EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between
Parks Acquisition Corporation (the "Company"), American Plumbing and Mechanical,
Inc., a Delaware corporation ("AMPAM"), and Xx. Xxxxxxx X. Xxxxx, III.
("Executive") is hereby entered into effective as of the date of the closing or
the transactions contemplated in the various Acquisition Agreements dated
September 16, 1999 between the Company and AMPAM.
RECITALS
The following statements are true and correct:
Whereas, as of the Effective Date, the Company, AMPAM, and the
subsidiaries of AMPAM (AMPAM and such subsidiaries, including the Company, 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 Company's
and the AMPAM Companies' customers and specific manner of doing business,
including the processes, techniques and trade secrets used by the Company and
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 Company and
the AMPAM Companies and which constitutes trade secrets and the valuable
goodwill of the Company and 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 President 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
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assigned to Executive and which are consistent with such position.
Executive shall report to the Board of Directors of the Company (the
"Board") unless otherwise directed by the Board. 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.
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. 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.
2. Compensation. For all services rendered by Executive, the Company
shall compensate Executive as follows:
a. Base Salary. The base salary (the "Base Salary") payable to
Executive during the term shall be $150,000 per year, 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 AMPAM (the "AMPAM
Board"), and may be increased or decreased at its discretion in light
of the Executive's position, responsibilities, performance and such
other reasonable, job related factors that the AMPAM Board deems
appropriate; provided, however, Base Salary, as adjusted, may not be
less than that amount in effect on the Effective Date.
b. Annual Bonus. AMPAM will adopt an incentive bonus plan
under which Executive and other officers of the AMPAM Companies 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 Company, as reasonably determined by the
AMPAM Board. If this incentive bonus plan is adopted by June 30, 2000,
Executive will be eligible to receive a bonus determined pursuant to
this plan for the three month period ended December
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31, 1999, payable within 30 days subsequent to the plan's adoption but
in no event prior to April 30, 2000. If this plan is adopted after June
30, 2000, Executive will be eligible to receive a bonus determined
pursuant to this plan payable by April 30, 2001 for the fifteen month
period ended December 31, 2000.
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:
1. 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 AMPAM's policy for
similarly situated officers. All such expenses shall be
appropriately documented in reasonable detail by Executive
upon submission of any request for reimbursement, and in a
format and manner consistent with the AMPAM's expense
reporting policy.
2. Executive shall be entitled to participate in all
incentive compensation plans and to receive all fringe
benefits and perquisites offered by the Company or AMPAM to
any of the Company's or AMPAM Companies' similarly situated
executives, including, without limitation, participation in
the various employee benefit plans or programs provided to the
employees of the Company or the AMPAM Companies 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.
The Company shall provide Executive with such other
perquisites as may be deemed appropriate for Executive by the
AMPAM Board during the term of this Agreement.
3. Notwithstanding the above, the Board may offer or
provide to Executive, or to any other officer or executive of
the Company, AMPAM, 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.
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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 and AMPAM'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 and
AMPAM. Subject to the further provisions of this Agreement, Executive
will not, during the term of his employment with any of the AMPAM
Companies and for a period of two years immediately following the
termination of such 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:
1. engage, as an officer, director, shareholder,
owner, partner, joint venturer, 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 AMPAM Company
within 100 miles of where any AMPAM Company conducts business
including any territory serviced by an AMPAM Company during
the term of Executive's employment (the "Territory");
2. call upon any person who is, at that time, an
employee of any AMPAM Company for the purpose or with the
intent of enticing such employee away from or out of the
employ of the AMPAM Company;
3. 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 an AMPAM Company within the Territory for the
purpose of soliciting customers, orders or contracts for any
Plumbing and Mechanical Business within the Territory;
4. 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 an AMPAM Company or for which
an AMPAM Company made an acquisition analysis, for the
purpose of acquiring such entity;
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5. 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 for valid
business reasons; or
6. testify as an expert witness in plumbing and
mechanical services matters for a party adverse to an AMPAM
Company in litigation; provided that nothing contained in this
paragraph 4(a)(vi) shall interfere with Executive's duty to
testify as a witness if required by law.
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 AMPAM shall immediately
be disclosed to the Board by Executive.
b. Because of the difficulty of measuring economic losses to
the AMPAM Companies as a result of a breach of the foregoing covenant,
and because of the immediate and irreparable damage that could be
caused to one or more AMPAM Company for which they would have no other
adequate remedy, Executive agrees that foregoing covenant may be
enforced by any AMPAM 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 that AMPAM Companies secure or post 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 any AMPAM Company conducting such new business. For example, if,
during the term of Executive's employment, an AMPAM Company 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
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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 AMPAM Company 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 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 unenforceability 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
an AMPAM Company, 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
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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 following ways:
a. Death. The death of Executive shall immediately terminate
this Agreement with no severance compensation due Executive's estate;
provided, however, (i) should Executive's Death occur prior to December
31, 2000, the Company shall pay the amount of Executive's bonus for
fiscal year 2000 as provided in paragraph 2.b. and (ii) 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 an AMPAM
Company (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) should
Executive's Disability occur prior to December 31, 2000, the Company
shall pay the amount of Executive's bonus for fiscal year 2000 as
provided in paragraph 2.b. (ii) 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 base salary (computed
by reference to Executive's Annual Base Salary at the time of his
termination) reduced by any cash benefits payable to Executive under
such long term disability plan and (iii) 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.
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c. Cause. The Company may terminate this Agreement and
Executive's employment 30 days after written notice to Executive for
"Cause", which shall be: (1) Executive's willful and material breach of
this Agreement (which remains uncured at the end of such 30-day
period); (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 an AMPAM Company which materially and adversely affects an AMPAM
Company (monetarily or otherwise); 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 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 found by the Board, in its discretion, to be done, or
omitted to be done, by Executive not in good faith and 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 copy of a resolution duly
adopted by the Board, finding that, in the good faith discretion 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.
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, in a
lump sum payment due on the effective date of termination, an amount
equivalent to the Annual 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 base salary at the rate then
in effect for one year. Further, any termination by the Company without
Cause or due to
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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 3a. 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 4d.,
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 Base Annual 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
county of Los Angeles; (d) the assignment to Executive of any duties or
responsibilities which are materially inconsistent with Executive's
title, position or responsibilities as in effect immediately prior to
such assignment; provided, however, Good Reason shall exist with
respect to a matter only if such matter is not corrected by the Company
or AMPAM 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. 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.
g. 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 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. All other rights and obligations of the
Company and Executive under this
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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 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 Company, 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 Company 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 an AMPAM Company, 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 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 an AMPAM Company's
relationships or agreements with its respective vendors or customers or any
other trade secret of an AMPAM Company, 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
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(as defined below) of the AMPAM Companies is confidential and a
valuable, special and unique asset of the AMPAM Companies that gives
the AMPAM Companies an advantage over its actual and potential, current
and future competitors. Executive further acknowledges and agrees that
Executive owes the Company and the AMPAM Companies 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 and the AMPAM
Companies.
b. 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 AMPAM Companies, 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 AMPAM Companies 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 premises
of any AMPAM Company, 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.
c. 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 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.
d. As used in this Agreement, the term "Confidential
Information" shall mean any information or material known to or used by
or for an AMPAM Company (whether or not owned or developed by the AMPAM
Company 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
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secrets of the AMPAM Companies; all information that an AMPAM Company
has marked as confidential or has otherwise described to Executive
(either in writing or orally) as confidential; all nonpublic
information concerning the AMPAM Company's 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 contacts; all AMPAM Company business records and plans; all AMPAM
Company 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 an AMPAM Company; all computer hardware or software
manuals; all training or instruction manuals; and all data and all
computer system passwords and user codes. For purposes hereto
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 and the AMPAM Companies for
any loss, including, but not limited to, reasonable attorneys' fees and
expenses, the Company and any AMPAM 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, successors and assigns. The Company and AMPAM 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
or AMPAM to expressly assume and agree in writing reasonably satisfactory to
Executive to perform this
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Agreement in the same manner and to the same extent that the Company or AMPAM
would be required to perform it if no such succession had taken place. Failure
of the Company or AMPAM 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. 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 4d.
c. A "Change in Control" shall be deemed to have occurred if:
1. 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 AMPAM 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 AMPAM and immediately after such
acquisition such person, entity or group is, directly or
indirectly, the beneficial owner of voting securities
representing 50% or more of the total voting power of all of
the then outstanding voting securities of AMPAM entitled to
vote generally in the election of directors;
2. upon the first purchase of the AMPAM's common
stock
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pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company);
3. the stockholders of AMPAM shall approve a merger,
consolidation, recapitalization or reorganization of AMPAM, 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
AMPAM 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;
4. the stockholders of AMPAM shall approve a plan of
complete liquidation or dissolution of AMPAM or an agreement
for the sale or disposition by AMPAM of all or substantially
all of its assets; or
5. 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 AMPAM'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.
d. 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 AMPAM 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, AMPAM
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 a 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
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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, AMPAM, its subsidiaries, their directors,
officers, and employees, in a form of such release reasonably acceptable to the
Company and AMPAM.
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 AMPAM Company or any present or
future subsidiary thereof, or as an executive officer of an AMPAM Company 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 AMPAM
Company 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
15
the Company or any AMPAM Company or any of their officers, directors or
representatives existing as of the Effective Date and covering the same subject
matter as this Agreement, but excluding the Acquisition Agreement among AMPAM,
the Company, the Executive and other stockholders of the Company, dated
September 16, 1999, which shall not be affected by this Agreement. This written
Agreement is the final, complete and exclusive statement and expression of the
agreement between the Company, AMPAM, 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
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 Xxxxx Xxxxxx Xxxx.
Xxxxx Xxxx, Xxxxx 00000
Attn: Xx. Xxxx Xxxxxx
To Executive: Xx. Xxxxxxx X. Xxxxx, III
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx Xxxxxxx, 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
16
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 AMPAM 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 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. Government 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.
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective for all purposes as of the Effective Date.
Date: September 30, 1999
AMERICAN PLUMBING AND MECHANICAL,
INC.
By /s/ XXXXX X. XXXXXXX
----------------------------------------
Xxxxx X. Xxxxxxx
Chief Financial Officer
DATE: September 30, 1999
EXECUTIVE
/s/ XXXXXXX X. XXXXX, III
------------------------------------------
Xxxxxxx X. Xxxxx, III
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