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EXHIBIT 10.16
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between American
Plumbing & Mechanical, Inc., a Delaware corporation (the Company or "AMPAM") and
all its subsidiaries, and Robert C. Richey ("Executive") is hereby entered into
effective as of April 1, 1999.
RECITALS
The following statements are true and correct:
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
Operating Officer of the Company. As such, xecutive
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
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promote and further the business and interests of the
Company and its affiliates.
(b) Executive shall faithfully adhere to, execute and
fulfill all 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) Bob Richey's outside business activities-Richey
Enterprises lease buildings to AMPAM/RCR Companies,
Inc. to include:
1. RCR COMPANIES, INC. RIVERSIDE FACILITY
12620 Magnolia Avenue
Riverside, California 92620
2. RCR COMPANIES, INC. RIVERSIDE FACILITY
12660 Magnolia Avenue
Riverside, California 92620
3. RCR COMPANIES, INC. LAS VEGAS FACILITY
5030 Schuster Street
Las Vegas, Nevada 89118
4. RCR COMPANIES, INC. CANOGA PARK FACILITY
21333 Deering Court
Canoga Park, California 91304
5. BC BACKHOE
No facility
Cliff Miller - 50%
Bob Richey - 50%
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
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such other 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 committee with the performance of the AMPAM
Companies, as reasonable determined by the Board.
(c) Executive Perquisites and Benefits. Executive shall
be entitled to receive additional benefits and
compensation from the Company in such form and to
such extent as 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 their duties pursuant to this
Agreement and in accordance with the Company's
policy for officers, including, without
limitation, continuing education, license and
administrative fees. 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 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
prerequisites 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.
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Notwithstanding the above, the Board may offer or provide to Executive, or to
any other officer of executive of the Company or any AMPAM Company, special
compensation, benefits, and/or perquisites, in order to attract or retain that
executive of officer where the Board determine, in its discretion, that the
offer or provision of such special compensation, benefits, an/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 a 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 their
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 their employment with the Company
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:
(i) Engage, as an officer, director, shareholder,
owner, partner, joint venture, or in a
managerial capacity, whether as an executive,
independent contractor, consultant or advisor,
as a sales representative or an executive in any
capacity, whether paid or unpaid, in any
underground utility, plumbing, piping,
mechanical, heating, ventilation, or air
conditioning contracting, installation or
service business or operation, or any ancillary
constructing, installation or services business
directly relating 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
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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
executive of the AMPAM Companies for the purpose
or with the intent of enticing such executive
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 have, in the
past, disclosed such information to the public
for valid business reasons; or
(vi) Testify as an expert witness in matters related
to the Plumbing and Mechanical Business 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.
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 the capital stock of a company engages 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
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acquisition. EXECUTIVE SHALL IMMEDIATELY DISCLOSE ANY OWNERSHIP INTEREST IN ANY
BUSINESS THAT IS IN COMPETITION WITH THE AMPAM COMPANIES TO THE BOARD.
(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 of 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 3(g) hereof, through the term of this
covenant Executive will be precluded from soliciting
the customers or executives 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 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 activities of the AMPAM
Companies or related activities or business in
locations the
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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 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
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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:
(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 his 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
twelve 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:
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(1) Executive's willful and material breach of this
Agreement (which remains uncured at the end of such
30-day period); provided, that none of the following
shall constitute Cause for purposes of this clause (1):
isolated incidences of (A) bad judgment, (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 the 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 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 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 that
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,
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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
of Employment for Cause did occur and
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 of
Notice of Consideration pursuant to the
provisions of this Section 4.c., the Board may,
by the affirmation vote of all of its members
(excluding for this purpose, Executive, if he is
a member of the Board, to be at fault in the
events leading to issuing the Notice of
Consideration), suspend Executive without 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 the Extended Term if such termination is
approved by the 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
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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 the Executive terminate with Good Reasons
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
month. 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 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 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
executive 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; or (g) a material breach
of this Agreement by the Company (including
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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 ma 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 off 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 by 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 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 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) executive 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
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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
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 the
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 paragraph 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 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 AMPAM. 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 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 therein. Executive must also render to the
Company, at the Company's expense, assistance in the
perfection, enforcement and defense of any Intellectual
Property.
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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.
(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 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 executives 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 Company 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
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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 any such written request, 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 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. Confidential Information includes,
but is not limited to, the following: all trade secrets
of the AMPAM Companies; all information that the AMPAM
Companies as 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 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
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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, 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 AMPAM Companies 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, than 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
of a substantial portion of the
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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 the 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
date 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 the
termination.
c. In any Change of 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 the
termination.
d. If, on or within two years following the effective date
of a Change of 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 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 the 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.
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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 13.d. 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 of 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 make
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 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.
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
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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 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 make or provided
pursuant to this Agreement, is subject to the
excise tax imposed by Section 499 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 available.
12. No Mitigation or Offset. Executive shall not be required to
mitigate the amount of any AMPAM. 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.or11. of this
Agreement unless Executive has executed (and not revoked) a
general release of all claims Executive may have against the
Company , its subsidiaries, their directors, officers and
employees, in a form of such release reasonably acceptable to
the Company.
14. Indemnification. In the event Executive is made a party to an
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(other than an action by the Company
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against Executive and a derivative action shall not be
considered and 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 of 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, liabilities, losses
and exposures for Executive's services as an executive,
officer and director of the Company (or any of the 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.
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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 & Mechanical, Inc
1950 Louis Henna Blvd.
Round Rock, Texas 78664
Attn: Chief Executive Officer
To Executive: Robert C. Richey
1215 Seacrest Drive
Corona Del Mar, California 92625
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 3(b), 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 Williamson County, Texas
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 Round Rock, Texas, in accordance with
the
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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 4.b and 4.c., respectfully, or that the
Company has otherwise materially breached this Agreement. A
decision by a majority by the arbitrator shall be final and
binding. Judgment may be entered on the arbitrators' award in
any court having jurisdiction.
17. 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.
18. 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.
19. Additional Provisions The additional provision set forth in
Annex A hereto shall apply.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective for all purposes as of the Effective Date.
Date: September 28, 1999
AMERICAN PLUMBING AND MECHANICAL, INC.
/s/ DAVID C. BAGGETT
---------------------------------
David C. Baggett
Chief Financial Officer
Date: September 28, 1999
EXECUTIVE
/s/ ROBERT C. RICHEY
----------------------------------
Robert C. Richey
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DRAFT
Annex A
I. The Company shall grant Executive a minimum of four weeks of vacation
per Calendar year.