EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made and entered into as of the 31st day of
January, 1996 by and between WATSCO, INC., a Florida corporation (hereinafter
called the "Company") and ALBERT H. NAHMAD (hereinafter called "Employee").
W I T N E S S E T H:
WHEREAS, the parties desire to execute an Employment Agreement to
contain the terms of the employment of the Employee by the Company,
NOW, THEREFORE, for good and valuable consideration the parties agree
as follows:
1. EMPLOYMENT TERM
The Company agrees to continue the employment of the Employee as
President and Chairman of the Board of the Company for the period commencing
February 1, 1996 and ending January 31, 1999. This contract shall, each January
31, automatically extend one year from its then expiration date unless the
Compensation Committee shall have notified the Employee to the contrary in
writing prior to that date.
2. DUTIES
The Company hereby employs Employee as President and Chairman of
the Board of the Company and Employee hereby accepts the employment and agrees
to devote substantially all of his business time and attention and best efforts
to the performance of his duties hereunder which shall include such duties,
authority and responsibility on behalf of the Company as are customary for such
positions and as may from time to time be assigned to him by the Board of
Directors of the Company. The Employee may serve as a Director or in other
capacities with other companies as long as it does not affect his ability to
devote substantially all of his business time and attention to the Company.
3. EXTENT OF SERVICE
Employee shall assume and perform such reasonable
responsibilities and duties as may be assigned to him from time to time by the
Company. Employee, while employed by the Company shall not, at any time during
the term of this Agreement become interested directly or indirectly in any
manner with any business competitive with or similar to the business of the
Company.
4. BASE COMPENSATION
The Company agrees to pay to Employee and Employee agrees to
accept from the Company a salary at the annual rate of not less than Four
Hundred and Eighty Thousand ($480,000) Dollars, payable in bi-weekly or monthly
installments.
5. ADDITIONAL COMPENSATION
For his leadership of the Company to its recent outstanding
growth in value, on January 2, 1997 the Employee shall be awarded $450,000 of
additional compensation provided he does not voluntarily leave employment of the
Company before that date.
For the year ended December 31, 1996 and for all subsequent years
during which this agreement is in effect for the entire year, the Employee shall
be entitled to the incentive compensation described in Exhibit A.
6. EXPENSE REIMBURSEMENT
Upon submission of proper proof of payment by Employee, the
Company will reimburse him for all reasonable expenditures for business travel
or entertainment made by him in the course of and pursuant to the business of
the Company, and Company shall supply to Employee the use of one (1) automobile
and shall pay all fuel, maintenance and insurance costs incident thereto.
7. TERMINATION OF EMPLOYMENT
During the term of this Agreement the Company may at any time
terminate the employment of Employee for cause. For the purpose of this
Agreement, "cause" shall be defined as any actions of Employee which are in the
nature of fraud or willful malfeasance or
misfeasance in the performance of the employment duties provided for by this
Agreement. Cause shall not include any act or failure to act, whether due to
error of judgment or otherwise, where Employee exercised good faith in the
exercise of his duties.
8. RESTRICTIVE COVENANT
The parties understand and contemplate that Employee is receiving
substantial benefits under this Agreement and that the Company is giving
Employee access to information concerning its business operations and that it
is, therefore, reposing a high degree of confidence and trust in Employee. In
consideration of the foregoing, Employee agrees that during the term of this
Agreement and upon termination of his employment with the Company for any
reason, he shall not engage in any business, enterprise or employment, whether
as owner, operator, stockholder, director, financial backer, creditor,
consultant, partner, agent, employee or otherwise, competitive with any business
engaged in by the Company or any subsidiary of the Company at the time of
termination for a period of two (2) years after termination of employment in the
areas in which the Company or any subsidiary are so engaged in such business.
This provision, and the provisions of paragraph 3 hereof, shall not prevent the
Employee from owning less than 2% of the outstanding stock of a public company
which may be in the same or a similar business too that engaged in by the
Company, as long as the stock owned by the Employee is publicly traded stock and
the interest of the Employee in the public company is solely that of an inactive
stockholder. The restrictive covenant contained herein applies even after this
Agreement is fully performed and has ended by its own terms.
Employee agrees that a violation by him of the covenant contained
herein will cause irreparable damage to the Company, the amount of which will be
almost impossible to ascertain, and for that reason Employee agrees that the
Company shall be entitled to an injunction out of any court of competent
jurisdiction restraining any violation of such covenant by Employee and such
right to injunction shall be cumulative to and in addition to any other remedies
of the Company.
9. SEVERABILITY
This Agreement shall be governed by the laws of the State of
Florida, and the invalidity of any one or more of the portions contained in this
Agreement shall not affect the enforceability of the remaining portions of this
Agreement or any part thereof, all of which are inserted conditionally on their
being valid in law, and in the event that one or more portions contained herein
shall be invalid, this instrument shall be construed as if such invalid portions
had not been inserted, and if such invalidity shall be caused by the length of
time or the size of any area set forth in any part hereof, such period of time
or such area, or both, shall be considered to be reduced to a period or area
which would cure such invalidity.
10. WAIVER
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such terms,
covenants or conditions, nor shall any waiver or relinquishment of such right or
power hereunder, at any time or times, be deemed a waiver or relinquishment of
such right or power at any other time or times.
11. BENEFIT
Except as otherwise herein expressly provided, this Agreement
shall inure to the benefit of and be binding upon the Company, its successors
and assigns, including, but not limited to, any corporation which may acquire
all or substantially all of the Company's assets and business, or with which the
Company may be consolidated or merged, and Employee, his heirs, executors,
administrators and legal representatives.
12. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties
hereto, the same shall not be modified or altered except by another written
agreement executed by each of the parties hereto and all prior employment
agreements between the parties and all the provisions thereof are hereby
terminated and shall be of no further force and effect.
13. NOTICES
Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing, and shall be deemed served if deposited in
the United States Certified Mail, Return Receipt Requested, and addressed as
follows:
TO THE COMPANY: WATSCO, INC.
2665 South Bayshore Drive
Coconut Grove, Florida 33133
TO THE EMPLOYEE: ALBERT H. NAHMAD
2665 South Bayshore Drive
Coconut Grove, Florida 33133
or to such other address as the parties may from time to time give notice of to
the other party.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals this 31st day of January, 1996.
WATSCO, INC.
By: /s/ RONALD P. NEWMAN
-------------------------------
Ronald P. Newman, Secretary
/s/ ALBERT H. NAHMAD
-------------------------------
ALBERT H. NAHMAD
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
INCENTIVE PLAN
I. PURPOSES. The purposes of the Incentive Plan are (i) to establish an
annual incentive compensation program for the Company's President and
Chief Executive Officer (the "Executive") that awards the Executive for
the achievement of objectives and goals established by the Board of
Directors (Compensation Committee) which contribute to the success of
the Company, thus providing a means for participation by the Executive
in such success, and (ii) to afford an incentive to the Executive to
contribute his best efforts to promote the success of the Company.
II. DEFINITIONS. The following words and phrases shall have the meaning set
forth below whenever used herein:
A. "COMMON STOCK PRICE" shall mean the reported New York Stock
Exchange closing price of the Company's Common Stock on the last
day of trading during that year.
B. "COMPENSATION COMMITTEE" shall mean the Compensation Committee of
the Company's Board of Directors. The membership of the
Compensation Committee shall in all cases be comprised solely of
two or more outside directors (within the meaning of Section
162(m)).
C. "EARNINGS PER SHARE" shall mean the fully diluted earnings per
share of the Company as reported in the Company's annual report to
shareholders.
D. "EMPLOYMENT AGREEMENT" shall mean the employment agreement, dated
as of January 31, 1996, between the Company and the Executive, as
such agreement may be amended or renewed from time to time.
E. "INCOME BEFORE TAXES" shall mean that amount as reported in the
Company's annual report to shareholders.
F. "NET INCOME" shall mean that amount as reported in the Company's
annual report to shareholders.
G. "PERFORMANCE BASED COMPENSATION" shall mean the compensation paid
or payable to the Executive pursuant to Article III of this
Incentive Plan.
H. "SECTION 162(M)" shall mean Section 162(m) (or any successor
provision) of the Internal Revenue Code of 1986, as amended, and
applicable authority thereunder.
III. OPERATION OF INCENTIVE PLAN.
A. ESTABLISHMENT OF PERFORMANCE GOALS. In each year in which the
Executive's Employment Agreement is in effect, not later than 90
days after the end of the prior year, the Compensation Committee
and the Executive shall agree upon the Performance Based
Compensation which the Executive will earn for that year if he
achieves the agreed upon incremental goals for increases in any one
of more of the following categories: Income Before Taxes, Net
Income, Earnings Per Share and Common Stock Price. Such performance
goals shall be in writing and become Exhibit A-1 to this Incentive
Plan. The performance goals will automatically be adjusted for any
increase or decrease in the number of shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other
increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company.
B. PAYMENT OF PERFORMANCE BASED COMPENSATION. Performance Based
Compensation shall be paid to the Executive as soon after year end
as the amount of such compensation can be determined with
reasonable certainty and the Compensation Committee has certified
that the performance goals have been met.
IV. NON-PERFORMANCE BASED COMPENSATION. It is recognized by the Company
that, at times, there may be years in which the Compensation Committee
desires to pay the Executive special non-performance based
compensation. At such times, the Compensation Committee may award
additional non-performance based compensation to the Executive in such
amount as it shall desire.
V. TERMINATION OF EMPLOYMENT. The Executive must be employed for the
entire year to be entitled to the Performance Based Compensation for
such year, unless the Compensation Committee specifically determines
that such amounts are to be paid.
VI. ADMINISTRATION. The Incentive Plan shall be administered by the
Compensation Committee, which will have the authority and
responsibility for (i) interpreting and administering the Incentive
Plan, (ii) establishing the performance goals for each year of the
Incentive Plan, (iii) determination of Performance Based Compensation
and final approval of payments to the Executive, and (iv) payment of
prorated
A-2
awards if, in its judgment, the payment of such awards would be in the
best interest of the Company.
VII. AMENDMENT AND TERMINATION. The Compensation Committee shall have the
power to amend, modify, suspend or terminate any part of the Incentive
Plan at any time; provided, however, that notwithstanding any other
provisions of the Incentive Plan, no such amendment or modification
shall (i) be effective without the approval of the shareholders of the
Company if such shareholder approval is required to preserve the
Company's Federal income tax deduction for Performance Based
Compensation paid under the Incentive Plan pursuant to the "other
performance based compensation" exception in Section 162(m), or (ii)
without the consent of the Executive, reduce the right of the Executive
to a payment hereunder to which he is entitled with respect to a fiscal
year that has ended prior to such amendment, modification, suspension
or termination.
VIII. WITHHOLDING TAXES. The Company shall have the right to deduct from all
payments under this Incentive Plan any Federal, state or local taxes
required by law to be withheld with respect to such payments.
IX. REORGANIZATION OR DISCONTINUANCE. The obligations of the Company
under the Incentive Plan shall be binding upon any successor
corporation or organization resulting from merger, consolidation or
other reorganization succeeding to substantially all of the assets and
business of the Company. The Company will make appropriate provision
for the preservation of the Executive's rights under the Incentive Plan
in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.
If the business conducted by the Company shall be discontinued, any
previously earned and unpaid compensation under the Incentive Plan
shall be immediately payable to the Executive.
X. GENERAL PROVISIONS. The general provisions of the Executive's
Employment Agreement shall be applicable to this Incentive Plan.
XI. EFFECTIVE DATE. The Incentive Plan is effective initially for the
fiscal year ended December 31, 1996, subject to approval by the
shareholders of the Company at the annual meeting of shareholders on
June 3, 1996, and shall remain in effect as long as the Executive is
employed by the Company.
A-3
EXHIBIT A-1
1996 PERFORMANCE GOALS AND PERFORMANCE BASED COMPENSATION
PERFORMANCE
BASED
COMPENSATION
------------
A. EARNINGS PER SHARE
For each $.01 increase . . . . . . . . . . . . . . . . . . . $29,000
B. INCREASE IN COMMON STOCK PRICE
For each $.125 increase in per share price of a share of
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . $5,500