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EXHIBIT 10.15
AMPAM PARENT/MGT
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between American
Plumbing and Mechanical, Inc., a Delaware corporation (the "Company" or "AMPAM")
and all its subsidiaries, and Xxxxxx X. Xxxxxxxxxxxx ("Executive") is hereby
entered into effective as of April 1, 1999.
RECITALS
Whereas, as of the Effective Date, the Company and the subsidiaries of
the Company (the Company and such subsidiaries being collectively, the "AMPAM
Companies") provide plumbing and mechanical contracting services; and
Whereas, the Company wishes to employ Executive, and Executive wishes
to be employed by the Company, on the terms set forth herein; and
Whereas, in the course of his employment with the Company, Executive
will become familiar with and aware of information as to the AMPAM Companies'
customers and specific manner of doing business, including the processes,
techniques and trade secrets used by the AMPAM Companies, and future plans with
respect thereto, all of which has been and will be established and maintained at
great expense to the AMPAM Companies and which constitutes trade secrets and the
valuable goodwill of the AMPAM Companies.
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
AGREEMENTS
1. Employment and Duties.
a. The Company hereby employs Executive as the Chief Executive
Officer of the Company. As such, Executive shall have the
responsibilities, duties and authority customarily
appertaining to such office and such other duties as may be
reasonably assigned to Executive and which are consistent with
such position. Executive shall report to the Chief Executive
Officer of the Company unless otherwise directed by the Board
of Directors. Executive hereby accepts this employment upon
the terms and conditions herein contained and, subject to
paragraph 1(c), agrees to devote substantially all of his
time, attention and efforts during normal business hours,
excluding any periods of vacation or sick leave, to promote
and further the business and interests of the Company and its
affiliates.
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b. Executive shall faithfully adhere to, execute and fulfill all
reasonable and lawful policies established by the Company, to
the extent such policies have been communicated to Executive
in writing and are not inconsistent with any of the terms of
this Agreement.
c. Except as set forth on Schedule 1c. hereto, Executive shall
not, during the term of his employment hereunder, engage in
any other business activity pursued for gain, profit or other
pecuniary advantage to the extent such activity interferes
materially with Executive's duties and responsibilities
hereunder. The foregoing limitations shall not prohibit
Executive from making personal investments in such form or
manner as will not materially interfere with Executive's
Performance of his duties under this Agreement.
d. Executive shall be entitled to vacation in accordance with the
policies of the Company for similarly-situated employees.
2. Compensation. For all services rendered by Executive, the Company shall
compensate Executive as follows:
a. Base Salary. The base salary payable to Executive during the
term shall be $220,000.00 per year ("Base Salary") payable in
accordance with the Company's payroll procedures for officers,
but not less frequently than twice monthly. On an annual basis
such base salary shall be reviewed by the Board of Directors
of the Company (the "Board"), and may be adjusted at its
discretion in light of the Executive's position,
responsibilities, performance and such other reasonable, job
related factors that the Board deems appropriate; provided,
however, as adjusted Base Salary may not be less than that
amount in effect on the Effective Date.
b. Annual Bonus. The Company will consider adopting an incentive
bonus plan under which Executive and other officers of the
Company will be eligible to receive annual bonus awards in
amounts that are competitive with those provided to similarly
situated executives and commensurate with the performance of
the AMPAM Companies, as reasonably determined by the Board.
c. Executive Perquisites and Benefits. Executive shall be
entitled to receive additional benefits and compensation from
the Company in the form and to the extent specified below:
i. Executive shall be reimbursed for all business travel
and other out-of-pocket expenses reasonably incurred
by Executive in the performance of his duties
pursuant to this Agreement and in accordance with the
Company's policy for its officers, including, without
limitation, continuing education, license and
administrative fees. All such expenses shall be
appropriately documented in
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reasonable detail by Executive upon submission of any
request for reimbursement, and in a format and manner
consistent with the Company's expense reporting
policy.
ii. Executive shall be entitled to participate in all
bonus and incentive compensation plans and to receive
all fringe benefits and perquisites offered by the
Company to any of the Company's similarly situated
executives, including, without limitation,
participation in the various employee benefit plans
or programs provided to the employees of the Company
in general, subject to the regular eligibility
requirements with respect to each of such benefit
plans or programs, and such other benefits or
perquisites as may be approved for Executive by the
Board during the term of this Agreement, all on a
basis as favorable to Executive as may be provided or
offered by the Company to other comparable officers
(in terms of position) of the Company.
Notwithstanding the above, until the Company
establishes employee welfare and pension benefit
plans for its officers, Executive shall participate
in such plans of the AMPAM Companies as may be
designated.
Notwithstanding the above, the Board may offer or provide to
Executive, or to any other officer or executive of the Company
or any AMPAM Company, special compensation, benefits, and/or
perquisites, in order to attract or retain that executive or
officer where the Board determines, in its discretion, that
the offer or provision of such special compensation, benefits,
and/or perquisites are in the best interests of AMPAM or any
AMPAM Company. Should the Board make such determination and
offer or provide special compensation, benefits and/or
perquisites to an officer or executive, Executive will not
automatically be entitled to such special compensation,
benefits and/or perquisites.
iii. Until such time as Executive becomes eligible for
coverage under a group health plan of AMPAM, the
Company shall monthly reimburse Executive for any
COBRA continuation premiums paid by Executive for his
coverage after the Effective Date.
3. Non-Competition Agreement.
a. Executive acknowledges that as a consequence of his employment
with the Company, he will be furnished or have access to
Confidential Information (as defined below). Executive further
recognizes that the Company's willingness to enter into this
Agreement is based in material part on Executive's agreement
to the provisions of this paragraph 3 and that Executive's
breach of the provisions of this paragraph 3 could materially
damage the Company. Subject to the further provisions of this
Agreement, Executive will not, during the term of his
employment with the Company and for a period of two years
immediately following the termination of such
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employment for any reason, directly or indirectly, for himself
or on behalf of or in conjunction with any other person,
company, partnership, corporation or business of whatever
nature:
i. engage, as an officer, director, shareholder, owner,
partner, joint venture, or in a managerial capacity,
whether as an employee, independent contractor,
consultant or advisor, or as a sales representative,
whether paid or unpaid, in any plumbing, piping,
mechanical, heating, ventilation or air conditioning
contracting; installation or services business
directly related thereto (such business and
operations referred to herein as the "Plumbing and
Mechanical Business"), in direct competition with any
of the AMPAM Companies within 100 miles of where any
of the AMPAM Companies conducts business including
any territory serviced by any of the AMPAM Companies
during the term of Executive's employment (the
"Territory");
ii. call upon any person who is, at that time, an
employee of the AMPAM Companies for the purpose or
with the intent of enticing such employee away from
or out of the employ of the AMPAM Companies;
iii. call upon any person or entity which is, at that
time, or which has been, within one year prior to
that time, a customer of the AMPAM Companies within
the Territory for the purpose of soliciting
customers, orders or contracts for any Plumbing and
Mechanical Business within the Territory;
iv. call upon any prospective acquisition candidate, on
Executive's own behalf or on behalf of any
competitor, which candidate was, to Executive's
knowledge after due inquiry, either called upon by
the AMPAM Companies or for which the AMPAM Companies
made an acquisition analysis, for the purpose of
acquiring such entity;
v. disclose customers, whether in existence or proposed,
of the AMPAM Companies to any person, firm,
partnership, corporation or business for any reason
or purpose whatsoever except to the extent that the
AMPAM Companies has in the past disclosed such
information to the public, any person, firm,
partnership, corporation, business, or other entity,
for valid business reasons; or
vi. testify as an expert witness in plumbing and
mechanical services matters for an adverse party to
any of the AMPAM Companies in litigation; provided
that nothing contained in this paragraph 3(a)(vi)
shall interfere with Executive's duty to testify as a
witness if required by law.
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Notwithstanding the above, the foregoing covenant
shall not be deemed to prohibit Executive from
acquiring as an investment (i) not more than 1% of
the capital stock of a company engaged in the
Plumbing and Mechanical Business, whose stock is
traded on a national securities exchange, the NASDAQ
Stock Market or on an over-the-counter or similar
market or (ii) not more than 1% of the capital stock
of a competing business whose stock is not publicly
traded if the Board consents to such acquisition. Any
ownership interest in any business which is in
competition with the AMPAM Companies shall
immediately be disclosed to the Board by Executive.
b. Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be
caused to the Company for which they would have no other
adequate remedy, Executive agrees that foregoing covenant may
be enforced by the Company, in the event of breach by him, by
injunctions, restraining orders, and orders of specific
performance issued by a court of competent jurisdiction.
Executive further agrees to waive any requirement for the
Company's securing or posting of any bond in connection with
such remedies.
c. It is agreed by the parties that the foregoing covenants in
this paragraph 3 impose a reasonable restraint on Executive in
light of the activities and business of the AMPAM Companies on
the date of the execution of this Agreement and the current
plans of the AMPAM Companies; but it is also the intent of the
Company and Executive that, subject to paragraph 3(g) hereof,
such covenants be construed and enforced in accordance with
the changing activities, business and locations of the AMPAM
Companies throughout the term of this covenant, whether before
or after the date of termination of the employment of
Executive, unless the Executive was conducting such new
business prior to the AMPAM Companies conducting such new
business. For example, if, during the term of Executive's
employment, any of the AMPAM Companies engages in new and
different activities, enters a new business or establishes new
locations for its current or new activities or business in
addition to or other than the activities or business
enumerated under the Recitals above or the locations currently
established therefor, then, subject to paragraph 3g. hereof,
through the term of this covenant Executive will be precluded
from soliciting the customers or employees of such new
activities or business or from such new location and from
directly competing with such new business activities, or
locations within 100 miles of where such new activities,
business or locations are conducted, unless Executive was
conducting such new activities or business prior to any of the
AMPAM Companies conducting such new activities or business.
d. It is further agreed by the parties hereto that, in the event
that Executive shall cease to be employed hereunder and shall
enter into a business or pursue other activities not in
competition with the Plumbing and Mechanical Business of the
AMPAM
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Companies or related activities or business in locations the
operation of which, under such circumstances, does not violate
clause (a)(i) of this paragraph 3, and in any event such new
business, activities or location are not in violation of this
paragraph 3 or of Executive's obligations under this paragraph
3, if any, Executive shall not be chargeable with a violation
of this paragraph 3 if the AMPAM Companies shall at any time
after the termination of Executive's employment enter the
same, similar or a competitive (i) business, (ii) course of
activities or (iii) location, as applicable.
e. The covenants in this paragraph 3 are severable and separate,
and the non-enforceability of any specific covenant shall not
affect the provisions of any other covenant. Moreover, in the
event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that
such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be
reformed.
f. All of the covenants in this paragraph 3 shall be construed as
an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action
of Executive against any of the AMPAM Companies, whether
predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of such
covenants. It is specifically agreed that the period of two
years (subject to the further provisions of this Agreement)
following termination of employment stated at the beginning of
this paragraph 3, during which the agreements and covenants of
Executive made in this paragraph 3 shall be effective, shall
be computed by excluding from such computation any time during
which Executive is in violation of any provision of this
paragraph 3.
g. The Company and the Executive hereby agree that this covenant
is a material and substantial part of this transaction.
4. Term; Termination; Rights on Termination. The term of this Agreement
shall begin on the Effective Date and continue for five years (the
"Initial Term"), unless terminated sooner as herein provided; however,
beginning on the fifth anniversary of the Effective Date and on each
anniversary thereafter the term shall automatically continue for one
year on the same terms and conditions contained herein in effect as of
the time of renewal (the "Extended Term") unless not less than six
months prior to any such anniversary either party shall give written
notice to the other party that the term shall not be so extended;
provided further, however, upon a Change in Control (as defined in
paragraph 11(e)) during the Initial Term or any Extended Term the term
of this Agreement shall automatically continue following such Change in
Control for a period equal to the then remaining term or two years,
whichever period is longer (such longer period being an Extended Term),
unless earlier terminated as provided in paragraph 11. This Agreement
and Executive's employment may be terminated in any one of the
followings ways:
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a. Death. The death of Executive shall immediately terminate this
Agreement with no severance compensation due Executive's
estate; provided, however, for the 90-day period following
Executive's death, the Company, at its sole cost and expense,
shall continue to provide Executive's then qualified
beneficiaries with coverage under the Company's group health
plan in which Executive participated immediately prior to
Executive's death or a successor plan thereto, subject to the
terms of such plan as it may be amended ("Company Health
Plan"). Thereafter, the Company shall provide continuation of
coverage elections to such qualified beneficiaries as are
required by law.
b. Disability. If Executive becomes entitled to and receives
benefits under an insured long term disability plan of the
AMPAM Companies (incurs a "Disability"), the Company, with the
approval of a majority of the members of the Board, may
terminate this Agreement and Executive's employment hereunder.
In the event this Agreement is terminated as a result of
Executive's Disability, Executive shall have no right to any
severance compensation; provided, however, (i) for 12 months
thereafter or until Executive's death, if earlier, the Company
shall continue to pay Executive an amount equal to Executive's
monthly adjusted Base Salary (computed by reference to
Executive's annual adjusted Base Salary at the time of his
termination) reduced by any cash benefits payable to Executive
under such long term disability plan and (ii) the Company, at
its sole cost and expense, shall continue the coverage of
Executive and his qualified beneficiaries (for as long as they
are qualified beneficiaries thereunder) under the Company
Health Plan for as long as Executive continues to qualify for
and receive benefits under such long term disability plan, but
not to exceed five years. Thereafter, the Company shall
provide continuation of coverage elections to Executive and
his qualified beneficiaries as required by law.
c. Cause. The Company may terminate this Agreement and
Executive's employment for "Cause", which shall be: (1)
Executive's willful and material breach of this Agreement
(which remains uncured at the end of a 30-day period);
provided, that none of the following shall constitute Cause
for purposes of this clause (1): isolated incidences of (A)
bad judgement, (B) negligence, or (C) any act or omission that
Executive believed in good faith to have been in or not
opposed to the interest of the Company; (2) Executive's gross
negligence in the performance or intentional nonperformance
(in either case continuing for 30 days after receipt of
written notice of need to cure) of any of Executive's material
duties and responsibilities hereunder; (3) Executive's
dishonesty or fraud with respect to the business, reputation
or affairs of the AMPAM Companies; or (4) Executive's
conviction of a felony crime involving moral turpitude. Any
termination for Cause must be approved by a majority of the
eligible members of the Board (for this purpose, any member of
the
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Board reasonably believed by a majority of the Board to be at
fault in the events leading the Board to consider terminating
Executive for Cause shall also be excluded, including
Executive if Executive is a member of the Board). For purposes
hereof, no act, or failure to act, on Executive's part shall
be deemed "willful" unless done, or omitted to be done, by
Executive not in good faith and/or without reasonable belief
that Executive's action or omission was in the best interest
of the Company. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for Cause unless and
until there shall have been delivered to Executive a Notice of
Termination and a copy of a resolution duly adopted by the
Board, finding that, in the good faith opinion of the Board,
Executive was guilty of conduct set forth above and specifying
the particulars thereof in detail. In the event of a
termination for Cause, Executive shall have no right to any
severance compensation.
i. The Company may not terminate Executive's employment
for Cause unless:
(1) no fewer than 30 days prior to the Date of
Termination, the Company provides Executive
with written notice (the "Notice of
Consideration") of its intent to consider
termination of Executive's employment for
Cause, including a detailed description of
the specific reasons which form the basis
for such consideration;
(2) for a period of not less than 25 days after
the date Notice of Consideration is
provided, Executive shall have the
opportunity to appear before the Board, with
or without legal representation, at
Executive's election, to present arguments
and evidence on his own behalf; and
(3) following the presentation to the Board as
provided in (2) above or Executive's failure
to appear before the Board at a date and
time specified in the Notice of
Consideration (which date shall not be more
than 30 days after the date the Notice of
Consideration is provided), Executive may be
terminated for Cause only if the Board, by
majority vote of its eligible voters,
determines that the actions or inactions of
Executive specified in the Notice of
Consideration, or reasonably related and/or
later-discovered actions or inactions,
occurred, that such actions or inactions
constitute Cause, and that Executive's
employment should accordingly be terminated
for Cause;
ii. Unless the Company (A) complies with the substantive
and procedural requirements of this Section 4.c.
prior to a Termination of Employment for Cause, and
(B) concludes, in its good faith discretion that
Executive's action or inaction specified in the
Notice of Termination for Cause did occur and
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constituted Cause, any Termination of Employment
shall be deemed a termination without Cause for all
purposes of this Agreement.
iii. After providing a notice of need to cure or Notice of
Consideration pursuant to the provisions of this
Section 4.c., the Board may, by the affirmative vote
of all of its members (excluding for this purpose
Executive if he is a member of the Board, and any
other member of the Board reasonably believed by the
Board to be at fault in the events leading to issuing
the Notice of Consideration), suspend Executive with
pay until a final determination pursuant to this
Section 4.c. has been made.
d. Without Cause or For Good Reason. Executive may only be
terminated without Cause and other than due to Disability by
the Company during either the Initial Term or Extended Term if
such termination is approved by a majority of the members of
the Board. Should Executive be terminated by the Company
without Cause and other than due to Disability or should
Executive terminate with Good Reason during the Initial Term,
Executive shall receive from the Company, in addition to any
accrued but unpaid salary, bonus and benefits, a lump sum
payment due on the effective date of termination, an amount
equivalent to the annual adjusted Base Salary at the rate then
in effect for (i) whatever time period is remaining under the
Initial Term (but in no event more than two years) or (ii) for
one year, whichever amount is greater. Should Executive be
terminated by the Company without Cause and other than due to
Disability or should Executive terminate with Good Reason
during the Extended Term, Executive shall receive from the
Company, in a lump sum payment due on the effective date of
termination, an amount equivalent to the adjusted Base Salary
at the rate then in effect for one year. Further, any
termination by the Company without Cause or due to Disability
or by Executive for Good Reason whether during the Initial
Term or any Extended Term shall operate to shorten the period
set forth in paragraph 3.a. and during which the terms of
paragraph 3. apply to one year from the date of termination of
employment. If Executive resigns or otherwise terminates his
employment without Good Reason, rather than the Company
terminating his employment pursuant to that paragraph 4.d.,
Executive shall receive no severance compensation.
e. Executive shall have "Good Reason" to terminate his employment
hereunder as a consequence of any of the following events,
unless such event is agreed to in writing by Executive: (a) a
material reduction in his authority, title, responsibilities
or duties; (b) Executive's adjusted Base Salary is reduced
below that in effect on the Effective Date; (c) the relocation
of the Company's principal executive offices or Executive's
principal office to a location outside the state of Texas
without a commensurate adjustment in Executive's Base Annual
Salary to reflect any increase in cost of living as measured
by comparing the applicable regional or local consumer price
indices; (d) the assignment to Executive of any duties or
responsibilities which are materially
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inconsistent with Executive's title, position or
responsibilities as in effect immediately prior to such
assignment; (e) the failure by the Company to continue in
effect any employee benefit plan in which Executive
participates and/or any perquisite provided Executive, which
is (are) material to Executive's total compensation and
benefits, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan or perquisite, or the failure by the
Company to continue Executive's participation therein, or any
action by the Company which would materially reduce
Executive's participation therein or reward opportunities
thereunder; (f) the failure of the Company to obtain a
satisfactory agreement from any successor or assign of the
Company to assume and agree to perform this Agreement, as
contemplated in paragraph 10.; (g) a material breach of this
Agreement by the Company (including failure of the Company to
pay Executive on a timely basis the amounts to which Executive
is entitled under this Agreement); provided, however, Good
Reason shall exist with respect to a matter only if such
matter is not corrected by the Company within 30 days of its
receipt of written notice of such matter from Executive, and
in no event shall a termination by Executive occurring more
than 60 days following the date of an event described above be
a termination for Good Reason due to such event.
f. If termination of Executive's employment arises out of the
Company's failure to pay Executive on a timely basis the
amounts to which Executive is entitled under this Agreement or
as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or
pursuant to the provisions of paragraph 18. below, the Company
shall pay all amounts and damages to which Executive may be
entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other
costs incurred by Executive to enforce his rights hereunder.
Further, none of the provisions of paragraph 3. shall apply in
the event this Agreement is terminated as a result of a breach
by the Company.
g. Resignation Without Good Reason. Executive may, without Good
Reason (as hereinafter defined), terminate this Agreement and
Executive's employment, effective 30 days after written notice
is provided to the Company. If Executive resigns or otherwise
terminates his employment without Good Reason, rather than the
Company terminating his employment pursuant to that paragraph
4.d., Executive shall receive all accrued but unpaid salary,
bonus and benefits. Under no circumstance where Executive
terminates Executive's employment without Good Reason, shall
Executive be entitled to any pro rata share or payment of any
bonus or other compensation which has not yet been determined
or which requires employment at the time of the determination
or award for eligibility.
h. Upon termination of this Agreement for any reason provided
above, in addition to the above payments, if any, Executive
shall be entitled to receive all compensation
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earned, accrued vacation and reimbursements due through the
effective date of termination, paid to Executive in a lump sum
on the effective date of termination. In addition, a
termination of this Agreement shall not alter or impair any of
Executive's vested rights or benefits, if any, under any (i)
employee benefit plan of the AMPAM Companies or (ii) deferred
compensation plan, including, without limitation, any stock
option plan, of the AMPAM Companies. In addition,
notwithstanding any other provision of this Agreement, upon
termination of this Agreement other than (i) by the Company
for Cause, (ii) by Executive without Good Reason and in the
absence of a Change in Control or (iii) at the expiration of
the Initial Term or any Extended Term pursuant to a timely
notice, all options to purchase the stock of the Company (or
any successor thereof) and all similar equity-based awards,
outstanding granted or issued on the date hereof shall, at the
time of such termination, become vested without regard to any
vesting schedule thereof and in the case of options, shall be
exercisable for the greater of two years from the date of such
termination or the period provided in such award. All other
rights and obligations of the Company and Executive under this
Agreement shall cease as of the effective date of termination,
except that Executive's obligations under paragraphs 3., 5.,
6., 7., and 8. herein and the Company's obligations under
paragraphs 11.g. and 14. shall survive such termination in
accordance with their terms, unless or except as expressly
provided otherwise in this Agreement.
5. Return of Company Property. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other
property delivered to or compiled by Executive by or on behalf of any
of the AMPAM Companies or their representatives, vendors or customers
which pertain to the business of any AMPAM Companies shall be and
remain the property of the AMPAM Companies, as the case may be, and be
subject at all times to their discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials and
other similar data pertaining to the business, activities or future
plans of the AMPAM Companies which is collected by Executive shall be
delivered promptly to the Company without request by it upon
termination of Executive's employment and Executive shall not retain
any copies of the same.
6. Intellectual Property. Executive shall disclose promptly to the Company
any and all conceptions, ideas, designs, plans, know-how, processes,
improvements and other discoveries, whether patentable or not, which
(i) are conceived or made by Executive, solely or jointly with another,
during the period of employment or thereafter, (ii) are directly
related to the plumbing and mechanical business or activities of the
AMPAM Companies, and (iii) Executive conceives as a result of his
employment by the Company, including any predecessor (collectively, the
"Intellectual Property"). Executive hereby assigns and agrees to assign
all his interests therein to the Company or its nominee. Whenever
requested to do so by the Company, Executive shall execute any and all
applications, assignments or other instruments that the Company shall
deem necessary to apply for and obtain Letters Patent of the United
States or any foreign country or to otherwise protect the Company's
interest
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therein. Executive must also render to the Company, at the Company's
expense, assistance in the perfection, enforcement and defense of any
Intellectual Property.
7. Trade Secrets. Executive agrees that he will not, during or after the
term of this Agreement, disclose the specific terms of the AMPAM
Companies' relationships or agreements with its respective vendors or
customers or any other trade secret of the AMPAM Companies, whether in
existence or proposed, to any person, firm, partnership, corporation or
business for any reason or purpose whatsoever, except as required by
law and prior to any such disclosure Executive shall give the Company
prior written notice thereof and the opportunity to contest such
disclosure.
8. Confidentiality.
a. Executive acknowledges and agrees that all Confidential
Information (as defined below) of the Company is confidential
and a valuable, special and unique asset of the Company that
gives the Company an advantage over its actual and potential,
current and future competitors. Executive further acknowledges
and agrees that Executive owes the Company a fiduciary duty to
preserve and protect all Confidential Information from
unauthorized disclosure or unauthorized use, that certain
Confidential Information constitutes "trade secrets" under
applicable laws and, that unauthorized disclosure or
unauthorized use of the Confidential Information would
irreparably injure the Company. Both during the term of
Executive's employment and after the termination of
Executive's employment for any reason (including wrongful
termination), Executive shall hold all Confidential
Information in strict confidence, and shall not use any
Confidential Information except for the benefit of the
Company, in accordance with the duties assigned to Executive.
Executive shall not, at any time (either during or after the
term of Executive's employment), disclose any Confidential
Information to any person or entity (except other employees of
the Company who have a need to know the information in
connection with the performance of their employment duties,
and who have been informed of the confidential nature of the
confidential information and have agreed to keep it
confidential), or copy, reproduce, modify, transmit, including
electronic transmission, decompile or reverse engineer any
Confidential Information, or remove any Confidential
Information from the Company's premises, without the prior
written consent of the Board, or permit any other person to do
so. Executive shall take reasonable precautions to protect the
physical security of all documents and other material
containing Confidential Information (regardless of the medium
on which the Confidential Information is stored). This
Agreement applies to all Confidential Information, whether now
known or later to become known to Executive.
b. Upon the termination of Executive's employment with the
Company for any reason, and upon written request of the
Company at any other time, Executive shall promptly surrender
and deliver to the Company all documents and other written
material of any
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nature containing or pertaining to any Confidential
Information and shall not retain any such document or other
material. Within ten days of a written request by the Company,
Executive shall certify to the Company in writing that all
such materials have been returned.
As used in this Agreement, the term "Confidential Information"
shall mean any information or material known to or used by or
for the AMPAM Companies (whether or not owned or developed by
the AMPAM Companies and whether or not developed by Executive)
that is not generally known to persons in the Plumbing and
Mechanical Business, except as provided in this paragraph.
Confidential Information includes, but is not limited to, the
following: all trade secrets of the AMPAM Companies; all
information that the AMPAM Companies have marked as
confidential or has otherwise described to Executive (either
in writing or orally) as confidential; all nonpublic
information concerning the AMPAM Companies' products,
services, prospective products or services, research, product
designs, prices, discounts, costs, marketing plans, marketing
techniques, market studies, test data, customers, customer
lists and records, suppliers and contracts; all AMPAM
Companies' business records and plans; all AMPAM Companies'
personnel files; all financial information of or concerning
the AMPAM Companies; all information relating to operating
system software, application software, software and system
methodology, hardware platforms, technical information,
inventions, computer programs and listings, source codes,
object codes, copyrights and other intellectual property; all
technical specifications; any proprietary information
belonging to the AMPAM Companies; all computer hardware or
software manuals; all training or instruction manuals; and all
data and all computer system passwords and user codes. For
purposes hereof, Confidential Information shall not include
such information (i) which becomes or is already known to the
public or some other party through no fault of Executive; or
(ii) the disclosure of which (x) is required by law (including
regulations and rulings) or the order of any competent
governmental authority or (y) Executive reasonably believes is
required in connection with the defense of a lawsuit against
Executive, provided that in either case, prior to disclosing
any information, Executive shall give prior written notice
thereof to the Company and provide the Company with the
opportunity to contest such disclosure.
9. No Prior Agreements. Executive hereby represents and warrants to the
Company that the execution of this Agreement by Executive and his
employment by the Company and the performance of his duties hereunder
will not violate or be a breach of any agreement, including any
non-competition agreement, invention or secrecy agreement, with a
former employer, client or any other person or entity. Further,
Executive agrees to indemnify the Company for any loss, including but
not limited to, reasonable attorneys' fees and expenses, the Company
may incur based upon or arising out of Executive's breach of this
paragraph 9.
10. Assignment, Binding Effect. Executive understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore,
that he cannot assign all or any portion of his performance under this
Agreement. Subject to the preceding two sentences and the express
provisions of paragraph 12. below, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto
and their respective heirs, legal representatives,
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successors and assigns. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and assets of the Company to
expressly assume and agree in writing reasonably satisfactory to
Executive to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
written agreement prior to the effectiveness of any such succession
shall be a material breach of this Agreement.
11. Change in Control.
a. Executive understands and acknowledges that the Company may be
merged or consolidated with or into another entity and that
such entity shall automatically succeed to the rights and
obligations of the Company hereunder or that the Company may
undergo a Change in Control (as defined below). In the event a
Change in Control is initiated or occurs during the Initial
Term or an Extended Term, then the provisions of this
paragraph 11. shall be applicable.
b. In the event of a Change in Control wherein the Company and
Executive have not received written notice at least ten
business days prior to the date of the event giving rise to
the Change in Control from the successor to all or a
substantial portion of the Company's business and/or assets
that such successor is willing as of the closing to assume and
agrees to perform, or continue to cause the Company to
perform, the Company's obligations under this Agreement in the
same manner and to the same extent that the Company is hereby
required to perform, then Executive may, at Executive's sole
discretion, elect to terminate Executive's employment on the
effective date of such Change in Control by providing written
notice to the Board at least five business days prior to the
closing of the transaction giving rise to the Change in
Control. In such case, Executive shall be deemed to have
terminated Executive's employment for Good Reason on such
date; provided, however, the amount of the lump sum severance
payment due Executive shall be triple the amount calculated
under the terms of paragraph 4.d., but shall in no event
exceed nine times Executive's Base Annual Salary as in effect
at the time of termination.
c. In any Change in Control situation, Executive may, at
Executive's sole discretion, elect to terminate Executive's
employment upon the effective date of such Change in Control
by providing written notice to the Board at least five
business days prior to the closing of the transaction giving
rise to the Change in Control. In such case, Executive shall
be deemed to have terminated Executive's employment for Good
Reason on such date; provided, however, the amount of the lump
sum severance payment due Executive shall be double the amount
calculated under the terms of paragraph 4.d., but shall in no
event exceed six times Executive's Base Annual Salary as in
effect at the time of termination.
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15
d. If, on or within two years following the effective date of a
Change in Control the Company terminates Executive's
employment other than for Cause or Disability or Executive
terminates his employment for Good Reason, or if Executive's
employment with the Company is terminated by the Company
within three months before the effective date of a Change in
Control and it is reasonably demonstrated that such
termination (i) was at the request of a third party that has
taken steps reasonably calculated to effect a Change in
Control, or (ii) otherwise arose in connection with or
anticipation of a Change in Control, then Executive shall
receive from Company, in a lump sum payment due on the
effective date of termination, the greater of (i) the
equivalent of three times Executive's Base Annual Salary at
the rate then in effect, or (ii) the base salary for whatever
period is then remaining on the Initial Term, if any, which
payment shall be in lieu of any amounts otherwise payable
pursuant to paragraph 4.d.
e. A "Change in Control" shall be deemed to have occurred if:
i. any person, entity or group (as such terms are used
in Sections 13d. and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Act")), other
than persons and entities which owned any capital
stock of the Company at the closing date of the
transactions contemplated in the Acquisition
Agreements, the AMPAM Companies or an employee
benefit plan of the AMPAM Companies, acquires,
directly or indirectly, the beneficial ownership (as
defined in Section 13(d) of the Act) of any voting
security of the Company and immediately after such
acquisition such person, entity or group is, directly
or indirectly, the beneficial owner of voting
securities representing [35]% or more of the total
voting power of all of the then outstanding voting
securities of the Company entitled to vote generally
in the election of directors;
ii. upon the first purchase of the Company's common stock
pursuant to a tender or exchange offer (other than a
tender or exchange offer made by the Company);
iii. the stockholders of the Company shall approve a
merger, consolidation, recapitalization or
reorganization of the Company, or a reverse stock
split of outstanding voting securities, or
consummation of any such transaction if stockholder
approval is not obtained, other than any such
transaction which would result in at least 75% of the
total voting power represented by the voting
securities of the surviving entity outstanding
immediately after such transaction being beneficially
owned by the holders of all of the outstanding voting
securities of the Company immediately prior to the
transactions with the voting power of each such
continuing holder relative to other such continuing
holders not substantially altered in the transaction;
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iv. the stockholders of the Company shall approve a plan
of complete liquidation or dissolution of the Company
or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's
assets; or
v. if, at any time during any period of two consecutive
years, individuals who at the beginning of such
period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the
election or nomination for the election by the
Company's stockholders of each new director was
approved a vote of at least two-thirds of the
directors then still in office who were directors at
the beginning of the period.
f. Notwithstanding anything in this Agreement to the contrary, a
termination pursuant to paragraph 11.b., c., or d. shall
operate to automatically waive in full the non-competition
restrictions imposed on Executive pursuant to paragraph 3.
g. If it shall be determined that any payment made or benefit
provided to Executive in connection with a change in control
(as defined in Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), or any successor thereto) of
the Company occurring after the Effective Date and on or
before the termination of this Agreement, whether or not made
or provided pursuant to this Agreement, is subject to the
excise tax imposed by Section 4999 of the Code, the Company
shall pay Executive an amount of cash (the "Additional
Amount") such that the net amount received by Executive after
paying all applicable taxes on such Additional Amount and any
penalties, interest and other reasonable costs incurred as a
result of such excise tax or additional payment, shall be
equal to the amount that Executive would have received if
Section 4999 were not applicable.
12. No Mitigation or Offset. Executive shall not be required to mitigate
the amount of any Company payment provided for in this Agreement by
seeking other employment or otherwise. The amount of any payment
required to be paid to Executive by the Company pursuant to this
Agreement shall not be reduced by any amounts that are owed to the
Company by Executive, provided that Executive (i) executes and delivers
to the Company a promissory note evidencing a promise by Executive to
pay the full amount of any amounts owed to the Company within 12 months
from the date of Executive's termination of employment and (ii)
provides such collateral reasonably satisfactory to the Company to
ensure payment of such promissory note.
13. Release. Notwithstanding anything in this Agreement to the contrary,
Executive shall not be entitled to receive any severance payments
pursuant to paragraphs 4. or 11. of this Agreement unless Executive has
executed (and not revoked) a general release of all claims, known or
unknown, Executive may have against the Company, its subsidiaries,
their directors, officers, and employees, in a form of such release
reasonably acceptable to the Company.
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14. Indemnification. In the event Executive is made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, derivative, subrogation, criminal, administrative or
investigative (other than an action by the Company against Executive
and a derivative action shall not be considered an action by the
Company), by reason of the fact that he is or was performing services
for the Company or any of the AMPAM Companies or any present or future
subsidiary thereof, or as an executive officer of the AMPAM Companies
prior to the date of this Agreement, then the Company shall indemnify
Executive against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement, as actually and reasonably
incurred by Executive in connection therewith. In the event that both
Executive and the Company are made a party to the same third-party
action, complaint, suit or proceeding, the Company agrees to engage
competent legal representation, and Executive agrees to use the same
representation, provided that if counsel selected by the Company shall
have a conflict of interest that prevents such counsel from
representing Executive, Executive may engage separate counsel and the
Company shall pay as incurred all reasonable attorneys' fees and
reasonable expenses of such separate counsel, provided further that
Executive may at any time, at Executive's sole expense, hire separate
counsel to represent Executive in such matter. Further, while Executive
is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held
liable to the Company for errors or omissions made in good faith where
Executive has not exhibited gross, willful and wanton negligence and
misconduct nor performed criminal and fraudulent acts which materially
damage the business of the Company. The Company shall indemnify
Executive against and hold Executive harmless from any costs, expenses
(including reasonable attorneys' fees as provided in this paragraph),
liabilities, losses and exposures for Executive's services as an
employee, officer and director of the Company (or any of AMPAM
Companies or any successor) to the maximum extent permitted under
applicable law. The indemnification required by this paragraph 14.
shall be made by the Company by periodic payments promptly as and when
bills are received or liabilities are incurred. The provisions of this
paragraph shall survive the termination of this Agreement.
15. Complete Agreement. This Agreement supersedes, and replaces in full,
all representations, understandings and agreements (oral or written)
between Executive and the Company or any of the AMPAM Companies or any
of their officers, directors or representatives existing as of the
Effective Date and covering the same subject matter as this Agreement.
This written Agreement is the final, complete and exclusive statement
and expression of the agreement between the Company and Executive and
of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may
not be modified after the Effective Date except by a further writing
signed by a duly authorized officer of the Company and Executive, and
no term of this Agreement may be waived except by writing signed by the
party waiving the benefit of such term. Without limiting the generality
of the foregoing, either party's failure to insist on strict compliance
with this Agreement shall not be deemed a waiver thereof.
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16. Notice. Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:
To the Company: American Plumbing and Mechanical, Inc.
0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Chairman of the Board of Directors
To Executive: Xxxxxx X. Xxxxxxxxxxxx
0000 Xxxx Xxxxx
Xxxxxx, XX 00000
Notice shall be deemed given and effective on the earlier of three days
after the deposit in the U.S. mail of a writing addressed as above and
sent first class mail, certified, return receipt requested, or when
actually received. Either party may change the address for notice by
notifying the other party of such change in accordance with this
paragraph 16.
17. Severability; Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and possible,
effect shall be given to the intent manifested by the portion held
invalid or inoperative. The paragraph headings herein are for reference
purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part
hereof.
18. Dispute Resolutions. Except with respect to injunctive relief as
provided in paragraph 3b., neither party shall institute a proceeding
in any court or administrative agency to resolve a dispute between the
parties before that party has sought to resolve the dispute through
direct negotiation with the other party. If the dispute is not resolved
within two weeks after a demand for direct negotiation, the parties
shall attempt to resolve the dispute through mediation. If the parties
do not promptly agree on a mediator, the parties shall request the
Association of Attorney Mediators in Xxxxxx County, Texas (or if the
Company's principal offices are not in Xxxxxx County, a similar
organization in the county in which the Company's principal offices are
located) to appoint a mediator certified by the Supreme Court of Texas.
If the mediator is unable to facilitate a settlement of the dispute
within a reasonable period of time, as determined by the mediator, the
mediator shall issue a written statement to the parties to that effect
and any unresolved dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by
arbitration, conducted before a single arbitrator in the city in which
the Company has its principal offices, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association
then in effect. The arbitrator shall have the authority to order
back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs and
expenses, including those incurred to enforce this Agreement, including
reasonable attorneys' fees and interest thereon in the event the
arbitrator determines that Executive was
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involuntarily terminated by the Company without Disability or Cause, as
defined in paragraphs 4b. and 4c., respectively, or that the Company
has otherwise materially breached this Agreement. A decision by the
arbitrator shall be final and binding. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The costs and
expenses, including reasonable attorneys' fees, of the prevailing party
in any dispute arising under this Agreement will be promptly paid by
the other party.
19. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Texas without regard to its
conflicts of law provisions.
20. Counterparts. This Agreement may be executed simultaneously in two or
more Counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
21. Additional Provisions. The additional provisions set forth in Annex A
and Annex B hereto shall apply.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective for all purposes as of the Effective Date.
Date: July 16, 1999
---------------------
AMERICAN PLUMBING AND MECHANICAL, INC.
/s/ XXXXX X. XXXXXXX
---------------------------------------
[Printed Name and Title]
Date: July 16, 1999
---------------------
EXECUTIVE
/s/ XXXXXX X. XXXXXXXXXXXX
---------------------------------------
Xxxxxx X. Xxxxxxxxxxxx
---------------------------------------
[Printed Name]
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Annex A
I. The Company shall grant to Executive a minimum of four weeks of
vacation per calendar year.
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Annex B
Definitions. For purposes of this Annex B, "Xxxxxxxxxxxx" shall be defined as
the combined operations of Xxxxxxxxxxxx Enterprises, Inc., Xxxxxxxxxxxx
Services, Inc. and GGR Leasing Corporation.
ADDITIONAL CONSIDERATION. In addition to the compensation provided in paragraphs
(a), (b) and (c) of paragraph 2 of the Agreement, AMPAM shall pay the Executive
such additional consideration (the "Additional Consideration") as shall be
determined in accordance with the following provisions (capitalized terms not
defined herein shall have the meaning ascribed to such term in the Acquisition
Agreement);
(i) Calculation of Additional Consideration.
(A) If Xxxxxxxxxxxx generates actual Net Income (as
defined below) in the calendar year ended December
31, 1999 in excess of Target Net Income (as defined
below) for that same period, the Executive shall be
entitled to receive Additional Consideration in
accordance with the following formula:
A = 50% x (B - C) x 10.0 x 38.5%, where
"A" represents the amount of Additional Consideration
(provided that Additional Consideration shall be
limited to the maximum discussed below and will only
be paid in the event that "A" is a positive number);
"B" represents the amount of actual Net Income (as
defined below) generated by Xxxxxxxxxxxx for the
calendar year ended December 31, 1999;
"C" represents Target Net Income (as defined below)
for the calendar year ended December 31, 1999.
(B) Net Income of Xxxxxxxxxxxx shall be Xxxxxxxxxxxx'x
net income determined in accordance with GAAP applied
on a basis consistent with that used in preparing the
Financial Statements (subject to audit by AMPAM's
independent public accountants at the election of
AMPAM), as adjusted by:
(i) the exclusion of an allocation of
amortization of goodwill associated with the
consummation of the AMPAM Plan of
Organization;
(ii) the application of an 40% effective tax rate
to the Company's pretax income;
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(iii) an allocation to Xxxxxxxxxxxx of a charge
for selling, general and administrative
expense for the year ended December 31, 1999
determined by multiplying $4,000,000 by the
Applicable Percentage (as defined below).
(iv) an allocation to Xxxxxxxxxxxx of
Xxxxxxxxxxxx'x allocable share of rebates
and other purchasing benefits received by
AMPAM from vendors and manufacturers of
equipment, material and supplies such
allocable share to be determined based upon
the relative purchase of equipment,
materials and supplies for the year ended
December 31, 1999 by Christianson from such
vendors and manufacturers in relation to the
purchase of equipment, materials and
supplies for the year ended December 31,
1999 by all Founding Companies and other
companies or businesses acquired by AMPAM
after the Closing Date from such vendors and
manufacturers, with the relative purchase
price relationship to be based upon the
criteria (such as quantity or dollar amount
of purchases) that forms the basis for such
rebates and other purchasing benefits
received from such vendors and
manufacturers; and
(v) the adjustment of Xxxxxxxxxxxx'x insurance
costs relating to general liability
insurance coverage, property damage
insurance coverage, xxxxxxx'x compensation
insurance coverage, health insurance
coverage and other insurance coverage to a
level consistent with Xxxxxxxxxxxx'x
insurance costs for the 12 month period
ended June 30, 1998, taking into
consideration changes in the size of the
business of Xxxxxxxxxxxx an the number of
employees of the Company.
If the allocation of selling, general and
administrative expenses discussed in (iii) exceeds
the allocation of rebated and other purchasing
benefits discussed in (iv), then there will be no
allocations of the items discussed in (iii) and (iv)
above for purposes of the Additional Consideration
calculation.
(C) Target Net Income is defined as $6,733,357.
(ii) Maximum Additional Consideration. Notwithstanding the
foregoing formula, the maximum aggregate Additional
Consideration ("Maximum Additional Consideration") to be
received by the Executive is limited to 15% of the sum of the
Base Cash Amount, the principal amount of AMPAM Notes and the
value of the shares of AMPAM Stock paid to the Executive
pursuant to Section I.A. of the Annex I to the Acquisition
Agreement (prior to taking into account the adjustments
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set forth in Sections I.B.2. and I.C.2.). For purposes of such
calculation, shares of AMPAM Stock received by the Executive
pursuant to Section I.A. of Annex I to the Acquisition
Agreement shall be given a value equal to the actual number of
shares of AMPAM Stock received by the Executive multiplied by
$13.00.
(iii) Form and Payment of Additional Consideration.
(A) Form. The Additional Consideration shall be paid 50%
in cash and 50% in AMPAM Stock; provided, however,
that the Executive may elect to receive all or a
portion of such cash in the form of AMPAM Notes
attached to Annex I to the Acquisition Agreement as
Appendix A. The number of shares of AMPAM Stock shall
be derived by dividing 50% of the amount of
Additional Consideration to be paid in AMPAM Stock by
the average closing price on the New York Stock
Exchange (or other exchange or quotation system as
the AMPAM Stock may be traded at such time) for AMPAM
Stock for the five trading days before and the five
trading days after March 31, 2000; provided, however,
that if AMPAM Stock is not traded on an exchange or
quotation system, the price to be used in making the
foregoing calculation will be $13.00 per share.
(B) Payment. Any Additional Consideration to be paid
shall be delivered by AMPAM to the Executive prior to
April 30, 2000. AMPAM's obligation to make any
payment of Additional Consideration will be subject
to the covenants and restrictions contained in
AMPAM's then existing private or public debt or
equity instruments.
(iv) Definitions.
"Applicable Percentage" shall mean the arithmetic average of
the following three percentages:
(a) the percentage that the aggregate dollar amount of
the payroll expenses of Xxxxxxxxxxxx for the year
ended December 31, 1999 represents in relation to the
aggregate dollar amount of the payroll expenses of
all Founding Companies for the year ended December
31, 1999;
(b) the percentage that the aggregate dollar amount of
the operating revenue of Xxxxxxxxxxxx for the year
ended December 31, 1999 represents in relation to the
aggregate dollar amount of the operating revenue of
all Founding Companies for the year ended December
31, 1999; and
(c) the percentage that the average net book value of the
total assets of Xxxxxxxxxxxx for the year ended
December 31, 1999 represents in relation to
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the average net book value of the sum of the total
assets of all Founding Companies for the year ended
December 31, 1999. For purposes of this provision,
the "average" net book value of total assets for
Xxxxxxxxxxxx and for all Founding Companies, as the
case may be, will be determined by dividing (I) the
total assets of Xxxxxxxxxxxx or the summation of the
total assets of all Founding Companies, as the case
may be, for each calendar month during the year ended
December 31, 1999 by (ii) 12.
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