Exhibit 10(c) EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this 1st day of
January, 1998 by and between EMCOR GROUP, INC. (the
"Company") and LEICLE E. CHESSER ("Executive").
RECITALS
In order to induce Executive to serve as Executive Vice President and
Chief Financial Officer of the Company, the Company desires to provide Executive
with compensation and other benefits under the conditions set forth in this
Agreement.
Executive is willing to accept such employment and to perform
services for the Company and its subsidiaries, on the terms and conditions
hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive during the Period of Employment (as
hereinafter defined) as an Executive Vice President and Chief Financial Officer
of the Company. In his capacity as Executive Vice President and Chief Financial
Officer of the Company, Executive shall have the customary powers,
responsibilities and authorities of executive vice presidents and chief
financial officers of similar corporations of the size, type and nature of the
Company as it may exist from time to time, subject to the direction of the
Chairman of the Board of Directors (the "Board") of the Company and the Chief
Executive Officer of the Company (the "Chairman").
1.2 Subject to the terms and conditions hereof, Executive hereby
agrees to be employed as the Executive Vice President and Chief Financial
Officer of the Company and shall devote his full working time and efforts, to
the best of his ability, experience and talent, to the performance of the
services, duties and responsibilities in connection therewith. Except upon the
prior written consent of the Chairman, Executive will not during the Period of
Employment (as hereinafter defined) (i) accept any other employment or (ii)
engage, directly or indirectly, in any other business activity (whether or not
pursued for pecuniary advantage), whether or not it may be competitive with, or
whether or not it might place him in a competing position to that of, the
Company or any subsidiary thereof. Nothing in this Agreement shall preclude the
Executive from (i) engaging, consistent with his duties and responsibilities
hereunder, in charitable community affairs, (ii) managing his personal
investments, (iii) continuing to serve on the boards of directors on which he
presently serves (to the extent such service is not precluded by federal or
state law or by conflict of interest by reason of his position with the
Company), or (iv) serving, subject to approval of the Chairman, as a member of
boards of directors of other companies, provided, that such activities do not
interfere with the performance of Executive's duties hereunder.
2. Period of Employment. Executive's period of employment hereunder
shall commence on January 1, 1998 (the "Commencement Date") and shall continue
through the earlier of December 31, 2000 or the date of termination hereunder
(the "Period of Employment"); provided, however, that the Period of Employment
shall automatically be extended for successive one-year periods unless the
Company or Executive, at least six months prior to the end of such period,
provides written notice to the other party of intent not to extend the Period of
Employment. Notwithstanding anything in this Agreement to the contrary,
following a Change of Control (as defined in Section 6.1(e)) the Period of
Employment shall in no event be less than three years.
3. Compensation.
3.1 Salary. The Company shall pay Executive a base salary ("Base
Salary") at the rate of $350,000 per annum for the Period of Employment. Base
Salary shall be payable in accordance with the ordinary payroll practices of the
Company. Executive's rate of Base Salary shall be increased on the first day of
each calendar year occurring during the Period of Employment, beginning with
January 1, 1999, by the percentage increase for the prior year in the consumer
price index for the area in which the principal office of the Company is
located, as determined by the U.S. Department of Commerce, or the amount
specified by the Board, whichever is greater.
3.2 Bonus. In addition to his Base Salary, Executive shall be
entitled, while he remains employed hereunder, in respect of each calendar year,
to an annual bonus (the "Bonus") payable in cash and at such times as bonuses
are customarily paid to senior executives of the Company. For each calendar year
during the Period of Employment, the amount of the Bonus shall be determined by
the Compensation Committee of the Board of Directors in its sole discretion.
3.3 Stock Options. (a) During each calendar year in the Period of
Employment, the Company shall recommend to the Compensation Committee of the
Board that Executive shall receive as of the first business day of each calendar
year an option ("Option") to purchase not less than 10,000 shares of common
stock of the Company ("Shares") at fair market value pursuant to the Company's
then applicable stock option plan. Each such Option shall be exercisable with
respect to the Shares subject thereto on the first anniversary of the date of
grant.
(b) In the event of Executive's termination of employment under
Section 6.1, each Option shall become immediately exercisable in full and shall
remain exercisable for the balance of its ten-year term.
4. Employee Benefits.
4.1 Employee Benefit Plans and Programs. The Company shall provide
Executive during the Period of Employment with coverage under any employee
benefit programs, plans and practices (commensurate with his position in the
Company) in accordance with the terms thereof, which the Company currently makes
available generally to its senior executive officers, or which the Company, with
Board approval, elects to make available generally to its senior executive
officers hereafter, including, but not limited to (a) retirement, pension and
profit-sharing; and (b) medical, dental, hospitalization, life insurance, short
and long-term disability, accidental death and dismemberment and travel accident
coverage; provided that Executive shall pay such portion of the premiums
therefor as is customarily paid by senior executives of the Company.
4.2 Vacation, Fringe and Other Benefits. Executive shall be entitled
to the number of vacation days customarily accorded senior executives of the
Company. In addition, during the Period of Employment, the Company shall pay
Executive $800 per month for leasing (plus maintenance and insurance) of an
automobile and shall make the initial capital cost reduction payment with
respect to the leasing of such automobile on Executive's behalf. The Company
shall also reimburse Executive for (a) all initiation fees and monthly dues for
membership in a club suitable for entertaining clients of the Company and (b)
all legal expenses incurred by Executive in connection with the negotiation and
drafting of this Agreement. The Company shall bear the cost of any increased tax
liability of Executive caused by the provisions of this Section 4.2.
5. Directors and Officers Liability. The Company shall keep in effect
during and after the Period of Employment, a policy of directors' and officers'
liability insurance for officers and directors of the Company at such reasonable
amount of coverage as is agreed to by Executive and the Board from time to time
and which insurance policy shall be on a claims-made basis.
6. Termination of Employment.
6.1 Termination Not For Cause or Resignation For Good Reason. (a) The
Company may terminate Executive's employment at any time, and Executive may
terminate his employment at any time. If Executive's employment is terminated by
the Company other than for Cause (as hereinafter defined), or Executive
terminates his employment for Good Reason (as hereinafter defined), Executive
shall be entitled to receive a lump sum cash payment (but not in substitution
for compensation already earned) in an amount equal to the sum of:
(i) the product of two times the sum of (A) Executive's Base Salary
at its current annual rate at the time of termination of employment plus (B)
Executive's "Deemed Bonus" (as defined below) for the calendar year in which the
termination of employment occurs;
(ii) an amount equal to Executive's Bonus, for any calendar year
ending before such termination occurs, which would have been payable had
Executive remained in employment until the date such Bonus would otherwise have
been paid; and
(iii) an amount equal to Executive's Deemed Bonus for the calendar
year in which the termination of employment occurs, multiplied by a fraction,
the numerator of which is the number of days in such calendar year that
Executive was an employee of the Company, and the denominator of which is 365.
In the event of a termination of Executive's employment by the
Company other than for Cause or by the Executive for Good Reason following a
Change of Control, the factor of two in subsection 6.1(a)(i) shall be increased
to three.
For purposes of subsections 6.1(a)(i) and (ii), 6.2(a) and 6.3, the
amount of the Deemed Bonus shall be the highest Bonus paid to Executive for any
year he has been employed by the Company.
(b) In addition to the amount described in subsections 6.1(a),
Executive shall be entitled to receive:
(i) until the earlier of December 31, 2000 or 18 months from the date
of termination, Executive (and, to the extent applicable, Executive's
dependents) shall continue to be covered, at the Company's expense, under the
Company's medical, dental and hospitalization coverage plans, and until the
earlier of December 31, 2000 or 6 months from the date of termination, Executive
shall continue to be covered, at the Company's expense, under the Company's
group life, short and long-term disability, accidental death and dismemberment
and travel accident coverage plans described in Section 4.1 hereof or the
Company will provide for equivalent coverage; and
(ii) all payments to which Executive has vested rights as of the
expiration of the Period of Employment under employee benefit, disability,
insurance and similar plans which provide for payments beyond the Period of
Employment.
(c) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) The assignment to Executive by the Company of duties
inconsistent with Executive's positions, duties, responsibilities, titles or
office as set forth in Section 1 hereof, or any reduction by the Company of his
duties or responsibilities or any removal of Executive from the position of
Executive Vice President and Chief Financial Officer, except in connection with
the termination of Executive's employment (A) upon the termination of the Period
of Employment on December 31, 2000, (B) upon the termination of a succeeding
one-year Period of Employment (as provided for under Section 2 hereof), (C) for
Cause, (D) as a result of Executive's Permanent Disability (as hereinafter
defined) or death or (E) by Executive other than for Good Reason;
(ii) A reduction by the Company in Executive's Base Salary, except as
provided herein, as in effect at the commencement of employment hereunder or as
the same may be increased from time to time during the Period of Employment;
(iii) The failure by the Company to obtain the specific assumption of
this Agreement by any successor or assign of the Company or any person acquiring
substantially all of the Company's assets;
(iv) Failure by the Company to perform in any material respect its
obligations under this Agreement, where such failure shall not have been
remedied within 30 days after Executive shall have notified the Company in
writing thereof;
(v) Any material reduction in Executive's compensation or benefits
following a Change of Control or Executive's principal business location is
changed to a location more than 30 miles from Executive's principal business
location (other than a relocation to New York, New York) immediately prior to a
Change of Control; or
(vi) The Company shall cease to keep in effect the policy of
directors' and officers' liability insurance for Executive described in Section
5;
(vii) The termination of the Indemnity Agreement, effective as of
April 20, 1995 between the Executive and the Company.
(d) If all or any portion of the payments or benefits provided under
Section 6.1, either alone or together with other payments and benefits which
Executive receives or is then entitled to receive from the Company, would
constitute a "parachute payment" within the meaning Section 28OG of the Internal
Revenue Code of 1986, as amended ("Code"), Executive shall be entitled to such
additional payments as may be necessary to ensure that the net after tax benefit
of all payments under this Section 6.1, including the payment provided for in
this subsection 6.1(c) shall be equal to the net after tax benefit of Executive
as if no excise tax had been imposed under Section 4999 of the Code.
The foregoing calculations shall be made, at the Company's expense,
by the Company and Executive. If no agreement on the calculations is reached,
Executive and the Company shall agree to the selection of an accounting firm to
make the calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company shall select a nationally recognized accounting
firm which has no current or recent business relationship with the Company. The
determination of any such firm selected shall be conclusive and binding on all
parties.
(e) For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred when:
(i) any person or persons acting in concert (excluding Company
benefit plans) becomes the beneficial owner of securities of the Company having
at least 25% of the voting power of the Company's then outstanding securities
(unless the event causing the 25% threshold to be crossed is an acquisition of
voting common securities directly from the Company, other than upon the
conversion of convertible debt securities or other securities and/or the
exercise of options or warrants); or
(ii) the shareholders of the Company shall approve any merger or
other business combination of the Company, sale or lease of the Company's assets
or combination of the foregoing transactions (the "Transactions") other than a
Transaction immediately following which the shareholders of the Company and any
trustee or fiduciary of any Company employee benefit plan immediately prior to
the Transaction own at least 65% of the voting power, directly or indirectly, of
(A) the surviving corporation in any such merger or other business combination;
(B) the purchaser or lessee of the Company's assets; or (C) both the surviving
corporation and the purchaser or lessee in the event of any combination of
Transactions; or
(iii) within any 24 month period, the persons who were directors
immediately before the beginning of such period (the "Incumbent Directors")
shall cease (for any reason other than death) to constitute at least a majority
of the Board or the board of directors of a successor to the Company. For this
purpose, any director who was not a director at the beginning of such period
shall be deemed to be an Incumbent Director if such director was elected to the
Board by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors (so long
as such director was not nominated by a person who has expressed an intent to
effect a Change of Control or engage in a proxy or other control contest).
(f) All cash payments under this Section 6.1 shall be made by the
Company within 30 calendar days following the event giving rise to such
payments.
6.2 Permanent Disability. If as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from his duties with the Company on a full-time basis for six consecutive
months (a "Permanent Disability") during his Period of Employment, the Company
or Executive may terminate his employment on written notice thereof, the Period
of Employment shall terminate on the giving of such notice, and the compensation
to which Executive is entitled pursuant to Section 3.1 shall be paid through the
last day of the month in which the notice is given. In addition, Executive shall
be entitled to receive:
(a) all unpaid amounts, as of the date of such termination, in
respect of any Bonus for any calendar year ending before the calendar year in
which such termination occurs, which would have been payable had Executive
remained in employment until the date such Bonus would otherwise have been paid,
plus Executive's Deemed Bonus for the calendar year in which his employment
terminates, multiplied by a fraction, the numerator of which is the number of
days in such calendar year the Executive was an employee of the Company, and the
denominator of which is 365;
(b) until the earlier of December 31, 2000 or 24 months from the date
of termination for Permanent Disability, Executive (and, to the extent
applicable, Executive's dependents) shall continue to be covered, at the
Company's expense, under Company's medical, dental, hospitalization, group life,
short and long-term disability, accidental death and dismemberment and travel
accident coverage plans described in Section 4.1 or the Company will provide for
equivalent coverage; provided that if Executive is provided with comparable
coverage by a successor employer any such coverage by the Company shall cease;
and
(c) all amounts payable under the Company's disability plans.
6.3 Death. In the event of Executive's death while employed
hereunder, the Period of Employment shall thereupon automatically terminate and
the Executive's estate or designated beneficiaries shall receive (i) payments of
Base Salary for a period of three months after the date of death; (ii) all
unpaid amounts, as of the date of such termination, in respect of any Bonus for
any calendar year ending before the calendar year in which such termination
occurs, which would have been payable had Executive remained in employment until
the date such Bonus would otherwise have been paid, plus Executive's Deemed
Bonus for the calendar year in which his employment terminates, multiplied by a
fraction, the numerator of which is the number of days in such calendar year the
Executive was an employee of the Company, and the denominator of which is 365;
and (iii) any death benefits provided under the employee benefit programs, in
accordance with their terms.
6.4 Voluntary Resignation; Discharge for Cause. If Executive resigns
voluntarily, other than for Good Reason or Permanent Disability, or the Company
terminates the employment of Executive at any time for Cause, the Company's
obligations under this Agreement to make any further payments to Executive shall
thereupon, to the extent permitted by law, cease and terminate except with
respect to all unpaid amounts, as of the date of such termination, in respect of
any Bonus for any calendar year ending before such termination occurs, which
would have been payable had Executive remained in employment until the date such
Bonus would otherwise have been paid. In addition, Executive shall remain
entitled to all vested amounts and benefits under the Company's employee benefit
programs, plans and practices. The term "Cause" shall be limited to (a) action
by Executive involving willful malfeasance in connection with his employment
which results in material harm to the Company, (b) material and continuing
breach by Executive of the terms of this Agreement which breach is not cured
within 60 days after Executive receives written notice from the Company of any
such breach or (c) Executive being convicted of a felony. Termination of
Executive for Cause pursuant to this Section 6.4 shall be communicated by a
Notice of Termination given within six months after the Board both (i) had
knowledge of conduct or an event allegedly constituting Cause and (ii) had
reason to believe that such conduct or event could be grounds for Cause. For
purposes of this Agreement a "Notice of Termination" shall mean delivery to
Executive of a copy of a resolution duly adopted by the Board at a meeting of
the Board called and held for that purpose (after not less than 10 days' notice
to Executive ("Preliminary Notice") and reasonable opportunity for Executive,
together with the Executive's counsel, to be heard before the Board prior to
such vote), finding that in the good faith opinion of the Board, Executive was
guilty of conduct set forth in the third sentence of this Section 6.4 and
specifying the particulars thereof in detail. The Board shall no later than 30
days after the receipt of the Preliminary Notice by Executive communicate its
findings to Executive. A failure by the Board to make its finding of Cause or to
communicate its conclusions within such 30-day period shall be deemed to be a
finding that Executive was not guilty of the conduct described in the second
sentence of this Section 6.4.
6.5 Termination Obligations. (a) Executive hereby acknowledges and
agrees that all personal property, including, without limitation, all books,
manuals, records, reports, notes, contracts, lists, and other documents, and
equipment furnished to or prepared by Executive in the course of or incident to
his employment, belong to the Company and shall be promptly returned to the
Company upon termination of the Period of Employment.
(b) Upon termination of the Period of Employment, the Executive shall
be deemed to have resigned from all offices and directorships then held with the
Company or any subsidiary or affiliate thereof.
7. Confidential Information. During and after the Period of
Employment, Executive shall not disclose to any person (other than an employee
or agent of the Company or any affiliate of the Company entitled to receive the
same) any confidential information relating to the business of the Company and
obtained by him while providing services to the Company, without the consent of
the Board, or until such information ceases to be confidential.
8. Non-Competition. In the event Executive's employment is terminated
by the Company for Cause or Executive terminates his employment with the Company
without Good Reason, Executive shall not, for a period ending on the earlier of
(i) 18 months from the date of such termination or (ii) December 31, 2000,
accept any other employment or engage, directly or indirectly, in any other
business activity which is competitive with that of the Company or any
subsidiary thereof.
9. Expenses. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement, including
expenses for travel and similar items related to such duties and
responsibilities. The Company will reimburse Executive for all such expenses
upon presentation by Executive from time to time of an itemized account of such
expenditures.
10. No Obligation to Mitigate Damages. Executive shall not be
required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking (and no payment otherwise required hereunder shall be
reduced on account of) other employment or otherwise, nor will any payments
hereunder be subject to offset in respect of any claims which the Company may
have against Executive.
11. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
to Executive:
Leicle E. Chesser
10 Sunrise Lane
New Millford, CT 06776
to Company:
Sheldon I. Cammaker, Esq.
Executive Vice President and General Counsel
Emcor Group, Inc.
101 Merritt Seven, 7th Floor
Norwalk, CT 06851
with a copy to:
Kenneth C. Edgar, Jr., Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Any such notice or communication shall be delivered by hand or sent certified or
registered mail, return receipt requested, postage prepaid, addressed as above
(or to such other address as such party may designate in a notice duly delivered
as described above), and the actual date of delivery or mailing shall determine
the time at which notice was given.
12. Agreement to Perform Necessary Acts. Each party agrees to perform
any further acts and to execute and deliver any further documents that may be
reasonably necessary to carry out the provisions of this Agreement.
13. Separability; Legal Actions; Legal Fees. If any provision of this
Agreement shall be declared to be invalid or unenforceable, in whole or in part,
such invalidity or unenforceability shall not affect the remaining provisions
hereof, which shall remain in full force and effect. Any controversy or claim
arising out of or relating to this Agreement or the breach of this Agreement
that cannot be resolved by Executive and the Company, including any dispute as
to the calculation of Executive's benefits or any payments hereunder, shall be
submitted to arbitration in New York, New York in accordance with the laws of
the State of New York and the procedures of the American Arbitration
Association, except that if Executive institutes an action relating to this
Agreement, Executive may, at Executive's option, bring that action in any court
of competent jurisdiction. All expenses, including legal expenses incurred by
Executive, relating to any arbitration shall be paid by the Company. Judgment
may be entered on an arbitrator(s)' award in any court having jurisdiction.
14. Assignment. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights hereunder
shall be assignable or otherwise subject to hypothecation by Executive (except
by will or by operation of the laws of intestate succession) or by the Company
(any such purported assignment by either shall be null and void), except that
the Company may assign this Agreement to any successor (whether by merger,
purchase or otherwise) to all or substantially all of the stock, assets or
business of the Company.
15. Amendment; Waiver. The Agreement may be amended at any time, but
only by mutual written agreement of the parties hereto. Any party may waive
compliance by the other party with any provision hereof, but only by an
instrument in writing executed by the party granting such waiver.
16. Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of Executive by the Company and may not be contradicted by evidence
of any prior or contemporaneous agreement. The parties further intend that this
Agreement shall constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding involving this Agreement.
17. Death or Incompetence. In the event of Executive's death or a
judicial determination of his incompetence, reference in this Agreement to
Executive shall be deemed, where appropriate, to refer to his estate or other
legal representative.
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18. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section are in addition to the survivorship provisions of any
other section of this Agreement.
19. Governing Law. This Agreement shall be construed, interpreted,
and governed in accordance with the laws of the State of New York without
reference to rules relating to conflicts of law.
20. Withholdings. The Company shall be entitled
to withhold from payment any amount of withholding required
by law.
21. Counterparts. This Agreement may be executed
in two or more counterparts, each of which will be deemed an
original.
EMCOR GROUP, INC.
By:__________________________
EXECUTIVE
-----------------------------
Leicle E. Chesser