER BENEFITS. Executive shall immediately be entitled to share
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in any employee benefits generally provided by the Company to its employees
similarly situated for so long as the Company provides such benefits. In
addition, Executive shall be entitled to (i) four (4) weeks annual vacation, and
(ii) payment by the Company on behalf of Executive of all premiums for group
medical insurance during Executive's COBRA period following termination of
Executive's employment with the Company, provided Executive is also receiving
severance benefits pursuant to Section 4.5 hereof.
4.3 BONUS.
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(a) In addition to the remuneration provided in PARAGRAPH 4.1 above,
Executive shall be entitled to a $75,000.00 bonus at a point in time where the
Company has delivered a draft of the fiscal year ending financial statements
which is acceptable to the Audit Committee. This draft should be delivered on
or before March 31, 1997. In addition, Executive
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may be paid an additional $75,000.00, with respect to the Company's 1996
calendar year, at the discretion of the Compensation Committee of the Board of
Directors of Pameco (the "COMPENSATION COMMITTEE") based on the Company's
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performance during calendar year 1996. Performance targets will be determined by
the Board of Directors of Pameco on or before June 1, 1996 and will include
factors such as (i) the Company's performance relative to the Company's planned
performance for calendar year 1996; (ii) development of the Company's
organizational structure; and (iii) successful transition of Executive and the
Company's present Chairman and CEO.
(b) For calendar year 1997 and thereafter the Compensation Committee
shall develop a bonus plan under which Executive's target bonus shall be equal
to 50% of Executive's annual salary with opportunities to exceed the target
bonus; provided that no bonuses will be paid hereunder unless and until the a
draft of the Company's GAAP financial statements shall be delivered to the Audit
Committee of Pameco. Executive acknowledges that any bonus amounts in excess of
50% of Executive's annual salary will be paid in shares of Pameco at a value per
share determined by the Board of Directors of Pameco at its sole discretion.
Measurements of performance under the bonus plan will be weighted 70% on
financial performance and 30% on other measures as determined by the
Compensation Committee in its sole discretion.
4.4 STOCK OWNERSHIP.
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(a) The Company shall cause Pameco to grant to Executive options to
acquire a total of 750,000 shares of the common stock of Pameco in three series
of options, each of which shall be exercisable for a period of six (6) years
after the date of grant at a purchase price per share of $4.00. The options
granted hereunder shall vest in accordance with the following vesting schedule
and in the event Executive exercises any of the options granted hereunder, he
shall agree to become a signatory to that certain Pameco Holdings, Inc.
Stockholders' Agreement, dated March 19, 1992, as amended from time to time
(5/10/96) by and among the original Stockholders of Pameco Holdings, Inc.:
Vesting Schedule
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(Shares in 000's)
Option Series
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Exercise Hurdle Total ----------------March 1st----------------
Price Price Shares 1996 1997 1998 1999 2000 2001
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Series A $4 $4.00 350 87.5 87.5 87.5 87.5
Series B $4 6.00 250 62.5 62.5 62.5 62.5
Series C $4 8.00 150 - - 37.5 37.5 37.5 37.5
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Total 750 87.5 150.0 187.5 187.5 100.0 37.5
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Cumulative Vesting 87.5 237.5 425.0 612.5 712.5 750.0
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(b) All of the options granted hereunder shall vest as of March 1 in
their respective year of vesting; provided, however, that the Series B and C
options shall vest only in the event the value of Pameco's common stock in a
sale or an initial public offering is equal to or greater than the hurdle price
specified in the schedule set forth above; and, provided further, that all
options granted hereunder will vest immediately upon reaching the hurdle price
in the event of a sale or an initial public offering.
4.5 SEVERANCE. In the event Executive is terminated without Cause
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during the term of this Agreement, Executive shall be entitled to severance pay
in an amount equal to (a) his then current annual salary, plus (b) his targeted
bonus for the year in which he is terminated multiplied by a fraction, the
numerator of which is the number of whole or partial months that have elapsed
during the year in which Executive is terminated through the date of such
termination and the denominator of which is 12; provided, however, that if
Executive's employment hereunder is terminated without Cause as a result of a
change of control of the Company or Pameco, Executive shall be entitled to
severance pay hereunder in an amount equal to two times his then current annual
salary, plus his targeted bonus for the year in which he is terminated. In no
event shall Executive be entitled to severance pay hereunder if Executive is
terminated for Cause or voluntarily leaves the employ of the Company.
5. DEFINITIONS. For purposes of this Agreement the following terms
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shall have the meanings specified below:
5.1 "CAUSE"- Commission of any act which, if prosecuted, would
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constitute a felony; any act or omission by Executive within Executive's control
which is in reckless disregard of the Company Business; failure or refusal by
Executive to comply with the provisions of this Agreement, where such failure or
refusal is not cured within 10 days after written notice from the Company;
Executive's prolonged absence without the consent of the Company; Executive's
neglect of his duties hereunder; commission of any crime or act of dishonesty,
fraud or moral turpitude; breach of any other agreement with the Company in
which Executive is a party; or institution of any proceeding by or against
Executive under any bankruptcy or similar laws for the relief of debtors.
5.2 "COMPLETE DISABILITY" - the inability of Executive to perform his
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services by reason of illness or incapacity and which results in his failure to
discharge his duties under this Agreement for an aggregate total of 90 days
(whether consecutive or non-consecutive) during any 180-day period.
5.3 "CONFIDENTIAL INFORMATION" - All information relating to the
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Company's customers, operations, finances, business and technologies which
derives economic value, actual or potential, from not being generally known to
other Persons, including, without limitation, technical or nontechnical data,
formula (including cost and/or pricing formula), compilations,
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programs, devices, methods, techniques, drawings, processes, designs,
compositions, computer programs, products, machinery, circuitry, protocols,
standards, invention, improvements, apparatus, research and developments;
financial data; names, addresses, telephone numbers, contact persons and other
identifying information relating to customers, potential customers and
suppliers; compilations and lists of customers, potential customers and
suppliers; information with respect to the needs and requirements of various
customers for the Company's products; rate and price information on products
provided by the Company; information with respect to the Company's relationships
with its suppliers; and all business records and personal data relating to the
Company's employees and agents; in all cases, whether written or oral.
Confidential Information may include information that is not a trade secret, but
information which is not a trade secret under applicable law shall only
constitute "Confidential Information" for two years after the termination or
expiration of this Agreement.
5.4 "CUSTOMERS" - All Persons that (a) Executive serviced or
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solicited on behalf of the Company, (b) whose dealings with the Company were
coordinated or supervised, in whole or in part, by Executive, or (c) about whom
Executive obtained Confidential Information, in each case during the one-year
period immediately prior to any termination or expiration of Executive's
employment with the Company.
5.5 "PERSON" - Any individual, corporation, bank, partnership, joint
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venture, association, joint-stock company, trust, unincorporated organization or
other entity.
6. COVENANTS OF EXECUTIVE.
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6.1 COVENANT AGAINST DISCLOSURE OR USE OF CONFIDENTIAL INFORMATION.
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In consideration of his employment hereunder and the payment by the Company to
Executive of the sums described in SECTION 4 hereof, Executive agrees that he
shall protect the Company's Confidential Information and shall not disclose to
any Person, or otherwise use, except in connection with his duties performed in
accordance with this Agreement, any Confidential Information. Provided,
however, that Executive may make disclosures required by a valid order or
subpoena issued by a court or administrative agency of competent jurisdiction,
in which event Executive will promptly notify the Company of such order or
subpoena to provide the Company an opportunity to protect its interests.
Executive's obligations under this paragraph shall survive any expiration or
termination of this Agreement.
6.2 COVENANT AGAINST POST-TERMINATION COMPETITION. In consideration
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of Executive's employment by the Company and the payment by the Company to
Executive of the sums described in SECTION 4 hereof, Executive agrees that for
the period specified in Paragraph 6.3 below, he will not directly or indirectly,
individually or on behalf of any Person other than the Company:
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(a) provide services of the type provided by Executive to the
Company hereunder to any Person listed in Exhibit "A" within the
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United States;
(b) solicit any Customers for the purpose of selling to them
products or services competitive with the products or services sold by
the Company at the time of such termination or expiration within the
United States; or
(c) solicit or induce, or in any manner attempt to solicit or
induce, any person employed by the Company to leave such employment,
whether or not such employment is pursuant to a written contract with
the Company and whether or not such employment is at will.
Nothing contained in this PARAGRAPH 6.2 shall be construed to prohibit Executive
from owning either of record or beneficially not more than two percent (2%) of
the shares or other equity interest of any publicly traded corporation or other
entity which provides products or services competitive with the products or
services sold by the Company. Executive's obligations under paragraph shall
survive any expiration or termination of this Agreement.
6.3 RESTRICTED PERIOD. The restrictions provided in PARAGRAPH 6.2
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above shall apply for a period (the "RESTRICTED PERIOD") commencing on the date
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of this Agreement and continuing in effect for a period of two (2) years after
the expiration or termination of this Agreement.
7. RETURN OF COMPANY DOCUMENTS AND EQUIPMENT. Upon termination or
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expiration of Executive's employment for any reason, or at any time upon the
Company's request, Executive agrees to deliver to the Company: (a) all Company
files, customer lists, catalogs, price lists, management reports, memoranda,
research, Company forms, financial data and reports and other documents supplied
to or created by him in connection with his employment hereunder (including all
copies of the foregoing) in his possession or control, (b) all of the software,
computers, modems, diskettes, instruments, tools, devices, equipment, audio or
videos tapes, drawings, papers, notes and other materials, and any copies
thereof (including such as may be contained in magnetic media or other forms of
computer storage), in Executive's possession or control that relate in any way
to the Company Business or with Executive's employment with the Company, and (c)
all other property relating to the employment of Executive, including, without
limitation, company credit cards, telephone cards, office keys, desk keys, car
keys and security passes.
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8. MISCELLANEOUS.
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8.1 CONTRACT NON-ASSIGNABLE. The parties acknowledge that this
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Agreement has been entered into due to, among other things, the special skills
of Executive, and agree that this Agreement may not be assigned or transferred
by Executive, in whole or in part, without the prior written consent of the
Company.
8.2 PROVISIONS SEVERABLE. If any provision or covenant, or any part
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thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
8.3 REMEDIES. Executive acknowledges that if he breaches or
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threatens to breach his covenants and agreements in this Agreement, his actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in
addition to any other rights or remedies of the Company.
8.4 WAIVER. Failure of either party to insist, in one or more
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instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
8.5 AMENDMENTS AND MODIFICATIONS. This Agreement may be amended or
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modified only by a writing signed by both parties hereto.
8.6 GOVERNING LAW. The validity and effect of this Agreement shall
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be governed by and construed and enforced in accordance with the laws of the
State of Georgia, without regard to its principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Address: EXECUTIVE:
_______________________________ _______________________________________
_______________________________ XXXXXX X. XXXXXXXX
_______________________________
Address: THE COMPANY:
_______________________________ PAMECO CORPORATION
_______________________________
_______________________________ By:____________________________________
Title:______________________________
EXHIBIT A
X.X. XxXxxxxx Supply/Xxxxx-XxXxx Co.
ABCO Refrigeration Supply Corp.
ACR Group, Inc.
Air Cold Supply
Aireco Supply Inc.
Xxxxxxx Distributing Co., Inc.
Apex Supply
Arizona Refrigeration Supplies, Inc.
Automatic Equipment Sales (AES) Inc.
Xxxxx Bros., Inc.
Xxxxx Engineering
X. X. Xxxxxxx Co.
Xxxxxxxx-Xxxxxx Corporation
Century Air Services
Coastline Distribution, Inc.
Comfort Supply, Inc.
Connor Co.
Xxxxxxxx Supply Co.
East Coast Metal Distributors, Inc.
Xxxxxx X. Xxxx Company
Familian Corp.
Xxxxxxxx Enterprises, Inc.
Xxxxx Pacific Corp.
Gemaire Distributors, Inc.
General Heating & Cooling
Xxxxxxx X. Xxxxxx Company
Xxxxxxxx Corporation
Xxxxxxx Distributing Company
Heating & Cooling Supply, Inc.
Xxxxxx Supply
Xxxxxxx Supply & Equipment Corp.
Xxxxxxxxx Supply
Lyon, Xxxxxxx & Company, Inc.
Mingledorff's Inc.
X.X. Xxxxx Company
Xxxxxx Company
Xxxxxx-Xxxxxx Inc.
R.E. Michel Company, Inc.
Refrigeration Sales Corp.
Xxxxxxxxx Heating Supply Co.
RSD
Shollimier Distributing, Inc.
Xxx Xxxxxx Industries, Inc.
Xxxxxx & Xxxxxx
Xxxxxx Brothers, Inc.
Southern Calif. Air Dist'rs. Inc.
Superior Supply
Temperature Systems, Inc.
The Xxxxxx-Xxxxx Company
The Climatic Corporation
Three States Supply Co. Inc.
United Products Dist., Inc.
United Supply Company (usco), Inc.
United Westburne, Inc.
Watsco Corporation
Winair Inc.
Wittichen
Young Supply Company
