FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or
15(d) of the Securities Exchange Act of 1934
- ------------------------------------------------------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
- --------------------------------------------------------------------------
Commission file number 0-2315
EMCOR Group, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its
charter)
Delaware 11-2125338
- ------------------------------------------------- ------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
101 Merritt Seven Corporate Park 06851-1060
------------------------------
Norwalk, Connecticut (Zip Code)
- -------------------------------------------------
(Address of principal executive offices)
(203) 849-7800
- -------------------------------------------------
(Registrant's telephone number)
N/A
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days. Yes X No __
Applicable Only To Issuers Involved In Bankruptcy Proceedings During The
Previous Five Years
Indicate by check mark whether the registrant has filed all documents
required to be filed by Section 12, 13 or 15(d) of the Securities and Exchange
Act of 1934, subsequent to the distribution of securities under a plan confirmed
by a court. Yes X No __
Applicable Only To Corporate Issuers
Number of shares of Common Stock outstanding as of the close of business on
July 28, 1998: 10,744,163 shares.
<PAGE>
EMCOR GROUP, INC.
INDEX
Page No.
PART I - Financial Information
Item 1 Financial Statements
Condensed consolidated balance sheets -
as of June 30, 1998 and December 31, 1997 1
Condensed consolidated statements of operations -
three months ended June 30, 1998 and 1997 3
Condensed consolidated statements of operations -
six months ended June 30, 1998 and 1997 4
Condensed consolidated statements of cash flows -
six months ended June 30, 1998 and 1997 5
Condensed consolidated statements of stockholders'
equity and comprehensive income (loss) -
six months ended June 30, 1998 and 1997 6
Notes to condensed consolidated financial statements 7
Item 2 Management's discussion and analysis of financial condition and
results of operations 12
PART II - Other Information
Item 1 Legal Proceedings 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 6 Exhibits and Reports on Form 8-K 14
<PAGE>
4
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
EMCOR Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
- ------------------------------------------ -------------------- ----------------
June 30, December 31,
1998 1997
(Unaudited)
- ------------------------------------------ -------------------- ----------------
ASSETS
Current Assets:
Cash and cash equivalents $95,412 $49,376
Accounts receivable, net 512,230 480,997
Costs and estimated earnings in excess
of billings on uncompleted contracts 87,818 73,974
Inventories 6,431 7,363
Prepaid expenses and other 11,037 10,951
-------------------- ----------------
Total Current Assets 712,928 622,661
-------------------- ----------------
Investments, Notes and Other Long-Term
Receivables 7,061 5,901
Property, Plant and Equipment, Net 28,312 27,164
Other Assets 8,248 4,928
-------------------- ----------------
Total Assets $756,549 $660,654
==================== ================
See notes to condensed consolidated financial statements.
<PAGE>
EMCOR Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
- ----------------------------------------------- ---------------- ---------------
June 30, December 31,
1998 1997
(Unaudited)
- ----------------------------------------------- ---------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Borrowings under working capital credit lines $-- $9,497
Current maturities of long-term debt 812 927
Accounts payable 243,026 239,117
Billings in excess of costs and estimated
earnings on uncompleted contracts 130,552 112,833
Accrued payroll and benefits 51,372 49,058
Other accrued expenses and liabilities 49,080 45,163
---------------- ---------------
Total Current Liabilities 474,842 456,595
---------------- ---------------
Long-Term Debt 117,108 63,212
Other Long-Term Obligations 47,948 45,524
Stockholders' Equity:
Common Stock, $.01 par value, 30,000,000
shares authorized, 10,744,163 shares and
9,590,827 shares issued and outstanding
or issuable at June 30, 1998 and December
31, 1997, respectively 107 96
Warrants 2,154 2,154
Capital Surplus 109,000 87,107
Accumulated Other Comprehensive Income (470) (195)
Retained Earnings 5,860 6,161
---------------- ---------------
Total Stockholders' Equity 116,651 95,323
---------------- ---------------
Total Liabilities and Stockholders' Equity $756,549 $660,654
================ ===============
See notes to condensed consolidated financial statements.
<PAGE>
EMCOR Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts) (Unaudited)
- --------------------------------------------- ---------------- -----------------
Three months ended June 30, 1998 1997
- --------------------------------------------- ---------------- -----------------
Revenues $545,547 $475,617
Costs and Expenses:
Cost of sales 493,272 432,118
Selling, general and administrative 44,212 37,232
---------------- -----------------
537,484 469,350
---------------- -----------------
Operating Income 8,063 6,267
Interest Expense, Net 1,365 3,051
---------------- -----------------
Income Before Income Taxes 6,698 3,216
Provision For Income Taxes 3,024 1,319
---------------- -----------------
Income Before Extraordinary Item 3,674 1,897
Extraordinary Item - Loss on Early
Extinguishment of Debt, Net of Income Taxes -- (1,004)
---------------- -----------------
Net Income $3,674 $893
================ =================
Per Share Information:
Basic Earnings Per Share:
Income Before Extraordinary Item $0.34 $0.20
Extraordinary Item - Loss on Early
Extinguishment of Debt, Net of Income Taxes -- (0.11)
---------------- -----------------
Basic Earnings Per Share $0.34 $0.09
================ =================
Diluted Earnings Per Share:
Income Before Extraordinary Item $0.31 $0.19
Extraordinary Item - Loss on Early
Extinguishment of Debt, Net of Income Taxes -- (0.10)
---------------- -----------------
Diluted Earnings Per Share $0.31 $0.09
================ =================
See notes to condensed consolidated financial statements.
<PAGE>
EMCOR Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts) (Unaudited)
- --------------------------------------------- ---------------- -----------------
Six months ended June 30, 1998 1997
- --------------------------------------------- ---------------- -----------------
Revenues $1,039,470 $909,387
Costs and Expenses:
Cost of sales 942,955 826,823
Selling, general and administrative 84,517 72,855
---------------- -----------------
1,027,472 899,678
---------------- -----------------
Operating Income 11,998 9,709
Interest Expense, Net 3,771 6,059
---------------- -----------------
Income Before Income Taxes 8,227 3,650
Provision For Income Taxes 3,751 1,497
---------------- -----------------
Income Before Extraordinary Item 4,476 2,153
Extraordinary Item - Loss on Early
Extinguishment of Debt, Net of Income Taxes (4,777) (1,004)
---------------- -----------------
Net (Loss) Income $(301) $1,149
================ =================
Per Share Information:
Basic (Loss) Earnings Per Share:
Income Before Extraordinary Item $0.44 $0.23
Extraordinary Item - Loss on Early
Extinguishment of Debt, Net of Income Taxes (0.47) (0.11)
---------------- ----------------
Basic (Loss) Earnings Per Share $(0.03) $0.12
================ ================
Diluted (Loss) Earnings Per Share:
Income Before Extraordinary Item $0.41 $0.21
Extraordinary Item - Loss on Early
Extinguishment of Debt, Net of Income Taxes (0.44) (0.10)
---------------- ----------------
Diluted (Loss) Earnings Per Share $(0.03) $0.11
================ ================
See notes to condensed consolidated financial statements.
<PAGE>
EMCOR Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands) (Unaudited)
- ---------------------------------------------------- ------------- -------------
Six months ended June 30, 1998 1997
- ---------------------------------------------------- ------------- -------------
CASH FLOWS FROM OPERATIONS:
Net (loss) income $(301) $1,149
Extraordinary Item - Loss on Early
Extinguishment of Debt,
Net of Income Taxes 4,777 1,004
Non-cash expenses 7,199 5,707
Changes in operating assets and liabilities (11,883) (7,045)
------------- ------------
NET CASH (USED IN) PROVIDED BY OPERATIONS (208) 815
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Convertible Subordinated Notes 115,000 --
Net proceeds from sale of Common Stock 22,485 --
Debt issuance costs (4,074) --
Payment of Series C Notes (61,854) (11,920)
Premiums paid on early extinguishment of debt (2,437) (590)
Payment of working capital credit lines (9,497) (37,000)
Borrowings under working capital credit lines -- 36,580
Payment of Supplemental SellCo Note (5,464) --
Payments of long-term debt and capital lease
obligations (196) 31
Exercise of stock options 289 171
------------- -------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
54,252 (12,728)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment, net (5,544) (5,201)
Proceeds from sale of property, plant and equipment 94 19
Acquisition of businesses (1,398) --
Decrease in investments, notes and other long-term
receivables (1,160) 1,675
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (8,008) (3,507)
------------- -------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 46,036 (15,420)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 49,376 50,705
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $95,412 $35,285
============= =============
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Paid For:
Interest $1,847 $4,677
Income Taxes $579 $238
See notes to condensed consolidated financial statements.
<PAGE>
EMCOR Group, Inc. and Subsidiaries
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND
COMPREHENSIVE INCOME (LOSS)
(In Thousands) (Unaudited)
- ------------------------------------------------------------------------------------------------------------
Accumulated
Other Retained
Common Capital Comprehensive Earnings/ Comprehensive
Total Stock Warrants Surplus Income (1) (Deficit) Income (Loss)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, $95,323 $96 $2,154 $87,107 $(195) $6,161
1998
Comprehensive income(loss):
Net loss (301) -- -- -- -- (301) $(301)
Foreign currency
translation
adjustments (275) -- -- -- (275) -- (275)
---------------
Comprehensive loss -- -- -- -- -- -- $(576)
===============
NOL utilization 1,845 -- -- 1,845 -- --
Issuance of Common
Stock 22,485 11 -- 22,474 -- --
Tax effect of
extraordinary item (2,715) -- -- (2,715) -- --
Common Stock issued
under stock
option plans 289 -- -- 289 -- --
--------- --------- ---------- -------- -------------- ----------
Balance, June 30, 1998 $116,651 $107 $2,154 $109,000 $(470) $5,860
========= ========= ========== ======== ============== ==========
Balance, January 1, $83,883 $95 $2,154 $81,672 $1,378 $(1,416)
1997
Comprehensive income (loss):
Net income 1,149 -- -- -- -- 1,149 $1,149
Foreign currency
translation
adjustments (964) -- -- -- (964) -- (964)
---------------
Comprehensive income -- -- -- -- -- -- $185
===============
NOL utilization 663 -- -- 663 -- --
Common Stock issued
under stock
option plans 171 -- -- 171 -- --
--------- --------- ---------- -------- -------------- ----------
Balance, June 30, 1997 $84,902 $95 $2,154 $82,506 $414 ($267)
========= ========= ========== ======== ============== ==========
(1) Represents foreign currency translation adjustments.
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
EMCOR Group, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
NOTE A Nature Of Operations
EMCOR Group, Inc. ("EMCOR" or the "Company") is a multinational corporation
involved in mechanical and electrical construction services and facilities
services. EMCOR's subsidiaries specialize in the design, integration,
installation, start-up, testing, operation and maintenance of: (i) distribution
systems for electrical power (including power cables, conduits, distribution
panels, transformers, generators, uninterruptible power supply systems and
related switch gear and control); (ii) lighting systems, including fixtures and
controls; (iii) low-voltage systems, including fire alarm, security,
communications and process control systems; (iv) heating, ventilation, air
conditioning, refrigeration and clean-room process ventilation systems; and (v)
plumbing, process and high-purity piping systems. EMCOR's subsidiaries provide
mechanical and electrical construction and facilities services directly to
end-users (including corporations, municipalities and other governmental
entities, owners/developers, and tenants of buildings) and, indirectly, by
acting as a subcontractor for construction managers, general contractors,
systems suppliers and other subcontractors. Mechanical and electrical
construction services are principally either large installation projects, with
contracts generally in the multi-million dollar range; smaller system
installation projects involving fit-out, renovation and retrofit work; and
maintenance and service. In addition, certain of its subsidiaries operate and
maintain mechanical and/or electrical systems for customers under contracts and
provide other services commonly referred to as facilities services including the
management of facilities and the provision of support services to customers at
the customer's facilities. Mechanical and electrical construction and facilities
services are provided to a broad range of commercial, industrial and
institutional customers through offices located in major markets throughout the
United States, Canada and the United Kingdom and through its joint ventures in
the United Arab Emirates, Saudi Arabia, South Africa, Hong Kong and Macau.
NOTE B Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared
by the Company, without audit, pursuant to the interim period reporting
requirements of Form 10-Q. Consequently, certain information and note
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
Readers of this report should refer to the consolidated financial statements and
the notes thereto included in the Company's latest Annual Report on Form 10-K
filed with the Securities and Exchange Commission.
In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting only of a normal
recurring nature) necessary to present fairly the financial position of the
Company and the results of its operations. The results of operations for the
three and six month periods ended June 30, 1998 are not necessarily indicative
of the results to be expected for the year ending December 31, 1998.
Certain reclassifications of prior year amounts have been made to conform to
current year presentation.
<PAGE>
NOTE C Long-Term Debt
Long-Term Debt in the accompanying condensed consolidated balance sheets
consists of the following amounts at June 30, 1998 and December 31, 1997 (in
thousands):
June 30, December 31,
1998 1997
---------------- ---------------
Convertible Subordinated Notes,
at 5.75%, due 2005 $115,000 $--
Series C Notes, outstanding face
value of approximately $61.9
million at December 31, 1997,
at 11.0%, discounted to a 14.0%
effective rate, due 2001 -- 56,290
Other 2,920 7,849
---------------- ---------------
117,920 64,139
Less current maturities (812) (927)
---------------- ---------------
$117,108 $63,212
================ ===============
On March 18, 1998, the Company called for the redemption of approximately $61.9
million principal amount of Series C Notes and irrevocably funded such amounts
with the trustee of the Series C Notes. In accordance with the Indenture
governing the Series C Notes, the redemption price of the Series C Notes was
104% of the principal amount redeemed. Accordingly, the Company recorded an
extraordinary loss related to the early retirement of debt. The extraordinary
loss consisted primarily of the write-off of the associated debt discount plus
the redemption premium and costs associated with the redemption, net of income
tax benefits.
The Company prepaid in full, including accrued interest thereon, the
Supplemental SellCo Note during June 1998.
On March 18, 1998, the Company sold, pursuant to an underwritten public
offering, $100.0 million principal amount of 5.75% Convertible Subordinated
Notes (the "Notes"). Interest on the Notes is payable semi-annually commencing
October 1, 1998. The Notes are unsecured indebtedness of the Company and are
convertible into Common Stock of the Company at a conversion price of $27.34 per
share at any time.
On March 24, 1998, the underwriter of the Notes offering exercised in full its
over-allotment option to purchase an additional $15.0 million of Notes and
accordingly an additional $15.0 million principal amount of such notes were
issued.
NOTE D Income Taxes
The Company files a consolidated federal income tax return including all U.S.
subsidiaries. At June 30, 1998, the Company had net operating loss carryforwards
("NOLs") for U.S. income tax purposes of approximately $165.0 million, which
expire in the years 2007 through 2010. The NOLs are subject to review by the
Internal Revenue Service. Future changes in ownership of the Company, as defined
by Section 382 of the Internal Revenue Code, could limit the amount of NOLs
available for use in any one year.
As a result of the adoption of Fresh-Start Accounting, the tax benefit of any
net operating loss carryforwards or net deductible temporary differences which
existed as of the date of the Company's emergence from Chapter 11 in December
1994 will result in a charge to the tax provision (provision in lieu of income
taxes) and be allocated to Capital Surplus.
<PAGE>
The Company has provided a valuation allowance as of June 30, 1998 for the full
amount of the tax benefit of its remaining NOLs and other deferred tax assets.
Income tax expense recorded for the three and six month periods ended June 30,
1998 and 1997 represent a provision primarily for federal, foreign and state and
local income taxes. The Company's utilization of NOLs and other deferred tax
assets for the three and six month periods ended June 30, 1998 of approximately
$1.3 million and $1.8 million, respectively, have been applied to Capital
Surplus.
NOTE E Legal Proceedings
The Company is currently defending a lawsuit that was commenced against the
Dynalectric Company ("Dynalectric"), a subsidiary of the Company, in Superior
Court of New Jersey, Bergen County, arising out of Dynalectric's participation
in a joint venture with the plaintiff, Computran. In the action, which was
instituted in 1988, Computran, a participant in, and a subcontractor to, the
joint venture alleges that Dynalectric wrongfully terminated its subcontract,
fraudulently diverted funds due it, misappropriated its trade secrets and
proprietary information, fraudulently induced it to enter into the joint venture
and conspired with other defendants to commit certain acts in violation of the
New Jersey Racketeering Influence and Corrupt Organization Act. Dynalectric
believes that Computran's claims are without merit and intends to defend this
matter vigorously. Dynalectric has filed counterclaims against Computran. As a
result of a motion made by Dynalectric, the Superior Court of New Jersey ordered
during 1997 that the matters in dispute between Dynalectric and Computran be
resolved by binding arbitration in accordance with an original agreement between
the parties and the arbitration is proceeding.
In February 1995 as part of an investigation by the New York County District
Attorney's office into the business affairs of Herbert Construction Company
("Herbert"), a general contractor that did business with the Company's
subsidiary, Forest Electric Corporation ("Forest"), a search warrant was
executed at Forest's executive offices. At that time, the Company was informed
that Forest and certain of its officers are targets of the continuing
investigation. Neither the Company nor Forest has been advised of the precise
nature of any suspected violation of law by Forest or its officers. On April 7,
1997, Ted Kohl, a principal of Herbert, pled guilty to one count of money
laundering, one count of offering a false instrument for filing and one count of
filing a false New York State Resident Income Tax Return. DPL Interiors, Inc., a
Company allegedly owned by Mr. Kohl, also pled guilty to one count of failing to
file New York City General Income Tax Returns. Mr.Kohl and DPL Interiors, Inc.
have not yet been sentenced.
Substantial settlements or damage judgements against a subsidiary of the Company
arising out of either of these matters could have a material adverse effect on
the Company's business, operating results and financial condition.
In addition to the above, the Company is involved in other legal proceedings and
claims, asserted by and against the Company, which have arisen in the ordinary
course of business.
The Company believes it has a number of valid defenses to these actions and the
Company intends to vigorously defend or assert these claims and does not believe
that a significant liability will result. However, the Company cannot predict
the outcome thereof or the impact that an adverse result of the matters
discussed above will have upon the Company's financial position or results of
operations.
NOTE F Earnings Per Share
Effective December 31, 1997 the Company adopted Statement of Financial
Accounting Standards No. 128 ("SFAS No. 128" or the "Statement"), "Earnings Per
Share" ("EPS"), which established standards for computing and presenting EPS.
The Statement replaced the presentation of Primary EPS with a presentation of
Basic EPS, as defined, and Fully Diluted EPS with Diluted EPS, as defined.
The following tables summarize the Company's calculation of Basic EPS and
Diluted EPS for the three and six month periods ended June 30, 1998 and 1997:
Three Months Ended
June 30, 1998
---------------
Income Shares Per Share
(Numerator) (Denominator) Amount
--------------- --------------- -------------
Basic EPS
Income before extraordinary item
available to common stockholders $3,674,000 10,725,320 $0.34
=============
Effect of Dilutive Securities:
Options -- 244,979
Warrants -- 322,938
Convertible Subordinated Notes 1,081,000 4,206,291
--------------- ---------------
Diluted EPS $4,755,000 15,499,528 $0.31
=============== =============== =============
Six Months Ended
June 30, 1998
---------------
Income Shares Per Share
(Numerator) (Denominator) Amount
--------------- --------------- -------------
Basic EPS
Income before extraordinary item
available to common stockholders $4,476,000 10,247,819 $0.44
=============
Effect of Dilutive Securities:
Options -- 250,939
Warrants -- 337,330
--------------- ---------------
Diluted EPS $4,476,000 10,836,088 $0.41
=============== =============== =============
Three Months Ended
June 30, 1997
---------------
Income Shares Per Share
(Numerator) (Denominator)) Amount
-------------- --------------- ------------
Basic EPS
Income before extraordinary item
available to common stockholders $1,897,000 9,535,697 $0.20
=============
Effect of Dilutive Securities:
Options -- 396,937
Warrants -- 88,200
-------------- ---------------
Diluted EPS $1,897,000 10,020,834 $0.19
============== =============== ============
<PAGE>
Six Months Ended
June 30, 1997
---------------
Income Shares Per Share
(Numerator) (Denominator)) Amount
-------------- --------------- ------------
Basic EPS
Income before extraordinary item
available to common stockholders $2,153,000 9,525,224 $0.23
=============
Effect of Dilutive Securities:
Options -- 400,632
Warrants -- 96,557
-------------- ---------------
Diluted EPS $2,153,000 10,022,413 $0.21
============== =============== ============
For the six month period ended June 30, 1998, the "if converted" amount of Notes
and related after-tax interest expense were excluded from the denominator and
numerator, respectively, in the calculation of Diluted EPS as the effect would
be antidilutive. For the three and six month periods ended June 30, 1998, no
options were excluded from the denominator in the calculation of Diluted EPS.
NOTE G Common Stock Issuance
On March 18, 1998 the Company sold, pursuant to an underwritten public offering,
1,100,000 shares of its Common Stock at a price of $21.875 per share. Proceeds
received from the sale of the Common Stock along with proceeds received from the
sale of the Notes were used to redeem the Series C Notes, repay outstanding
borrowings under the Company's working capital credit lines, prepay the
Supplemental SellCo Note and accrued interest thereon and will be used for
possible acquisitions and for other general corporate purposes.
NOTE H Other
The Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS No. 130"), which requires companies to
report all changes in equity during a period, except those resulting from
investment by owners and distribution to owners, in a financial statement for
the period in which they are recognized. The Company has chosen to disclose
Comprehensive Income, which encompasses net income and foreign currency
translation adjustments, in the condensed consolidated statements of
stockholders' equity and comprehensive income (loss). Prior year financial
information has been restated to conform with the reporting requirements of SFAS
No. 130.
In June 1998, the Financial Accounting Standards Board issued statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133" or "the Statement"), which establishes
accounting and reporting standards requiring derivative instruments, as defined,
to be measured in the financial statements at fair value. The Statement also
requires that changes in the derivatives' fair value be recognized currently in
earnings unless certain accounting criteria are met. SFAS No. 133 is effective
for fiscal years beginning after June 15, 1999 and cannot be applied
retroactively. The Company currently has one forward exchange contract which is
designated as a hedge against intercompany loans to the Company's U.K.
subsidiary. The Company does not expect the provision of SFAS No. 133 to have a
significant effect on the current forward exchange contract or on the financial
condition or results of operations of the Company.
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Revenues for the second quarter of 1998 were $545.5 million compared to $475.6
million in the second quarter of 1997. In the second quarter of 1998, the
Company generated net income of $3.7 million, or $0.34 per basic and $0.31 per
diluted share, compared to net income of $0.9 million, or $0.09 per basic and
diluted share, in the second quarter of 1997. Net income for the second quarter
of 1997 included an after-tax charge associated with the early retirement of
approximately $11.9 million of the Company's Series C Notes, which is reflected
in the accompanying condensed consolidated statements of operations under the
caption "Extraordinary Item - Loss on Early Extinguishment of Debt, Net of
Income Taxes." In addition, net income for the second quarter of 1998 includes
an income tax provision of $3.0 million, of which $1.3 million will not be paid
in cash due to the utilization of tax net operating loss carry forwards
("NOL's"). Had the Company been able to offset these NOL's against the recorded
income tax provision, net income would have been $5.0 million.
Revenues for the six months ended June 30, 1998 were $1,039.5 million compared
to $909.4 million in the same period in the prior year. For the six months ended
June 30, 1998, the Company incurred a net loss of $0.3 million, or $0.03 per
basic and diluted share, as compared to net income of $1.1 million, or $0.12 per
basic share and $0.11 per diluted share, for the six months ended June 30, 1997.
The results for the first six months of 1998 and 1997 included charges of $4.8
million and $1.0 million, respectively, related to the early retirement of
Series C Notes. Exclusive of these extraordinary items, net income for the first
half of 1998 was $4.5 million, or $0.44 per basic share and $0.41 per diluted
share, compared to $2.2 million, or $0.23 per basic share and $0.21 per diluted
share, in the same period in 1997.
The Company generated operating income of $8.1 million for the three months
ended June 30, 1998 compared to operating income of $6.3 million in the same
period of the prior year. The $1.8 million improvement in operating income for
the three months ended June 30, 1998 was attributable to the increase in
operating volume and the increase in gross profit as a percentage of revenue.
Operating income for the first half of 1998 was $12.0 million compared to
operating income of $9.7 million in the same period in the prior year, the
increase being attributable to the items noted above for the second quarter of
1998.
Selling, General & Administrative expenses ("SG&A") for the quarters ended June
30, 1998 and 1997 were $44.2 million, or 8.1% of revenues, and $37.2 million, or
7.8% of revenues, respectively. SG&A for the six months ended June 30, 1998 was
$84.5 million, or 8.1% of revenues, compared to SG&A of $72.9 million, or 8.0%
of revenues, for the six months ended June 30, 1997. The dollar increase in SG&A
for the three and six month periods ended June 30, 1998 compared to the same
periods in 1997 are attributable to the increase in operating volume.
On March 18, 1998, the Company called for the redemption of approximately $61.9
million principal amount of Series C Notes. In accordance with the Indenture
governing the Series C Notes, the redemption price of the Series C Notes was
104% of the principal amount redeemed. Accordingly, the Company recorded an
extraordinary loss related to the early retirement of debt. The extraordinary
loss consisted primarily of the write-off of the associated debt discount plus
the redemption premium and costs associated with the redemption, net of income
tax benefits. The Company prepaid in full, including accrued interest thereon,
the Supplemental SellCo Note during June, 1998.
The Company's backlog was $1,094.5 million at June 30, 1998 and $996.4 million
at December 31, 1997. Between December 31, 1997 and June 30, 1998, the Company's
backlog in Canada increased by $25.6 million, its backlog in the United States
increased by $81.1 million and its backlog in the United Kingdom decreased by
$8.5 million.
Liquidity and Capital Resources
On March 18, 1998, the Company sold, pursuant to underwritten public offerings,
$100.0 million principal amount of 5.75% Convertible Subordinated Notes (the
"Notes") and 1,100,000 shares of its Common Stock. Interest on the Notes is
payable semi-annually commencing October 1, 1998. The Notes are unsecured
indebtedness of the Company and are convertible into Common Stock of the Company
at a conversion price of $27.34 per share at any time.
On March 24, 1998, the underwriter of the Notes offering exercised in full its
over-allotment option to purchase an additional $15.0 million of Notes and
accordingly an additional $15.0 million principal amount of such notes were
issued.
Proceeds received from the sale of the Notes along with proceeds from the sale
of the Common Stock were used to redeem the Series C Notes, repay outstanding
borrowings under the Company's working capital credit lines, prepay the
Supplemental SellCo Note and accrued interest thereon and will be used for
possible acquisitions and for other general corporate purposes.
The Company's consolidated cash balance increased by approximately $46.0 million
from $49.4 million at December 31, 1997 to $95.4 million at June 30, 1998,
primarily as a result of the net proceeds received from the sale of Common Stock
and Notes offset by the repayment of debt instruments noted above.
As of June 30, 1998 the Company's total borrowing capacity under its revolving
credit facility was $100.0 million. The Company had approximately $29.0 million
of letters of credit outstanding as of that date. There were no revolving loans
outstanding as of June 30, 1998.
Year 2000
The Company has performed a comprehensive review of its computer systems to
identify systems that could be affected by the Year 2000 issue and is developing
a plan to resolve the issue. The Company is utilizing both internal and external
resources to identify, correct or reprogram, and test the systems to ensure Year
2000 compliance. Preliminary cost estimates of testing and converting system
applications range from $1.0 million to $2.0 million. Maintenance and
modification cots will be expensed as incurred, while costs of new software will
be capitalized and amortized over the expected useful life of the related
software.
The Company expects its Year 2000 conversion project to be completed on a timely
basis. However, there can be no assurance that the systems of other companies on
which the Company's systems rely also will be converted on a timely basis. A
failure to convert successfully by another company could have an adverse effect
on the Company's systems.
This Quarterly Report on Form 10-Q contains certain forward-looking statements
within the meaning of the Private Securities Reform Act of 1995. These
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those in any such forward-looking
statements. Such factors include, but are not limited to, adverse changes in
general economic conditions, including changes in the specific markets for the
Company's services, adverse business conditions, decreased or lack of growth in
the mechanical and electrical construction and facilities services industries,
increased competition, pricing pressures, risks associated with foreign
operations and other factors.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The information in Note E to the Company's June 30, 1998 Notes to Condensed
Consolidated Financial Statements (unaudited) regarding legal proceedings is
hereby incorporated herein by reference thereto.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On June 19, 1998 the Company held its annual meeting of stockholders.
(b) At the annual meeting each of the seven individuals nominated for
election as a director of the Company for the ensuing year was elected.
The seven directors constituted all of the members of the Board of
Directors of the Company. Stephen W. Bershad received 6,745,529 votes,
David A. B. Brown received 6,745,501 votes, Georges de Buffevent
received 6,755,529 votes, Albert Fried, Jr. received 6,292,329 votes,
Richard Hamm received 6,314,829 votes, Frank T. MacInnis received
6,755,529 votes, and Kevin R. Toner received 6,304,829 votes.
There were no broker non-votes.
(c) The stockholders voted upon a proposal to approve the adoption of the
Company's 1997 Non-Employee Directors' Non-qualified Stock Option Plan
for Directors. 3,951,885 shares were voted in favor of the 1997
Directors' Stock Option Plan, 2,179,290 shares were voted against the
1997 Directors' Stock Option Plan and 48,391 shares abstained from
voting thereon. There were no broker non-votes.
(d) The stockholders voted upon a proposal to approve the adoption of the
Company's 1997 Stock Plan for Directors. 3,134,814 shares were voted in
favor of the 1997 Stock Plan for Directors, 2,999,481 shares were voted
against the 1997 Stock Plan for Directors and 48,891 shares abstained
from voting thereon. There were no broker non-votes.
(e) The stockholders also voted upon a proposal to ratify the appointment by
the Audit Committee of the Board of Directors of Arthur Andersen LLP,
certified public accountants, as the Company's independent public
accountants for 1998. 8,209,351 shares were voted in favor of
ratification, 2,000 voted against ratification and 1,800 shares
abstained from voting thereon. There were no broker non-votes.
(f) The meeting was adjourned until July 13, 1998 in order that more
stockholders might consider and vote upon a proposal to approve an
amendment to the Company's 1994 Management Stock Option Plan increasing
the aggregate number of shares of the Company's Common Stock for which
options may be granted under that Plan from 1,000,000 to 2,000,000. At
the meeting held July 13, 1998, 3,264,930 shares were voted in favor of
the amendment, 4,121,515 shares were voted against the amendment and
398,791 shares abstained from voting thereon. There were no broker
non-votes.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10(a) Continuity Agreement dated as of June 22, 1998 between
Frank T. MacInnis and EMCOR Group, Inc.
Exhibit10(b) Continuity Agreement dated as of June 22, 1998 between
Jeffrey M. Levy and EMCOR Group, Inc.
Exhibit10(c) Continuity Agreement dated as of June 22, 1998 between
Sheldon I. Cammaker and EMCOR Group, Inc.
Exhibit10(d) Continuity Agreement dated as of June 22, 1998 between
Leicle E. Chesser and EMCOR Group, Inc.
Exhibit10(e) Continuity Agreement dated as of June 22, 1998 between
Thomas D. Cunningham and EMCOR Group, Inc.
Exhibit10(f) Continuity Agreement dated as of June 22, 1998 between R.
Kevin Matz and EMCOR Group, Inc.
Exhibit10(g) Continuity Agreement dated as of June 22, 1998 between
Mark A. Pompa and EMCOR Group, Inc.
Exhibit 27 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter ended June 30, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EMCOR GROUP, INC.
---------------------------------------
(Registrant)
Date: July 29, 1998 By: /s/FRANK T. MacINNIS
---------------------------------------
Frank T. MacInnis
Chairman of the Board of
Directors and
Chief Executive Officer
Date: July 29, 1998 By: /s/LEICLE E. CHESSER
---------------------------------------
---------------------------------------
Leicle E. Chesser
Executive Vice President
and Chief Financial Officer
Exhibit 10(a)
CONTINUITY AGREEMENT
This Agreement ("Agreement") is dated as of June 22, 1998, by and
between the EMCOR GROUP, INC., a Delaware corporation (the "Company"), and FRANK
T. MACINNIS (the "Executive").
WHEREAS, the Company's Board of Directors (the "Board") considers
the continued services of key executives of the Company to be in the best
interests of the Company and its stockholders; and
WHEREAS, the Board desires to assure, and has determined that it
is appropriate and in the best interests of the Company and its stockholders to
reinforce and encourage the continued attention and dedication of key executives
of the Company to their duties of employment without personal distraction or
conflict of interest in circumstances arising from the possibility or occurrence
of a change of control of the Company; and
WHEREAS, the Board has authorized the Company to enter into
continuity agreements with those key executives of the Company who are
designated by the Compensation and Personnel Committee of the Board of Directors
("Committee"), such agreements to set forth the severance compensation which the
Company agrees under certain circumstances to pay such executives; and
WHEREAS, the Executive is a key executive of the Company and has
been designated by the Committee as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term of Agreement. On the date on which a Change of Control
occurs (the "Effective Date"), this Agreement shall become effective. If
Executive ceases to be employed by reason of an Anticipatory Termination (as
defined in Section 3 (c)) prior to the Effective Date, then Executive shall
receive the severance benefits provided herein and the Effective Date of this
Agreement shall be deemed to be the date immediately preceding the occurrence of
an Anticipatory Termination. If Executive ceases to be employed for any reason
other than an Anticipatory Termination prior to a Change of Control, this
Agreement shall terminate and have no effect and Executive shall receive such
severance payments as are provided in any existing agreement between the
Executive and the Company.
If a Change of Control occurs, the Executive's employment shall be continued
hereunder for the period (the "Employment Period") commencing on the Effective
Date and ending on the second anniversary of the date on which a Change of
Control occurs, subject to the termination of Executive's employment as
described hereinafter. Any existing employment agreement between the Executive
and the Company shall continue to be effective following the Change of Control,
but severance amounts under this Agreement shall be reduced by amounts payable
under any such employment agreement.
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 stockholders 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
stockholders 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).
2. Employment following Change of Control. Executive shall have
at least the same titles and responsibilities as those in effect immediately
prior to the Change of Control. Executive shall receive an annual base salary
which is not less than that in effect immediately prior to the Change of Control
and the Company shall review the salary annually with a view to increasing it;
provided any such increase shall be in the sole discretion of the Board. Once
increased, base salary can not be decreased. The Executive shall also be paid an
annual bonus (the "Bonus") which shall be no less than the higher of (i) the
bonus paid or payable in respect of the year prior to the Change of Control, or
(ii) the average of the annual bonuses paid or payable in respect of the three
years prior to the Change of Control. In addition, the Executive shall be
provided with incentive compensation, pension, general insurance and fringe
benefits and perquisites that are commensurate with the benefits and perquisites
provided to Executive immediately prior to the Change of Control or, if more
favorable to Executive, at the level made available to other similarly situated
executive officers of the Company after the Change of Control. Upon the Change
of Control, the Company shall also cause Executive's outstanding options to
become immediately exercisable.
3. Termination Following Change of Control.
(a) The Executive shall be entitled to the severance benefits
provided in Section 4 hereof in the event Executive's employment is terminated
(A) within two years following a Change of Control (i) by the Company without
Cause, (ii) by Executive for Good Reason, or (iii) for any reason during the
30-day period immediately following the first anniversary of the Change of
Control or (B) prior to a Change of Control, as a result of an Anticipatory
Termination.
Notwithstanding the foregoing, except as set forth in item (iii) above,
Executive shall not be entitled to severance benefits in the event of a
termination of employment on account of death, Disability or Retirement, but
excluding any such termination which is coincident with or subsequent to a
termination which would otherwise give rise to severance benefits. For purposes
of this Agreement:
(i) "Disability" shall mean an illness or injury preventing
Executive from performing his duties, as they existed immediately prior
to the illness or injury, on a full time basis for 180 consecutive
business days.
(ii) "Retirement" shall mean a termination of employment by
Executive pursuant to late, normal or early retirement under a pension
plan sponsored by the Company, as defined in such plan.
(b) Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to
Executive by the Board or an officer of the Company which specifically
identifies the manner in which the Board or the officer believes that
Executive has not substantially performed Executive's duties; or
(ii) (A) the conviction of, or plea of guilty or nolo contendere
to, a felony or (B) the willful engaging by Executive in gross
misconduct which is materially and demonstrably injurious to the
Company.
In each case above, for a termination of employment to be for Cause: (a) the
Executive must be provided with a Notice of Termination (as described in Section
3 (d)); (b) the Executive must be provided with an opportunity to be heard by
the Board no earlier than 30 days following the Notice of Termination (during
which notice period Executive has failed to cure or resolve the behavior in
question); and (c) there must be a good faith determination of Cause by at least
3/4 of the non-employee outside directors of the Company.
(c) Good Reason and Anticipatory Termination. For purposes of
this Agreement, "Good Reason" shall mean:
(i) Executive's annual salary is reduced below the higher of (A)
the amount in effect on the Effective Date, or (B) the highest amount in
effect at any time thereafter;
(ii) Executive's annual bonus is reduced below the Bonus;
(iii) Executive's duties and responsibilities or the program of
incentive compensation and retirement and general insurance benefits
offered to Executive are materially and adversely diminished in
comparison to the duties and responsibilities or the program of benefits
enjoyed by Executive on the Effective Date;
(iv) Executive is required to be based at a location more than 50
miles from the location where Executive was based and performed services
on the Effective Date; or
(v) failure to provide for the assumption of this Agreement by
any successor entity;
provided, however, that any diminution of duties or responsibilities that occurs
solely as a result of the fact that the Company ceases to be a public company
shall not, in and of itself, constitute Good Reason.
Any event or condition described in clauses (i) through (iv) or a termination
without Cause, either of which occurs prior to a Change of Control but which
Executive reasonably demonstrates (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change of Control (a "Third Party"), or (B) otherwise arose in connection with,
or in anticipation of a Change of Control, shall constitute Good Reason for
purposes of this Agreement, notwithstanding that it occurred prior to a Change
of Control ("Anticipatory Termination").
Executive shall give the Company written notice of any event which he claims is
the basis for Good Reason and the Company shall have 30 days within which to
cure or resolve the behavior in question before Executive can terminate for Good
Reason.
(d) Notice of Termination. Any purported termination of the
Executive's employment with the Company shall be communicated by a Notice of
Termination to the Executive, if such termination is by the Company, or to the
Company, if such termination is by the Executive. For purposes of this
Agreement, "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provisions so indicated. For purposes of this Agreement, no purported
termination of Executive's employment with the Company shall be effective
without such a Notice of Termination having been given.
(e) Dispute Resolution. Disputes arising from the operation of
this Agreement, including, but not necessarily being limited to, the manner of
giving the Notice of Termination, the reasons or cause for the Executive's
termination or the amount of severance compensation due to the Executive
subsequent to the Executive's termination, may be resolved, at the Executive's
discretion, by arbitration; provided, however, that disputes arising under
Section 11 of this Agreement shall not be resolved under this Section 3 (e). In
the event that any such dispute which the Executive elects to be resolved by
arbitration, after notice thereof is given to the other party in writing, is not
able to be resolved by mutual agreement of the parties within sixty (60)
calendar days of the giving of such notice, the Executive and the Company hereby
agree to promptly submit such a dispute to binding arbitration in New York, New
York in accordance with New York law and the rules and procedures of the
American Arbitration Association. During any period in which a dispute is
pending that the Executive elects to be resolved by arbitration, the Executive
shall continue to receive his salary (including any Bonus) and benefits as if
his employment with the Company had continued through the date of the arbiters'
determination, and any such payments or benefits shall not be offset against any
severance, either under this Agreement or otherwise, to which Executive may be
entitled.
4. Compensation Upon Termination After a Change of Control.
If within two (2) years after the Effective Date, the Executive's
employment by the Company shall be terminated in accordance with Section 3 (a)
(the "Termination"), the Executive shall be entitled to the following payments
and benefits:
(a) Severance. As soon as practicable after the Termination, but
in any event no later than 10 business days following such Termination, the
Company shall pay or cause to be paid to the Executive, a lump sum cash amount
equal to three (3) times the sum of (i) the Executive's annual base salary on
the Effective Date (the "Base Salary"), (ii) the Bonus, and (iii) the value of
the perquisites (e.g., car allowance, club dues, etc., including any ordinary
tax gross-ups for perquisites) provided to Executive in respect of the year
prior to the Change of Control. In addition, at the time of the above payment,
the Executive shall be entitled to an additional lump sum cash payment equal to
the sum of (A) Executive's annual salary through the date of termination, (B) a
pro rata portion of the Bonus (calculated through the date of termination), and
(C) an amount, if any, equal to compensation previously deferred (excluding any
qualified plan deferral) and any accrued vacation pay, in each case, in full
satisfaction of Executive's rights thereto.
(b) Additional Benefits. The Executive shall be entitled to
continued medical, dental and life insurance coverage for the Executive and the
Executive's eligible dependents on the same basis as in effect prior to the
Change of Control or the Executive's Termination of employment, whichever is
deemed to provide for more substantial benefits, until the earlier of (A)
thirty-six (36) months (the "Separation Period") after the Executive's
Termination or (B) the commencement of comparable coverage with a subsequent
employer; provided, however, that such continued coverage shall not count
against any continued coverage required by law.
(c) Outplacement. If so requested by the Executive, outplacement
services shall be provided by a professional outplacement provider at a cost to
the Company of not more than 20% of the Executive's Base Salary.
(d) Withholding. Payments and benefits provided pursuant to this
Section 4 shall be subject to any applicable payroll and other taxes required to
be withheld.
5. Certain Additional Payments by the Company:
(a) Anything in this Agreement to the contrary notwithstanding,
if it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment") , would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of the Company, within the meaning of Section
28OG of the Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with respect to such
excise tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax") , then the Executive
shall be entitled to receive an additional payment or payments (a "Gross-Up
Payment") in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b) Subject to the provisions of Section 5 (f) hereof, all
determinations required to be made under this Section 5, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change of Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its determination and detailed supporting calculations to
both the Company and the Executive within 15 calendar days after the Termination
Date, if applicable, and any other such time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any Excise Tax
is payable by the Executive, the Company shall pay the required Gross-Up Payment
to the Executive within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
5(f) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 5(b) hereof.
(d) The federal, state and local income or other tax returns
filed by the Executive and the Company (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the Excise
Tax payable by the Executive. The Executive shall make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated by Sections
5 (b) and (d) hereof shall be borne by the Company. If such fees and expenses
are initially advanced by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as promptly as practicable but no later than 10 business days after the
Executive actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid (in each case, to the extent known by the Executive).
The Executive shall not pay such claim prior to the earlier of (a) the
expiration of the 30-calendar-day period following the date on which he gives
such notice to the Company and (b) the date that any payment of amount with
respect to such claim is due. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with respect
to such claim by an attorney competent in respect of the subject matter
and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Section 5
(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5 (f) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided however, that the Executive may
participate therein at his cost and expense) and may, at its option,
either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay the tax claimed and sue
for a refund, the Company shall advance the amount of such payment to
the Executive on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 5 (f) hereof, the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5 (f) hereof) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(f) hereof,
a determination is made that the Executive is not entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance shall be forgiven and
shall not be required repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be pursuant to this
Section 5.
6. Obligations Absolute; No Mitigation; No Effect On Other
Rights.
(a) The obligations of the Company to make the payment to the
Executive, and to make the arrangements, provided for herein are absolute and
unconditional and may not be reduced by any circumstances, including without
limitation any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or any third party at any time.
(b) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
(c) The provisions of this Agreement, and any payment provided
for herein, shall not supersede or in any way limit the rights, benefits, duties
or obligations which the Executive may now or in the future have under any
benefit, incentive or other plan or arrangement of the Company or any other
agreement with the Company.
7. Not an Employment Agreement. Subject to the terms of this or
any other agreement or arrangement between the Company and the Executive that
may then be in effect, nothing herein shall prevent the Company from terminating
the Executive's employment.
8. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all or substantially all of the Company's business or
assets which executes and delivers an agreement provided for in this Section
8(a) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law, including any parent or subsidiary of such a
successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement or contemplated hereby shall be in
writing and shall be deemed to have been duly given when personally delivered or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
101 Merritt Seven, 7th Floor
Norwalk, CT 06851
Attention: Frank T. MacInnis, Chairman of the Board
and in the case of the Executive, to the Executive at the most current address
shown on the Executive's employment records. Either party may designate a
different address by giving notice of change of address in the manner provided
above, except that notices of change of address shall be effective only upon
receipt.
10. Expenses. In addition to all other amounts payable to the
Executive under this Agreement, the Company shall pay or reimburse the Executive
for legal fees (including without limitation, any and all court costs and
attorneys' fees and expenses) , incurred by the Executive in connection with or
as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; unless, in the case of an action brought by the Executive, it is
determined by an arbitrator or by a court of competent jurisdiction that such
action was frivolous and was not brought in good faith.
11. Confidentiality. The Executive shall retain in confidence any
and all confidential information concerning the Company and its respective
business which is now known or hereafter becomes known to the Executive, except
as otherwise required by law and except information (i) ascertainable or
obtained from public information, (ii) received by the Executive at any time
after the Executive's employment by the Company shall have terminated, from a
third party not employed by or otherwise affiliated with the Company or (iii)
which is or becomes known to the public by any means other than a breach of this
Section 11. Upon any termination of Executive's employment, the Executive shall
not take or keep any proprietary information or documentation belonging to the
Company.
12. Miscellaneous. No provision of this Agreement may be amended,
altered, modified, waived or discharged unless such amendment, alteration,
modification, waiver or discharge is agreed to in writing signed by the
Executive and such officer of the Company as shall be specifically designated by
the Committee or by the Board. No waiver by either party, at any time, of any
breach by the other party of, or of compliance by the other party with, any
condition or provision of this Agreement to be performed or complied with by
such other party shall be deemed a waiver of any similar or dissimilar provision
or condition of this Agreement or any other breach of or failure to comply with
the same condition or provision at the same time or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without giving effect to its conflict of laws rules. Any
action brought by the Executive or the Company shall be brought and maintained
in a court of competent jurisdiction in the State of New York.
13. Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
hereto waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
14. Revocation. This Agreement may be revoked at any time prior
to the Effective Date, without prior notice to Executive, upon the resolution of
the Board that the continued existence of this Agreement and of similar
agreements with other employees of the Company is no longer in the best
interests of the Company.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
16. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior oral or written agreements, commitments or
understanding with respect to the matters provided for herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EMCOR GROUP, INC.
By:_____________________________
Jeffrey M. Levy
President and
Chief Operating Officer
_______________________________
Executive: Frank T. MacInnis
Exhibit 10(b)
CONTINUITY AGREEMENT
This Agreement ("Agreement") is dated as of June 22, 1998, by and
between the EMCOR GROUP, INC., a Delaware corporation (the "Company"), and
JEFFREY M. LEVY (the "Executive").
WHEREAS, the Company's Board of Directors (the "Board") considers
the continued services of key executives of the Company to be in the best
interests of the Company and its stockholders; and
WHEREAS, the Board desires to assure, and has determined that it
is appropriate and in the best interests of the Company and its stockholders to
reinforce and encourage the continued attention and dedication of key executives
of the Company to their duties of employment without personal distraction or
conflict of interest in circumstances arising from the possibility or occurrence
of a change of control of the Company; and
WHEREAS, the Board has authorized the Company to enter into
continuity agreements with those key executives of the Company who are
designated by the Compensation and Personnel Committee of the Board of Directors
("Committee"), such agreements to set forth the severance compensation which the
Company agrees under certain circumstances to pay such executives; and
WHEREAS, the Executive is a key executive of the Company and has
been designated by the Committee as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term of Agreement. On the date on which a Change of Control
occurs (the "Effective Date"), this Agreement shall become effective. If
Executive ceases to be employed by reason of an Anticipatory Termination (as
defined in Section 3 (c)) prior to the Effective Date, then Executive shall
receive the severance benefits provided herein and the Effective Date of this
Agreement shall be deemed to be the date immediately preceding the occurrence of
an Anticipatory Termination. If Executive ceases to be employed for any reason
other than an Anticipatory Termination prior to a Change of Control, this
Agreement shall terminate and have no effect and Executive shall receive such
severance payments as are provided in any existing agreement between the
Executive and the Company.
If a Change of Control occurs, the Executive's employment shall be continued
hereunder for the period (the "Employment Period") commencing on the Effective
Date and ending on the second anniversary of the date on which a Change of
Control occurs, subject to the termination of Executive's employment as
described hereinafter. Any existing employment agreement between the Executive
and the Company shall continue to be effective following the Change of Control,
but severance amounts under this Agreement shall be reduced by amounts payable
under any such employment agreement.
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 stockholders 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
stockholders 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).
2. Employment following Change of Control. Executive shall have
at least the same titles and responsibilities as those in effect immediately
prior to the Change of Control. Executive shall receive an annual base salary
which is not less than that in effect immediately prior to the Change of Control
and the Company shall review the salary annually with a view to increasing it;
provided any such increase shall be in the sole discretion of the Board. Once
increased, base salary can not be decreased. The Executive shall also be paid an
annual bonus (the "Bonus") which shall be no less than the higher of (i) the
bonus paid or payable in respect of the year prior to the Change of Control, or
(ii) the average of the annual bonuses paid or payable in respect of the three
years prior to the Change of Control. In addition, the Executive shall be
provided with incentive compensation, pension, general insurance and fringe
benefits and perquisites that are commensurate with the benefits and perquisites
provided to Executive immediately prior to the Change of Control or, if more
favorable to Executive, at the level made available to other similarly situated
executive officers of the Company after the Change of Control. Upon the Change
of Control, the Company shall also cause Executive's outstanding options to
become immediately exercisable.
3. Termination Following Change of Control.
(a) The Executive shall be entitled to the severance benefits
provided in Section 4 hereof in the event Executive's employment is terminated
(A) within two years following a Change of Control (i) by the Company without
Cause, (ii) by Executive for Good Reason, or (iii) for any reason during the
30-day period immediately following the first anniversary of the Change of
Control or (B) prior to a Change of Control, as a result of an Anticipatory
Termination.
Notwithstanding the foregoing, except as set forth in item (iii) above,
Executive shall not be entitled to severance benefits in the event of a
termination of employment on account of death, Disability or Retirement, but
excluding any such termination which is coincident with or subsequent to a
termination which would otherwise give rise to severance benefits. For purposes
of this Agreement:
(i) "Disability" shall mean an illness or injury preventing
Executive from performing his duties, as they existed immediately prior
to the illness or injury, on a full time basis for 180 consecutive
business days.
(ii) "Retirement" shall mean a termination of employment by
Executive pursuant to late, normal or early retirement under a pension
plan sponsored by the Company, as defined in such plan.
(b) Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to
Executive by the Board or an officer of the Company which specifically
identifies the manner in which the Board or the officer believes that
Executive has not substantially performed Executive's duties; or
(ii) (A) the conviction of, or plea of guilty or nolo contendere
to, a felony or (B) the willful engaging by Executive in gross
misconduct which is materially and demonstrably injurious to the
Company.
In each case above, for a termination of employment to be for Cause: (a) the
Executive must be provided with a Notice of Termination (as described in Section
3 (d)); (b) the Executive must be provided with an opportunity to be heard by
the Board no earlier than 30 days following the Notice of Termination (during
which notice period Executive has failed to cure or resolve the behavior in
question); and (c) there must be a good faith determination of Cause by at least
3/4 of the non-employee outside directors of the Company.
(c) Good Reason and Anticipatory Termination. For purposes of
this Agreement, "Good Reason" shall mean:
(i) Executive's annual salary is reduced below the higher of (A)
the amount in effect on the Effective Date, or (B) the highest amount in
effect at any time thereafter;
(ii) Executive's annual bonus is reduced below the Bonus;
(iii) Executive's duties and responsibilities or the program of
incentive compensation and retirement and general insurance benefits
offered to Executive are materially and adversely diminished in
comparison to the duties and responsibilities or the program of benefits
enjoyed by Executive on the Effective Date;
(iv) Executive is required to be based at a location more than 50
miles from the location where Executive was based and performed services
on the Effective Date; or
(v) failure to provide for the assumption of this Agreement by
any successor entity;
provided, however, that any diminution of duties or responsibilities that occurs
solely as a result of the fact that the Company ceases to be a public company
shall not, in and of itself, constitute Good Reason.
Any event or condition described in clauses (i) through (iv) or a termination
without Cause, either of which occurs prior to a Change of Control but which
Executive reasonably demonstrates (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change of Control (a "Third Party"), or (B) otherwise arose in connection with,
or in anticipation of a Change of Control, shall constitute Good Reason for
purposes of this Agreement, notwithstanding that it occurred prior to a Change
of Control ("Anticipatory Termination").
Executive shall give the Company written notice of any event which he claims is
the basis for Good Reason and the Company shall have 30 days within which to
cure or resolve the behavior in question before Executive can terminate for Good
Reason.
(d) Notice of Termination. Any purported termination of the
Executive's employment with the Company shall be communicated by a Notice of
Termination to the Executive, if such termination is by the Company, or to the
Company, if such termination is by the Executive. For purposes of this
Agreement, "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provisions so indicated. For purposes of this Agreement, no purported
termination of Executive's employment with the Company shall be effective
without such a Notice of Termination having been given.
(e) Dispute Resolution. Disputes arising from the operation of
this Agreement, including, but not necessarily being limited to, the manner of
giving the Notice of Termination, the reasons or cause for the Executive's
termination or the amount of severance compensation due to the Executive
subsequent to the Executive's termination, may be resolved, at the Executive's
discretion, by arbitration; provided, however, that disputes arising under
Section 11 of this Agreement shall not be resolved under this Section 3 (e). In
the event that any such dispute which the Executive elects to be resolved by
arbitration, after notice thereof is given to the other party in writing, is not
able to be resolved by mutual agreement of the parties within sixty (60)
calendar days of the giving of such notice, the Executive and the Company hereby
agree to promptly submit such a dispute to binding arbitration in New York, New
York in accordance with New York law and the rules and procedures of the
American Arbitration Association. During any period in which a dispute is
pending that the Executive elects to be resolved by arbitration, the Executive
shall continue to receive his salary (including any Bonus) and benefits as if
his employment with the Company had continued through the date of the arbiters'
determination, and any such payments or benefits shall not be offset against any
severance, either under this Agreement or otherwise, to which Executive may be
entitled.
4. Compensation Upon Termination After a Change of Control.
If within two (2) years after the Effective Date, the Executive's
employment by the Company shall be terminated in accordance with Section 3 (a)
(the "Termination"), the Executive shall be entitled to the following payments
and benefits:
(a) Severance. As soon as practicable after the Termination, but
in any event no later than 10 business days following such Termination, the
Company shall pay or cause to be paid to the Executive, a lump sum cash amount
equal to three (3) times the sum of (i) the Executive's annual base salary on
the Effective Date (the "Base Salary"), (ii) the Bonus, and (iii) the value of
the perquisites (e.g., car allowance, club dues, etc., including any ordinary
tax gross-ups for perquisites) provided to Executive in respect of the year
prior to the Change of Control. In addition, at the time of the above payment,
the Executive shall be entitled to an additional lump sum cash payment equal to
the sum of (A) Executive's annual salary through the date of termination, (B) a
pro rata portion of the Bonus (calculated through the date of termination), and
(C) an amount, if any, equal to compensation previously deferred (excluding any
qualified plan deferral) and any accrued vacation pay, in each case, in full
satisfaction of Executive's rights thereto.
(b) Additional Benefits. The Executive shall be entitled to
continued medical, dental and life insurance coverage for the Executive and the
Executive's eligible dependents on the same basis as in effect prior to the
Change of Control or the Executive's Termination of employment, whichever is
deemed to provide for more substantial benefits, until the earlier of (A)
thirty-six (36) months (the "Separation Period") after the Executive's
Termination or (B) the commencement of comparable coverage with a subsequent
employer; provided, however, that such continued coverage shall not count
against any continued coverage required by law.
(c) Outplacement. If so requested by the Executive, outplacement
services shall be provided by a professional outplacement provider at a cost to
the Company of not more than 20% of the Executive's Base Salary.
(d) Withholding. Payments and benefits provided pursuant to this
Section 4 shall be subject to any applicable payroll and other taxes required to
be withheld.
5. Certain Additional Payments by the Company:
(a) Anything in this Agreement to the contrary notwithstanding,
if it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment") , would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of the Company, within the meaning of Section
28OG of the Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with respect to such
excise tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax") , then the Executive
shall be entitled to receive an additional payment or payments (a "Gross-Up
Payment") in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b) Subject to the provisions of Section 5 (f) hereof, all
determinations required to be made under this Section 5, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change of Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its determination and detailed supporting calculations to
both the Company and the Executive within 15 calendar days after the Termination
Date, if applicable, and any other such time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any Excise Tax
is payable by the Executive, the Company shall pay the required Gross-Up Payment
to the Executive within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
5(f) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 5(b) hereof.
(d) The federal, state and local income or other tax returns
filed by the Executive and the Company (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the Excise
Tax payable by the Executive. The Executive shall make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated by Sections
5 (b) and (d) hereof shall be borne by the Company. If such fees and expenses
are initially advanced by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as promptly as practicable but no later than 10 business days after the
Executive actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid (in each case, to the extent known by the Executive).
The Executive shall not pay such claim prior to the earlier of (a) the
expiration of the 30-calendar-day period following the date on which he gives
such notice to the Company and (b) the date that any payment of amount with
respect to such claim is due. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with respect
to such claim by an attorney competent in respect of the subject matter
and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Section 5
(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5 (f) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided however, that the Executive may
participate therein at his cost and expense) and may, at its option,
either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay the tax claimed and sue
for a refund, the Company shall advance the amount of such payment to
the Executive on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 5 (f) hereof, the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5 (f) hereof) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(f) hereof,
a determination is made that the Executive is not entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance shall be forgiven and
shall not be required repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be pursuant to this
Section 5.
6. Obligations Absolute; No Mitigation; No Effect On
Other Rights.
(a) The obligations of the Company to make the payment to the
Executive, and to make the arrangements, provided for herein are absolute and
unconditional and may not be reduced by any circumstances, including without
limitation any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or any third party at any time.
(b) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
(c) The provisions of this Agreement, and any payment provided
for herein, shall not supersede or in any way limit the rights, benefits, duties
or obligations which the Executive may now or in the future have under any
benefit, incentive or other plan or arrangement of the Company or any other
agreement with the Company.
7. Not an Employment Agreement. Subject to the terms of this or
any other agreement or arrangement between the Company and the Executive that
may then be in effect, nothing herein shall prevent the Company from terminating
the Executive's employment.
8. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all or substantially all of the Company's business or
assets which executes and delivers an agreement provided for in this Section
8(a) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law, including any parent or subsidiary of such a
successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement or contemplated hereby shall be in
writing and shall be deemed to have been duly given when personally delivered or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
101 Merritt Seven, 7th Floor
Norwalk, CT 06851
Attention: Frank T. MacInnis, Chairman of the Board
and in the case of the Executive, to the Executive at the most current address
shown on the Executive's employment records. Either party may designate a
different address by giving notice of change of address in the manner provided
above, except that notices of change of address shall be effective only upon
receipt.
10. Expenses. In addition to all other amounts payable to the
Executive under this Agreement, the Company shall pay or reimburse the Executive
for legal fees (including without limitation, any and all court costs and
attorneys' fees and expenses) , incurred by the Executive in connection with or
as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; unless, in the case of an action brought by the Executive, it is
determined by an arbitrator or by a court of competent jurisdiction that such
action was frivolous and was not brought in good faith.
11. Confidentiality. The Executive shall retain in confidence any
and all confidential information concerning the Company and its respective
business which is now known or hereafter becomes known to the Executive, except
as otherwise required by law and except information (i) ascertainable or
obtained from public information, (ii) received by the Executive at any time
after the Executive's employment by the Company shall have terminated, from a
third party not employed by or otherwise affiliated with the Company or (iii)
which is or becomes known to the public by any means other than a breach of this
Section 11. Upon any termination of Executive's employment, the Executive shall
not take or keep any proprietary information or documentation belonging to the
Company.
12. Miscellaneous. No provision of this Agreement may be amended,
altered, modified, waived or discharged unless such amendment, alteration,
modification, waiver or discharge is agreed to in writing signed by the
Executive and such officer of the Company as shall be specifically designated by
the Committee or by the Board. No waiver by either party, at any time, of any
breach by the other party of, or of compliance by the other party with, any
condition or provision of this Agreement to be performed or complied with by
such other party shall be deemed a waiver of any similar or dissimilar provision
or condition of this Agreement or any other breach of or failure to comply with
the same condition or provision at the same time or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without giving effect to its conflict of laws rules. Any
action brought by the Executive or the Company shall be brought and maintained
in a court of competent jurisdiction in the State of New York.
13. Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
hereto waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
14. Revocation. This Agreement may be revoked at any time prior
to the Effective Date, without prior notice to Executive, upon the resolution of
the Board that the continued existence of this Agreement and of similar
agreements with other employees of the Company is no longer in the best
interests of the Company.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
16. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior oral or written agreements, commitments or
understanding with respect to the matters provided for herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EMCOR GROUP, INC.
By:____________________________
Frank T. MacInnis
Chairman of the Board and
Chief Executive Officer
________________________________
Executive: Jeffrey M. Levy
Exhibit 10(c)
CONTINUITY AGREEMENT
This Agreement ("Agreement") is dated as of June 22, 1998, by and
between the EMCOR GROUP, INC., a Delaware corporation (the "Company"), and
SHELDON I. CAMMAKER (the "Executive").
WHEREAS, the Company's Board of Directors (the "Board") considers
the continued services of key executives of the Company to be in the best
interests of the Company and its stockholders; and
WHEREAS, the Board desires to assure, and has determined that it
is appropriate and in the best interests of the Company and its stockholders to
reinforce and encourage the continued attention and dedication of key executives
of the Company to their duties of employment without personal distraction or
conflict of interest in circumstances arising from the possibility or occurrence
of a change of control of the Company; and
WHEREAS, the Board has authorized the Company to enter into
continuity agreements with those key executives of the Company who are
designated by the Compensation and Personnel Committee of the Board of Directors
("Committee"), such agreements to set forth the severance compensation which the
Company agrees under certain circumstances to pay such executives; and
WHEREAS, the Executive is a key executive of the Company and has
been designated by the Committee as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term of Agreement. On the date on which a Change of Control
occurs (the "Effective Date"), this Agreement shall become effective. If
Executive ceases to be employed by reason of an Anticipatory Termination (as
defined in Section 3 (c)) prior to the Effective Date, then Executive shall
receive the severance benefits provided herein and the Effective Date of this
Agreement shall be deemed to be the date immediately preceding the occurrence of
an Anticipatory Termination. If Executive ceases to be employed for any reason
other than an Anticipatory Termination prior to a Change of Control, this
Agreement shall terminate and have no effect and Executive shall receive such
severance payments as are provided in any existing agreement between the
Executive and the Company.
If a Change of Control occurs, the Executive's employment shall be continued
hereunder for the period (the "Employment Period") commencing on the Effective
Date and ending on the second anniversary of the date on which a Change of
Control occurs, subject to the termination of Executive's employment as
described hereinafter. Any existing employment agreement between the Executive
and the Company shall continue to be effective following the Change of Control,
but severance amounts under this Agreement shall be reduced by amounts payable
under any such employment agreement.
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 stockholders 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
stockholders 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).
2. Employment following Change of Control. Executive shall have
at least the same titles and responsibilities as those in effect immediately
prior to the Change of Control. Executive shall receive an annual base salary
which is not less than that in effect immediately prior to the Change of Control
and the Company shall review the salary annually with a view to increasing it;
provided any such increase shall be in the sole discretion of the Board. Once
increased, base salary can not be decreased. The Executive shall also be paid an
annual bonus (the "Bonus") which shall be no less than the higher of (i) the
bonus paid or payable in respect of the year prior to the Change of Control, or
(ii) the average of the annual bonuses paid or payable in respect of the three
years prior to the Change of Control. In addition, the Executive shall be
provided with incentive compensation, pension, general insurance and fringe
benefits and perquisites that are commensurate with the benefits and perquisites
provided to Executive immediately prior to the Change of Control or, if more
favorable to Executive, at the level made available to other similarly situated
executive officers of the Company after the Change of Control. Upon the Change
of Control, the Company shall also cause Executive's outstanding options to
become immediately exercisable.
3. Termination Following Change of Control.
(a) The Executive shall be entitled to the severance benefits
provided in Section 4 hereof in the event Executive's employment is terminated
(A) within two years following a Change of Control (i) by the Company without
Cause, (ii) by Executive for Good Reason, or (iii) for any reason during the
30-day period immediately following the first anniversary of the Change of
Control or (B) prior to a Change of Control, as a result of an Anticipatory
Termination.
Notwithstanding the foregoing, except as set forth in item (iii) above,
Executive shall not be entitled to severance benefits in the event of a
termination of employment on account of death, Disability or Retirement, but
excluding any such termination which is coincident with or subsequent to a
termination which would otherwise give rise to severance benefits. For purposes
of this Agreement:
(i) "Disability" shall mean an illness or injury preventing
Executive from performing his duties, as they existed immediately prior
to the illness or injury, on a full time basis for 180 consecutive
business days.
(ii) "Retirement" shall mean a termination of employment by
Executive pursuant to late, normal or early retirement under a pension
plan sponsored by the Company, as defined in such plan.
(b) Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to
Executive by the Board or an officer of the Company which specifically
identifies the manner in which the Board or the officer believes that
Executive has not substantially performed Executive's duties; or
(ii) (A) the conviction of, or plea of guilty or nolo contendere
to, a felony or (B) the willful engaging by Executive in gross
misconduct which is materially and demonstrably injurious to the
Company.
In each case above, for a termination of employment to be for Cause: (a) the
Executive must be provided with a Notice of Termination (as described in Section
3 (d)); (b) the Executive must be provided with an opportunity to be heard by
the Board no earlier than 30 days following the Notice of Termination (during
which notice period Executive has failed to cure or resolve the behavior in
question); and (c) there must be a good faith determination of Cause by at least
3/4 of the non-employee outside directors of the Company.
(c) Good Reason and Anticipatory Termination. For purposes of
this Agreement, "Good Reason" shall mean:
(i) Executive's annual salary is reduced below the higher of (A)
the amount in effect on the Effective Date, or (B) the highest amount in
effect at any time thereafter;
(ii) Executive's annual bonus is reduced below the Bonus;
(iii) Executive's duties and responsibilities or the program of
incentive compensation and retirement and general insurance benefits
offered to Executive are materially and adversely diminished in
comparison to the duties and responsibilities or the program of benefits
enjoyed by Executive on the Effective Date;
(iv) Executive is required to be based at a location more than 50
miles from the location where Executive was based and performed services
on the Effective Date; or
(v) failure to provide for the assumption of this Agreement by
any successor entity;
provided, however, that any diminution of duties or responsibilities that occurs
solely as a result of the fact that the Company ceases to be a public company
shall not, in and of itself, constitute Good Reason.
Any event or condition described in clauses (i) through (iv) or a termination
without Cause, either of which occurs prior to a Change of Control but which
Executive reasonably demonstrates (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change of Control (a "Third Party"), or (B) otherwise arose in connection with,
or in anticipation of a Change of Control, shall constitute Good Reason for
purposes of this Agreement, notwithstanding that it occurred prior to a Change
of Control ("Anticipatory Termination").
Executive shall give the Company written notice of any event which he claims is
the basis for Good Reason and the Company shall have 30 days within which to
cure or resolve the behavior in question before Executive can terminate for Good
Reason.
(d) Notice of Termination. Any purported termination of the
Executive's employment with the Company shall be communicated by a Notice of
Termination to the Executive, if such termination is by the Company, or to the
Company, if such termination is by the Executive. For purposes of this
Agreement, "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provisions so indicated. For purposes of this Agreement, no purported
termination of Executive's employment with the Company shall be effective
without such a Notice of Termination having been given.
(e) Dispute Resolution. Disputes arising from the operation of
this Agreement, including, but not necessarily being limited to, the manner of
giving the Notice of Termination, the reasons or cause for the Executive's
termination or the amount of severance compensation due to the Executive
subsequent to the Executive's termination, may be resolved, at the Executive's
discretion, by arbitration; provided, however, that disputes arising under
Section 11 of this Agreement shall not be resolved under this Section 3 (e). In
the event that any such dispute which the Executive elects to be resolved by
arbitration, after notice thereof is given to the other party in writing, is not
able to be resolved by mutual agreement of the parties within sixty (60)
calendar days of the giving of such notice, the Executive and the Company hereby
agree to promptly submit such a dispute to binding arbitration in New York, New
York in accordance with New York law and the rules and procedures of the
American Arbitration Association. During any period in which a dispute is
pending that the Executive elects to be resolved by arbitration, the Executive
shall continue to receive his salary (including any Bonus) and benefits as if
his employment with the Company had continued through the date of the arbiters'
determination, and any such payments or benefits shall not be offset against any
severance, either under this Agreement or otherwise, to which Executive may be
entitled.
4. Compensation Upon Termination After a Change of Control.
If within two (2) years after the Effective Date, the Executive's
employment by the Company shall be terminated in accordance with Section 3 (a)
(the "Termination"), the Executive shall be entitled to the following payments
and benefits:
(a) Severance. As soon as practicable after the Termination, but
in any event no later than 10 business days following such Termination, the
Company shall pay or cause to be paid to the Executive, a lump sum cash amount
equal to three (3) times the sum of (i) the Executive's annual base salary on
the Effective Date (the "Base Salary"), (ii) the Bonus, and (iii) the value of
the perquisites (e.g., car allowance, club dues, etc., including any ordinary
tax gross-ups for perquisites) provided to Executive in respect of the year
prior to the Change of Control. In addition, at the time of the above payment,
the Executive shall be entitled to an additional lump sum cash payment equal to
the sum of (A) Executive's annual salary through the date of termination, (B) a
pro rata portion of the Bonus (calculated through the date of termination), and
(C) an amount, if any, equal to compensation previously deferred (excluding any
qualified plan deferral) and any accrued vacation pay, in each case, in full
satisfaction of Executive's rights thereto.
(b) Additional Benefits. The Executive shall be entitled to
continued medical, dental and life insurance coverage for the Executive and the
Executive's eligible dependents on the same basis as in effect prior to the
Change of Control or the Executive's Termination of employment, whichever is
deemed to provide for more substantial benefits, until the earlier of (A)
thirty-six (36) months (the "Separation Period") after the Executive's
Termination or (B) the commencement of comparable coverage with a subsequent
employer; provided, however, that such continued coverage shall not count
against any continued coverage required by law.
(c) Outplacement. If so requested by the Executive, outplacement
services shall be provided by a professional outplacement provider at a cost to
the Company of not more than 20% of the Executive's Base Salary.
(d) Withholding. Payments and benefits provided pursuant to this
Section 4 shall be subject to any applicable payroll and other taxes required to
be withheld.
5. Certain Additional Payments by the Company:
(a) Anything in this Agreement to the contrary notwithstanding,
if it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment") , would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of the Company, within the meaning of Section
28OG of the Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with respect to such
excise tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax") , then the Executive
shall be entitled to receive an additional payment or payments (a "Gross-Up
Payment") in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b) Subject to the provisions of Section 5 (f) hereof, all
determinations required to be made under this Section 5, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change of Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its determination and detailed supporting calculations to
both the Company and the Executive within 15 calendar days after the Termination
Date, if applicable, and any other such time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any Excise Tax
is payable by the Executive, the Company shall pay the required Gross-Up Payment
to the Executive within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
5(f) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 5(b) hereof.
(d) The federal, state and local income or other tax returns
filed by the Executive and the Company (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the Excise
Tax payable by the Executive. The Executive shall make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated by Sections
5 (b) and (d) hereof shall be borne by the Company. If such fees and expenses
are initially advanced by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as promptly as practicable but no later than 10 business days after the
Executive actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid (in each case, to the extent known by the Executive).
The Executive shall not pay such claim prior to the earlier of (a) the
expiration of the 30-calendar-day period following the date on which he gives
such notice to the Company and (b) the date that any payment of amount with
respect to such claim is due. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with respect
to such claim by an attorney competent in respect of the subject matter
and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Section 5
(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5 (f) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided however, that the Executive may
participate therein at his cost and expense) and may, at its option,
either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay the tax claimed and sue
for a refund, the Company shall advance the amount of such payment to
the Executive on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 5 (f) hereof, the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5 (f) hereof) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(f) hereof,
a determination is made that the Executive is not entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance shall be forgiven and
shall not be required repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be pursuant to this
Section 5.
6. Obligations Absolute; No Mitigation; No Effect On
Other Rights.
(a) The obligations of the Company to make the payment to the
Executive, and to make the arrangements, provided for herein are absolute and
unconditional and may not be reduced by any circumstances, including without
limitation any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or any third party at any time.
(b) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
(c) The provisions of this Agreement, and any payment provided
for herein, shall not supersede or in any way limit the rights, benefits, duties
or obligations which the Executive may now or in the future have under any
benefit, incentive or other plan or arrangement of the Company or any other
agreement with the Company.
7. Not an Employment Agreement. Subject to the terms of this or
any other agreement or arrangement between the Company and the Executive that
may then be in effect, nothing herein shall prevent the Company from terminating
the Executive's employment.
8. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all or substantially all of the Company's business or
assets which executes and delivers an agreement provided for in this Section
8(a) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law, including any parent or subsidiary of such a
successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement or contemplated hereby shall be in
writing and shall be deemed to have been duly given when personally delivered or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
101 Merritt Seven, 7th Floor
Norwalk, CT 06851
Attention: Frank T. MacInnis, Chairman of the Board
and in the case of the Executive, to the Executive at the most current address
shown on the Executive's employment records. Either party may designate a
different address by giving notice of change of address in the manner provided
above, except that notices of change of address shall be effective only upon
receipt.
10. Expenses. In addition to all other amounts payable to the
Executive under this Agreement, the Company shall pay or reimburse the Executive
for legal fees (including without limitation, any and all court costs and
attorneys' fees and expenses) , incurred by the Executive in connection with or
as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; unless, in the case of an action brought by the Executive, it is
determined by an arbitrator or by a court of competent jurisdiction that such
action was frivolous and was not brought in good faith.
11. Confidentiality. The Executive shall retain in confidence any
and all confidential information concerning the Company and its respective
business which is now known or hereafter becomes known to the Executive, except
as otherwise required by law and except information (i) ascertainable or
obtained from public information, (ii) received by the Executive at any time
after the Executive's employment by the Company shall have terminated, from a
third party not employed by or otherwise affiliated with the Company or (iii)
which is or becomes known to the public by any means other than a breach of this
Section 11. Upon any termination of Executive's employment, the Executive shall
not take or keep any proprietary information or documentation belonging to the
Company.
12. Miscellaneous. No provision of this Agreement may be amended,
altered, modified, waived or discharged unless such amendment, alteration,
modification, waiver or discharge is agreed to in writing signed by the
Executive and such officer of the Company as shall be specifically designated by
the Committee or by the Board. No waiver by either party, at any time, of any
breach by the other party of, or of compliance by the other party with, any
condition or provision of this Agreement to be performed or complied with by
such other party shall be deemed a waiver of any similar or dissimilar provision
or condition of this Agreement or any other breach of or failure to comply with
the same condition or provision at the same time or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without giving effect to its conflict of laws rules. Any
action brought by the Executive or the Company shall be brought and maintained
in a court of competent jurisdiction in the State of New York.
13. Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
hereto waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
14. Revocation. This Agreement may be revoked at any time prior
to the Effective Date, without prior notice to Executive, upon the resolution of
the Board that the continued existence of this Agreement and of similar
agreements with other employees of the Company is no longer in the best
interests of the Company.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
16. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior oral or written agreements, commitments or
understanding with respect to the matters provided for herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EMCOR GROUP, INC.
By:______________________________
Frank T. MacInnis
Chairman of the Board and
Chief Executive Officer
_________________________________
Executive: Sheldon I. Cammaker
Exhibit 10(d)
CONTINUITY AGREEMENT
This Agreement ("Agreement") is dated as of June 22, 1998, by and
between the EMCOR GROUP, INC., a Delaware corporation (the "Company"), and
LEICLE E. CHESSER (the "Executive").
WHEREAS, the Company's Board of Directors (the "Board") considers
the continued services of key executives of the Company to be in the best
interests of the Company and its stockholders; and
WHEREAS, the Board desires to assure, and has determined that it
is appropriate and in the best interests of the Company and its stockholders to
reinforce and encourage the continued attention and dedication of key executives
of the Company to their duties of employment without personal distraction or
conflict of interest in circumstances arising from the possibility or occurrence
of a change of control of the Company; and
WHEREAS, the Board has authorized the Company to enter into
continuity agreements with those key executives of the Company who are
designated by the Compensation and Personnel Committee of the Board of Directors
("Committee"), such agreements to set forth the severance compensation which the
Company agrees under certain circumstances to pay such executives; and
WHEREAS, the Executive is a key executive of the Company and has
been designated by the Committee as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term of Agreement. On the date on which a Change of Control
occurs (the "Effective Date"), this Agreement shall become effective. If
Executive ceases to be employed by reason of an Anticipatory Termination (as
defined in Section 3 (c)) prior to the Effective Date, then Executive shall
receive the severance benefits provided herein and the Effective Date of this
Agreement shall be deemed to be the date immediately preceding the occurrence of
an Anticipatory Termination. If Executive ceases to be employed for any reason
other than an Anticipatory Termination prior to a Change of Control, this
Agreement shall terminate and have no effect and Executive shall receive such
severance payments as are provided in any existing agreement between the
Executive and the Company.
If a Change of Control occurs, the Executive's employment shall be continued
hereunder for the period (the "Employment Period") commencing on the Effective
Date and ending on the second anniversary of the date on which a Change of
Control occurs, subject to the termination of Executive's employment as
described hereinafter. Any existing employment agreement between the Executive
and the Company shall continue to be effective following the Change of Control,
but severance amounts under this Agreement shall be reduced by amounts payable
under any such employment agreement.
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 stockholders 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
stockholders 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).
2. Employment following Change of Control. Executive shall have
at least the same titles and responsibilities as those in effect immediately
prior to the Change of Control. Executive shall receive an annual base salary
which is not less than that in effect immediately prior to the Change of Control
and the Company shall review the salary annually with a view to increasing it;
provided any such increase shall be in the sole discretion of the Board. Once
increased, base salary can not be decreased. The Executive shall also be paid an
annual bonus (the "Bonus") which shall be no less than the higher of (i) the
bonus paid or payable in respect of the year prior to the Change of Control, or
(ii) the average of the annual bonuses paid or payable in respect of the three
years prior to the Change of Control. In addition, the Executive shall be
provided with incentive compensation, pension, general insurance and fringe
benefits and perquisites that are commensurate with the benefits and perquisites
provided to Executive immediately prior to the Change of Control or, if more
favorable to Executive, at the level made available to other similarly situated
executive officers of the Company after the Change of Control. Upon the Change
of Control, the Company shall also cause Executive's outstanding options to
become immediately exercisable.
3. Termination Following Change of Control.
(a) The Executive shall be entitled to the severance benefits
provided in Section 4 hereof in the event Executive's employment is terminated
(A) within two years following a Change of Control (i) by the Company without
Cause, (ii) by Executive for Good Reason, or (iii) for any reason during the
30-day period immediately following the first anniversary of the Change of
Control or (B) prior to a Change of Control, as a result of an Anticipatory
Termination.
Notwithstanding the foregoing, except as set forth in item (iii) above,
Executive shall not be entitled to severance benefits in the event of a
termination of employment on account of death, Disability or Retirement, but
excluding any such termination which is coincident with or subsequent to a
termination which would otherwise give rise to severance benefits. For purposes
of this Agreement:
(i) "Disability" shall mean an illness or injury preventing
Executive from performing his duties, as they existed immediately prior
to the illness or injury, on a full time basis for 180 consecutive
business days.
(ii) "Retirement" shall mean a termination of employment by
Executive pursuant to late, normal or early retirement under a pension
plan sponsored by the Company, as defined in such plan.
(b) Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to
Executive by the Board or an officer of the Company which specifically
identifies the manner in which the Board or the officer believes that
Executive has not substantially performed Executive's duties; or
(ii) (A) the conviction of, or plea of guilty or nolo contendere
to, a felony or (B) the willful engaging by Executive in gross
misconduct which is materially and demonstrably injurious to the
Company.
In each case above, for a termination of employment to be for Cause: (a) the
Executive must be provided with a Notice of Termination (as described in Section
3 (d)); (b) the Executive must be provided with an opportunity to be heard by
the Board no earlier than 30 days following the Notice of Termination (during
which notice period Executive has failed to cure or resolve the behavior in
question); and (c) there must be a good faith determination of Cause by at least
3/4 of the non-employee outside directors of the Company.
(c) Good Reason and Anticipatory Termination. For purposes of
this Agreement, "Good Reason" shall mean:
(i) Executive's annual salary is reduced below the higher of (A)
the amount in effect on the Effective Date, or (B) the highest amount in
effect at any time thereafter;
(ii) Executive's annual bonus is reduced below the Bonus;
(iii) Executive's duties and responsibilities or the program of
incentive compensation and retirement and general insurance benefits
offered to Executive are materially and adversely diminished in
comparison to the duties and responsibilities or the program of benefits
enjoyed by Executive on the Effective Date;
(iv) Executive is required to be based at a location more than 50
miles from the location where Executive was based and performed services
on the Effective Date; or
(v) failure to provide for the assumption of this Agreement by
any successor entity;
provided, however, that any diminution of duties or responsibilities that occurs
solely as a result of the fact that the Company ceases to be a public company
shall not, in and of itself, constitute Good Reason.
Any event or condition described in clauses (i) through (iv) or a termination
without Cause, either of which occurs prior to a Change of Control but which
Executive reasonably demonstrates (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change of Control (a "Third Party"), or (B) otherwise arose in connection with,
or in anticipation of a Change of Control, shall constitute Good Reason for
purposes of this Agreement, notwithstanding that it occurred prior to a Change
of Control ("Anticipatory Termination").
Executive shall give the Company written notice of any event which he claims is
the basis for Good Reason and the Company shall have 30 days within which to
cure or resolve the behavior in question before Executive can terminate for Good
Reason.
(d) Notice of Termination. Any purported termination of the
Executive's employment with the Company shall be communicated by a Notice of
Termination to the Executive, if such termination is by the Company, or to the
Company, if such termination is by the Executive. For purposes of this
Agreement, "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provisions so indicated. For purposes of this Agreement, no purported
termination of Executive's employment with the Company shall be effective
without such a Notice of Termination having been given.
(e) Dispute Resolution. Disputes arising from the operation of
this Agreement, including, but not necessarily being limited to, the manner of
giving the Notice of Termination, the reasons or cause for the Executive's
termination or the amount of severance compensation due to the Executive
subsequent to the Executive's termination, may be resolved, at the Executive's
discretion, by arbitration; provided, however, that disputes arising under
Section 11 of this Agreement shall not be resolved under this Section 3 (e). In
the event that any such dispute which the Executive elects to be resolved by
arbitration, after notice thereof is given to the other party in writing, is not
able to be resolved by mutual agreement of the parties within sixty (60)
calendar days of the giving of such notice, the Executive and the Company hereby
agree to promptly submit such a dispute to binding arbitration in New York, New
York in accordance with New York law and the rules and procedures of the
American Arbitration Association. During any period in which a dispute is
pending that the Executive elects to be resolved by arbitration, the Executive
shall continue to receive his salary (including any Bonus) and benefits as if
his employment with the Company had continued through the date of the arbiters'
determination, and any such payments or benefits shall not be offset against any
severance, either under this Agreement or otherwise, to which Executive may be
entitled.
4. Compensation Upon Termination After a Change of Control.
If within two (2) years after the Effective Date, the Executive's
employment by the Company shall be terminated in accordance with Section 3 (a)
(the "Termination"), the Executive shall be entitled to the following payments
and benefits:
(a) Severance. As soon as practicable after the Termination, but
in any event no later than 10 business days following such Termination, the
Company shall pay or cause to be paid to the Executive, a lump sum cash amount
equal to three (3) times the sum of (i) the Executive's annual base salary on
the Effective Date (the "Base Salary"), (ii) the Bonus, and (iii) the value of
the perquisites (e.g., car allowance, club dues, etc., including any ordinary
tax gross-ups for perquisites) provided to Executive in respect of the year
prior to the Change of Control. In addition, at the time of the above payment,
the Executive shall be entitled to an additional lump sum cash payment equal to
the sum of (A) Executive's annual salary through the date of termination, (B) a
pro rata portion of the Bonus (calculated through the date of termination), and
(C) an amount, if any, equal to compensation previously deferred (excluding any
qualified plan deferral) and any accrued vacation pay, in each case, in full
satisfaction of Executive's rights thereto.
(b) Additional Benefits. The Executive shall be entitled to
continued medical, dental and life insurance coverage for the Executive and the
Executive's eligible dependents on the same basis as in effect prior to the
Change of Control or the Executive's Termination of employment, whichever is
deemed to provide for more substantial benefits, until the earlier of (A)
thirty-six (36) months (the "Separation Period") after the Executive's
Termination or (B) the commencement of comparable coverage with a subsequent
employer; provided, however, that such continued coverage shall not count
against any continued coverage required by law.
(c) Outplacement. If so requested by the Executive, outplacement
services shall be provided by a professional outplacement provider at a cost to
the Company of not more than 20% of the Executive's Base Salary.
(d) Withholding. Payments and benefits provided pursuant to this
Section 4 shall be subject to any applicable payroll and other taxes required to
be withheld.
5. Certain Additional Payments by the Company:
(a) Anything in this Agreement to the contrary notwithstanding,
if it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment") , would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of the Company, within the meaning of Section
28OG of the Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with respect to such
excise tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax") , then the Executive
shall be entitled to receive an additional payment or payments (a "Gross-Up
Payment") in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b) Subject to the provisions of Section 5 (f) hereof, all
determinations required to be made under this Section 5, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change of Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its determination and detailed supporting calculations to
both the Company and the Executive within 15 calendar days after the Termination
Date, if applicable, and any other such time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any Excise Tax
is payable by the Executive, the Company shall pay the required Gross-Up Payment
to the Executive within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
5(f) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 5(b) hereof.
(d) The federal, state and local income or other tax returns
filed by the Executive and the Company (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the Excise
Tax payable by the Executive. The Executive shall make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated by Sections
5 (b) and (d) hereof shall be borne by the Company. If such fees and expenses
are initially advanced by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as promptly as practicable but no later than 10 business days after the
Executive actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid (in each case, to the extent known by the Executive).
The Executive shall not pay such claim prior to the earlier of (a) the
expiration of the 30-calendar-day period following the date on which he gives
such notice to the Company and (b) the date that any payment of amount with
respect to such claim is due. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with respect
to such claim by an attorney competent in respect of the subject matter
and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Section 5
(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5 (f) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided however, that the Executive may
participate therein at his cost and expense) and may, at its option,
either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay the tax claimed and sue
for a refund, the Company shall advance the amount of such payment to
the Executive on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 5 (f) hereof, the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5 (f) hereof) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(f) hereof,
a determination is made that the Executive is not entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance shall be forgiven and
shall not be required repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be pursuant to this
Section 5.
6. Obligations Absolute; No Mitigation; No Effect On
Other Rights.
(a) The obligations of the Company to make the payment to the
Executive, and to make the arrangements, provided for herein are absolute and
unconditional and may not be reduced by any circumstances, including without
limitation any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or any third party at any time.
(b) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
(c) The provisions of this Agreement, and any payment provided
for herein, shall not supersede or in any way limit the rights, benefits, duties
or obligations which the Executive may now or in the future have under any
benefit, incentive or other plan or arrangement of the Company or any other
agreement with the Company.
7. Not an Employment Agreement. Subject to the terms of this or
any other agreement or arrangement between the Company and the Executive that
may then be in effect, nothing herein shall prevent the Company from terminating
the Executive's employment.
8. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all or substantially all of the Company's business or
assets which executes and delivers an agreement provided for in this Section
8(a) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law, including any parent or subsidiary of such a
successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement or contemplated hereby shall be in
writing and shall be deemed to have been duly given when personally delivered or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
101 Merritt Seven, 7th Floor
Norwalk, CT 06851
Attention: Frank T. MacInnis, Chairman of the Board
and in the case of the Executive, to the Executive at the most current address
shown on the Executive's employment records. Either party may designate a
different address by giving notice of change of address in the manner provided
above, except that notices of change of address shall be effective only upon
receipt.
10. Expenses. In addition to all other amounts payable to the
Executive under this Agreement, the Company shall pay or reimburse the Executive
for legal fees (including without limitation, any and all court costs and
attorneys' fees and expenses) , incurred by the Executive in connection with or
as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; unless, in the case of an action brought by the Executive, it is
determined by an arbitrator or by a court of competent jurisdiction that such
action was frivolous and was not brought in good faith.
11. Confidentiality. The Executive shall retain in confidence any
and all confidential information concerning the Company and its respective
business which is now known or hereafter becomes known to the Executive, except
as otherwise required by law and except information (i) ascertainable or
obtained from public information, (ii) received by the Executive at any time
after the Executive's employment by the Company shall have terminated, from a
third party not employed by or otherwise affiliated with the Company or (iii)
which is or becomes known to the public by any means other than a breach of this
Section 11. Upon any termination of Executive's employment, the Executive shall
not take or keep any proprietary information or documentation belonging to the
Company.
12. Miscellaneous. No provision of this Agreement may be amended,
altered, modified, waived or discharged unless such amendment, alteration,
modification, waiver or discharge is agreed to in writing signed by the
Executive and such officer of the Company as shall be specifically designated by
the Committee or by the Board. No waiver by either party, at any time, of any
breach by the other party of, or of compliance by the other party with, any
condition or provision of this Agreement to be performed or complied with by
such other party shall be deemed a waiver of any similar or dissimilar provision
or condition of this Agreement or any other breach of or failure to comply with
the same condition or provision at the same time or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without giving effect to its conflict of laws rules. Any
action brought by the Executive or the Company shall be brought and maintained
in a court of competent jurisdiction in the State of New York.
13. Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
hereto waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
14. Revocation. This Agreement may be revoked at any time prior
to the Effective Date, without prior notice to Executive, upon the resolution of
the Board that the continued existence of this Agreement and of similar
agreements with other employees of the Company is no longer in the best
interests of the Company.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
16. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior oral or written agreements, commitments or
understanding with respect to the matters provided for herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EMCOR GROUP, INC.
By:______________________________
Frank T. MacInnis
Chairman of the Board and
Chief Executive Officer
_________________________________
Executive: LEICLE E. CHESSER
Exhibit 10(e)
CONTINUITY AGREEMENT
This Agreement ("Agreement") is dated as of June 22, 1998, by and
between the EMCOR GROUP, INC., a Delaware corporation (the "Company"), and
THOMAS D. CUNNINGHAM (the "Executive").
WHEREAS, the Company's Board of Directors (the "Board") considers
the continued services of key executives of the Company to be in the best
interests of the Company and its stockholders; and
WHEREAS, the Board desires to assure, and has determined that it
is appropriate and in the best interests of the Company and its stockholders to
reinforce and encourage the continued attention and dedication of key executives
of the Company to their duties of employment without personal distraction or
conflict of interest in circumstances arising from the possibility or occurrence
of a change of control of the Company; and
WHEREAS, the Board has authorized the Company to enter into
continuity agreements with those key executives of the Company who are
designated by the Compensation and Personnel Committee of the Board of Directors
("Committee"), such agreements to set forth the severance compensation which the
Company agrees under certain circumstances to pay such executives; and
WHEREAS, the Executive is a key executive of the Company and has
been designated by the Committee as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term of Agreement. On the date on which a Change of Control
occurs (the "Effective Date"), this Agreement shall become effective. If
Executive ceases to be employed by reason of an Anticipatory Termination (as
defined in Section 3 (c)) prior to the Effective Date, then Executive shall
receive the severance benefits provided herein and the Effective Date of this
Agreement shall be deemed to be the date immediately preceding the occurrence of
an Anticipatory Termination. If Executive ceases to be employed for any reason
other than an Anticipatory Termination prior to a Change of Control, this
Agreement shall terminate and have no effect and Executive shall receive such
severance payments as are provided in any existing agreement between the
Executive and the Company.
If a Change of Control occurs, the Executive's employment shall be continued
hereunder for the period (the "Employment Period") commencing on the Effective
Date and ending on the second anniversary of the date on which a Change of
Control occurs, subject to the termination of Executive's employment as
described hereinafter. Any existing employment agreement between the Executive
and the Company shall continue to be effective following the Change of Control,
but severance amounts under this Agreement shall be reduced by amounts payable
under any such employment agreement.
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 stockholders 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
stockholders 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).
2. Employment following Change of Control. Executive shall have
at least the same titles and responsibilities as those in effect immediately
prior to the Change of Control. Executive shall receive an annual base salary
which is not less than that in effect immediately prior to the Change of Control
and the Company shall review the salary annually with a view to increasing it;
provided any such increase shall be in the sole discretion of the Board. Once
increased, base salary can not be decreased. The Executive shall also be paid an
annual bonus (the "Bonus") which shall be no less than the higher of (i) the
bonus paid or payable in respect of the year prior to the Change of Control, or
(ii) the average of the annual bonuses paid or payable in respect of the three
years prior to the Change of Control. In addition, the Executive shall be
provided with incentive compensation, pension, general insurance and fringe
benefits and perquisites that are commensurate with the benefits and perquisites
provided to Executive immediately prior to the Change of Control or, if more
favorable to Executive, at the level made available to other similarly situated
executive officers of the Company after the Change of Control. Upon the Change
of Control, the Company shall also cause Executive's outstanding options to
become immediately exercisable.
3. Termination Following Change of Control.
(a) The Executive shall be entitled to the severance benefits
provided in Section 4 hereof in the event Executive's employment is terminated
(A) within two years following a Change of Control (i) by the Company without
Cause, (ii) by Executive for Good Reason, or (iii) for any reason during the
30-day period immediately following the first anniversary of the Change of
Control or (B) prior to a Change of Control, as a result of an Anticipatory
Termination.
Notwithstanding the foregoing, except as set forth in item (iii) above,
Executive shall not be entitled to severance benefits in the event of a
termination of employment on account of death, Disability or Retirement, but
excluding any such termination which is coincident with or subsequent to a
termination which would otherwise give rise to severance benefits. For purposes
of this Agreement:
(i) "Disability" shall mean an illness or injury preventing
Executive from performing his duties, as they existed immediately prior
to the illness or injury, on a full time basis for 180 consecutive
business days.
(ii) "Retirement" shall mean a termination of employment by
Executive pursuant to late, normal or early retirement under a pension
plan sponsored by the Company, as defined in such plan.
(b) Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to
Executive by the Board or an officer of the Company which specifically
identifies the manner in which the Board or the officer believes that
Executive has not substantially performed Executive's duties; or
(ii) (A) the conviction of, or plea of guilty or nolo contendere
to, a felony or (B) the willful engaging by Executive in gross
misconduct which is materially and demonstrably injurious to the
Company.
In each case above, for a termination of employment to be for Cause: (a) the
Executive must be provided with a Notice of Termination (as described in Section
3 (d)); (b) the Executive must be provided with an opportunity to be heard by
the Board no earlier than 30 days following the Notice of Termination (during
which notice period Executive has failed to cure or resolve the behavior in
question); and (c) there must be a good faith determination of Cause by at least
3/4 of the non-employee outside directors of the Company.
(c) Good Reason and Anticipatory Termination. For purposes of
this Agreement, "Good Reason" shall mean:
(i) Executive's annual salary is reduced below the higher of (A)
the amount in effect on the Effective Date, or (B) the highest amount in
effect at any time thereafter;
(ii) Executive's annual bonus is reduced below the Bonus;
(iii) Executive's duties and responsibilities or the program of
incentive compensation and retirement and general insurance benefits
offered to Executive are materially and adversely diminished in
comparison to the duties and responsibilities or the program of benefits
enjoyed by Executive on the Effective Date;
(iv) Executive is required to be based at a location more than 50
miles from the location where Executive was based and performed services
on the Effective Date; or
(v) failure to provide for the assumption of this Agreement by
any successor entity;
provided, however, that any diminution of duties or responsibilities that occurs
solely as a result of the fact that the Company ceases to be a public company
shall not, in and of itself, constitute Good Reason.
Any event or condition described in clauses (i) through (iv) or a termination
without Cause, either of which occurs prior to a Change of Control but which
Executive reasonably demonstrates (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change of Control (a "Third Party"), or (B) otherwise arose in connection with,
or in anticipation of a Change of Control, shall constitute Good Reason for
purposes of this Agreement, notwithstanding that it occurred prior to a Change
of Control ("Anticipatory Termination").
Executive shall give the Company written notice of any event which he claims is
the basis for Good Reason and the Company shall have 30 days within which to
cure or resolve the behavior in question before Executive can terminate for Good
Reason.
(d) Notice of Termination. Any purported termination of the
Executive's employment with the Company shall be communicated by a Notice of
Termination to the Executive, if such termination is by the Company, or to the
Company, if such termination is by the Executive. For purposes of this
Agreement, "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provisions so indicated. For purposes of this Agreement, no purported
termination of Executive's employment with the Company shall be effective
without such a Notice of Termination having been given.
(e) Dispute Resolution. Disputes arising from the operation of
this Agreement, including, but not necessarily being limited to, the manner of
giving the Notice of Termination, the reasons or cause for the Executive's
termination or the amount of severance compensation due to the Executive
subsequent to the Executive's termination, may be resolved, at the Executive's
discretion, by arbitration; provided, however, that disputes arising under
Section 11 of this Agreement shall not be resolved under this Section 3 (e). In
the event that any such dispute which the Executive elects to be resolved by
arbitration, after notice thereof is given to the other party in writing, is not
able to be resolved by mutual agreement of the parties within sixty (60)
calendar days of the giving of such notice, the Executive and the Company hereby
agree to promptly submit such a dispute to binding arbitration in New York, New
York in accordance with New York law and the rules and procedures of the
American Arbitration Association. During any period in which a dispute is
pending that the Executive elects to be resolved by arbitration, the Executive
shall continue to receive his salary (including any Bonus) and benefits as if
his employment with the Company had continued through the date of the arbiters'
determination, and any such payments or benefits shall not be offset against any
severance, either under this Agreement or otherwise, to which Executive may be
entitled.
4. Compensation Upon Termination After a Change of Control.
If within two (2) years after the Effective Date, the Executive's
employment by the Company shall be terminated in accordance with Section 3 (a)
(the "Termination"), the Executive shall be entitled to the following payments
and benefits:
(a) Severance. As soon as practicable after the Termination, but
in any event no later than 10 business days following such Termination, the
Company shall pay or cause to be paid to the Executive, a lump sum cash amount
equal to three (3) times the sum of (i) the Executive's annual base salary on
the Effective Date (the "Base Salary"), (ii) the Bonus, and (iii) the value of
the perquisites (e.g., car allowance, club dues, etc., including any ordinary
tax gross-ups for perquisites) provided to Executive in respect of the year
prior to the Change of Control. In addition, at the time of the above payment,
the Executive shall be entitled to an additional lump sum cash payment equal to
the sum of (A) Executive's annual salary through the date of termination, (B) a
pro rata portion of the Bonus (calculated through the date of termination), and
(C) an amount, if any, equal to compensation previously deferred (excluding any
qualified plan deferral) and any accrued vacation pay, in each case, in full
satisfaction of Executive's rights thereto.
(b) Additional Benefits. The Executive shall be entitled to
continued medical, dental and life insurance coverage for the Executive and the
Executive's eligible dependents on the same basis as in effect prior to the
Change of Control or the Executive's Termination of employment, whichever is
deemed to provide for more substantial benefits, until the earlier of (A)
thirty-six (36) months (the "Separation Period") after the Executive's
Termination or (B) the commencement of comparable coverage with a subsequent
employer; provided, however, that such continued coverage shall not count
against any continued coverage required by law.
(c) Outplacement. If so requested by the Executive, outplacement
services shall be provided by a professional outplacement provider at a cost to
the Company of not more than 20% of the Executive's Base Salary.
(d) Withholding. Payments and benefits provided pursuant to this
Section 4 shall be subject to any applicable payroll and other taxes required to
be withheld.
5. Certain Additional Payments by the Company:
(a) Anything in this Agreement to the contrary notwithstanding,
if it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment") , would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of the Company, within the meaning of Section
28OG of the Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with respect to such
excise tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax") , then the Executive
shall be entitled to receive an additional payment or payments (a "Gross-Up
Payment") in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b) Subject to the provisions of Section 5 (f) hereof, all
determinations required to be made under this Section 5, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change of Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its determination and detailed supporting calculations to
both the Company and the Executive within 15 calendar days after the Termination
Date, if applicable, and any other such time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any Excise Tax
is payable by the Executive, the Company shall pay the required Gross-Up Payment
to the Executive within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
5(f) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 5(b) hereof.
(d) The federal, state and local income or other tax returns
filed by the Executive and the Company (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the Excise
Tax payable by the Executive. The Executive shall make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated by Sections
5 (b) and (d) hereof shall be borne by the Company. If such fees and expenses
are initially advanced by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as promptly as practicable but no later than 10 business days after the
Executive actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid (in each case, to the extent known by the Executive).
The Executive shall not pay such claim prior to the earlier of (a) the
expiration of the 30-calendar-day period following the date on which he gives
such notice to the Company and (b) the date that any payment of amount with
respect to such claim is due. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with respect
to such claim by an attorney competent in respect of the subject matter
and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Section 5
(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5 (f) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided however, that the Executive may
participate therein at his cost and expense) and may, at its option,
either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay the tax claimed and sue
for a refund, the Company shall advance the amount of such payment to
the Executive on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 5 (f) hereof, the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5 (f) hereof) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(f) hereof,
a determination is made that the Executive is not entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance shall be forgiven and
shall not be required repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be pursuant to this
Section 5.
6. Obligations Absolute; No Mitigation; No Effect On
Other Rights.
(a) The obligations of the Company to make the payment to the
Executive, and to make the arrangements, provided for herein are absolute and
unconditional and may not be reduced by any circumstances, including without
limitation any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or any third party at any time.
(b) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
(c) The provisions of this Agreement, and any payment provided
for herein, shall not supersede or in any way limit the rights, benefits, duties
or obligations which the Executive may now or in the future have under any
benefit, incentive or other plan or arrangement of the Company or any other
agreement with the Company.
7. Not an Employment Agreement. Subject to the terms of this or
any other agreement or arrangement between the Company and the Executive that
may then be in effect, nothing herein shall prevent the Company from terminating
the Executive's employment.
8. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all or substantially all of the Company's business or
assets which executes and delivers an agreement provided for in this Section
8(a) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law, including any parent or subsidiary of such a
successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement or contemplated hereby shall be in
writing and shall be deemed to have been duly given when personally delivered or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
101 Merritt Seven, 7th Floor
Norwalk, CT 06851
Attention: Frank T. MacInnis, Chairman of the Board
and in the case of the Executive, to the Executive at the most current address
shown on the Executive's employment records. Either party may designate a
different address by giving notice of change of address in the manner provided
above, except that notices of change of address shall be effective only upon
receipt.
10. Expenses. In addition to all other amounts payable to the
Executive under this Agreement, the Company shall pay or reimburse the Executive
for legal fees (including without limitation, any and all court costs and
attorneys' fees and expenses) , incurred by the Executive in connection with or
as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; unless, in the case of an action brought by the Executive, it is
determined by an arbitrator or by a court of competent jurisdiction that such
action was frivolous and was not brought in good faith.
11. Confidentiality. The Executive shall retain in confidence any
and all confidential information concerning the Company and its respective
business which is now known or hereafter becomes known to the Executive, except
as otherwise required by law and except information (i) ascertainable or
obtained from public information, (ii) received by the Executive at any time
after the Executive's employment by the Company shall have terminated, from a
third party not employed by or otherwise affiliated with the Company or (iii)
which is or becomes known to the public by any means other than a breach of this
Section 11. Upon any termination of Executive's employment, the Executive shall
not take or keep any proprietary information or documentation belonging to the
Company.
12. Miscellaneous. No provision of this Agreement may be amended,
altered, modified, waived or discharged unless such amendment, alteration,
modification, waiver or discharge is agreed to in writing signed by the
Executive and such officer of the Company as shall be specifically designated by
the Committee or by the Board. No waiver by either party, at any time, of any
breach by the other party of, or of compliance by the other party with, any
condition or provision of this Agreement to be performed or complied with by
such other party shall be deemed a waiver of any similar or dissimilar provision
or condition of this Agreement or any other breach of or failure to comply with
the same condition or provision at the same time or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without giving effect to its conflict of laws rules. Any
action brought by the Executive or the Company shall be brought and maintained
in a court of competent jurisdiction in the State of New York.
13. Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
hereto waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
14. Revocation. This Agreement may be revoked at any time prior
to the Effective Date, without prior notice to Executive, upon the resolution of
the Board that the continued existence of this Agreement and of similar
agreements with other employees of the Company is no longer in the best
interests of the Company.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
16. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior oral or written agreements, commitments or
understanding with respect to the matters provided for herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EMCOR GROUP, INC.
By:________________________________
Frank T. MacInnis
Chairman of the Board and
Chief Executive Officer
___________________________________
Executive: THOMAS D. CUNNINGHAM
Exhibit 10(f)
CONTINUITY AGREEMENT
This Agreement ("Agreement") is dated as of June 22, 1998, by and
between the EMCOR GROUP, INC., a Delaware corporation (the "Company"), and R.
KEVIN MATZ (the "Executive").
WHEREAS, the Company's Board of Directors (the "Board") considers
the continued services of key executives of the Company to be in the best
interests of the Company and its stockholders; and
WHEREAS, the Board desires to assure, and has determined that it
is appropriate and in the best interests of the Company and its stockholders to
reinforce and encourage the continued attention and dedication of key executives
of the Company to their duties of employment without personal distraction or
conflict of interest in circumstances arising from the possibility or occurrence
of a change of control of the Company; and
WHEREAS, the Board has authorized the Company to enter into
continuity agreements with those key executives of the Company who are
designated by the Compensation and Personnel Committee of the Board of Directors
("Committee"), such agreements to set forth the severance compensation which the
Company agrees under certain circumstances to pay such executives; and
WHEREAS, the Executive is a key executive of the Company and has
been designated by the Committee as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term of Agreement. On the date on which a Change of Control
occurs (the "Effective Date"), this Agreement shall become effective. If
Executive ceases to be employed by reason of an Anticipatory Termination (as
defined in Section 3 (c)) prior to the Effective Date, then Executive shall
receive the severance benefits provided herein and the Effective Date of this
Agreement shall be deemed to be the date immediately preceding the occurrence of
an Anticipatory Termination. If Executive ceases to be employed for any reason
other than an Anticipatory Termination prior to a Change of Control, this
Agreement shall terminate and have no effect and Executive shall receive such
severance payments as are provided in any existing agreement between the
Executive and the Company.
If a Change of Control occurs, the Executive's employment shall be continued
hereunder for the period (the "Employment Period") commencing on the Effective
Date and ending on the second anniversary of the date on which a Change of
Control occurs, subject to the termination of Executive's employment as
described hereinafter. Any existing employment agreement between the Executive
and the Company shall continue to be effective following the Change of Control,
but severance amounts under this Agreement shall be reduced by amounts payable
under any such employment agreement.
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 stockholders 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
stockholders 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).
2. Employment following Change of Control. Executive shall have
at least the same titles and responsibilities as those in effect immediately
prior to the Change of Control. Executive shall receive an annual base salary
which is not less than that in effect immediately prior to the Change of Control
and the Company shall review the salary annually with a view to increasing it;
provided any such increase shall be in the sole discretion of the Board. Once
increased, base salary can not be decreased. The Executive shall also be paid an
annual bonus (the "Bonus") which shall be no less than the higher of (i) the
bonus paid or payable in respect of the year prior to the Change of Control, or
(ii) the average of the annual bonuses paid or payable in respect of the three
years prior to the Change of Control. In addition, the Executive shall be
provided with incentive compensation, pension, general insurance and fringe
benefits and perquisites that are commensurate with the benefits and perquisites
provided to Executive immediately prior to the Change of Control or, if more
favorable to Executive, at the level made available to other similarly situated
executive officers of the Company after the Change of Control. Upon the Change
of Control, the Company shall also cause Executive's outstanding options to
become immediately exercisable.
3. Termination Following Change of Control.
(a) The Executive shall be entitled to the severance benefits
provided in Section 4 hereof in the event Executive's employment is terminated
(A) within two years following a Change of Control (i) by the Company without
Cause, (ii) by Executive for Good Reason, or (iii) for any reason during the
30-day period immediately following the first anniversary of the Change of
Control or (B) prior to a Change of Control, as a result of an Anticipatory
Termination.
Notwithstanding the foregoing, except as set forth in item (iii) above,
Executive shall not be entitled to severance benefits in the event of a
termination of employment on account of death, Disability or Retirement, but
excluding any such termination which is coincident with or subsequent to a
termination which would otherwise give rise to severance benefits. For purposes
of this Agreement:
(i) "Disability" shall mean an illness or injury preventing
Executive from performing his duties, as they existed immediately prior
to the illness or injury, on a full time basis for 180 consecutive
business days.
(ii) "Retirement" shall mean a termination of employment by
Executive pursuant to late, normal or early retirement under a pension
plan sponsored by the Company, as defined in such plan.
(b) Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to
Executive by the Board or an officer of the Company which specifically
identifies the manner in which the Board or the officer believes that
Executive has not substantially performed Executive's duties; or
(ii) (A) the conviction of, or plea of guilty or nolo contendere
to, a felony or (B) the willful engaging by Executive in gross
misconduct which is materially and demonstrably injurious to the
Company.
In each case above, for a termination of employment to be for Cause: (a) the
Executive must be provided with a Notice of Termination (as described in Section
3 (d)); (b) the Executive must be provided with an opportunity to be heard by
the Board no earlier than 30 days following the Notice of Termination (during
which notice period Executive has failed to cure or resolve the behavior in
question); and (c) there must be a good faith determination of Cause by at least
3/4 of the non-employee outside directors of the Company.
(c) Good Reason and Anticipatory Termination. For purposes of
this Agreement, "Good Reason" shall mean:
(i) Executive's annual salary is reduced below the higher of (A)
the amount in effect on the Effective Date, or (B) the highest amount in
effect at any time thereafter;
(ii) Executive's annual bonus is reduced below the Bonus;
(iii) Executive's duties and responsibilities or the program of
incentive compensation and retirement and general insurance benefits
offered to Executive are materially and adversely diminished in
comparison to the duties and responsibilities or the program of benefits
enjoyed by Executive on the Effective Date;
(iv) Executive is required to be based at a location more than 50
miles from the location where Executive was based and performed services
on the Effective Date; or
(v) failure to provide for the assumption of this Agreement by
any successor entity;
provided, however, that any diminution of duties or responsibilities that occurs
solely as a result of the fact that the Company ceases to be a public company
shall not, in and of itself, constitute Good Reason.
Any event or condition described in clauses (i) through (iv) or a termination
without Cause, either of which occurs prior to a Change of Control but which
Executive reasonably demonstrates (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change of Control (a "Third Party"), or (B) otherwise arose in connection with,
or in anticipation of a Change of Control, shall constitute Good Reason for
purposes of this Agreement, notwithstanding that it occurred prior to a Change
of Control ("Anticipatory Termination").
Executive shall give the Company written notice of any event which he claims is
the basis for Good Reason and the Company shall have 30 days within which to
cure or resolve the behavior in question before Executive can terminate for Good
Reason.
(d) Notice of Termination. Any purported termination of the
Executive's employment with the Company shall be communicated by a Notice of
Termination to the Executive, if such termination is by the Company, or to the
Company, if such termination is by the Executive. For purposes of this
Agreement, "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provisions so indicated. For purposes of this Agreement, no purported
termination of Executive's employment with the Company shall be effective
without such a Notice of Termination having been given.
(e) Dispute Resolution. Disputes arising from the operation of
this Agreement, including, but not necessarily being limited to, the manner of
giving the Notice of Termination, the reasons or cause for the Executive's
termination or the amount of severance compensation due to the Executive
subsequent to the Executive's termination, may be resolved, at the Executive's
discretion, by arbitration; provided, however, that disputes arising under
Section 11 of this Agreement shall not be resolved under this Section 3 (e). In
the event that any such dispute which the Executive elects to be resolved by
arbitration, after notice thereof is given to the other party in writing, is not
able to be resolved by mutual agreement of the parties within sixty (60)
calendar days of the giving of such notice, the Executive and the Company hereby
agree to promptly submit such a dispute to binding arbitration in New York, New
York in accordance with New York law and the rules and procedures of the
American Arbitration Association. During any period in which a dispute is
pending that the Executive elects to be resolved by arbitration, the Executive
shall continue to receive his salary (including any Bonus) and benefits as if
his employment with the Company had continued through the date of the arbiters'
determination, and any such payments or benefits shall not be offset against any
severance, either under this Agreement or otherwise, to which Executive may be
entitled.
4. Compensation Upon Termination After a Change of Control.
If within two (2) years after the Effective Date, the Executive's
employment by the Company shall be terminated in accordance with Section 3 (a)
(the "Termination"), the Executive shall be entitled to the following payments
and benefits:
(a) Severance. As soon as practicable after the Termination, but
in any event no later than 10 business days following such Termination, the
Company shall pay or cause to be paid to the Executive, a lump sum cash amount
equal to two and one-quarter (2-1/4) times the sum of (i) the Executive's annual
base salary on the Effective Date (the "Base Salary"), (ii) the Bonus, and (iii)
the value of the perquisites (e.g., car allowance, club dues, etc., including
any ordinary tax gross-ups for perquisites) provided to Executive in respect of
the year prior to the Change of Control. In addition, at the time of the above
payment, the Executive shall be entitled to an additional lump sum cash payment
equal to the sum of (A) Executive's annual salary through the date of
termination, (B) a pro rata portion of the Bonus (calculated through the date of
termination), and (C) an amount, if any, equal to compensation previously
deferred (excluding any qualified plan deferral) and any accrued vacation pay,
in each case, in full satisfaction of Executive's rights thereto.
(b) Additional Benefits. The Executive shall be entitled to
continued medical, dental and life insurance coverage for the Executive and the
Executive's eligible dependents on the same basis as in effect prior to the
Change of Control or the Executive's Termination of employment, whichever is
deemed to provide for more substantial benefits, until the earlier of (A)
thirty-six (36) months (the "Separation Period") after the Executive's
Termination or (B) the commencement of comparable coverage with a subsequent
employer; provided, however, that such continued coverage shall not count
against any continued coverage required by law.
(c) Outplacement. If so requested by the Executive, outplacement
services shall be provided by a professional outplacement provider at a cost to
the Company of not more than 20% of the Executive's Base Salary.
(d) Withholding. Payments and benefits provided pursuant to this
Section 4 shall be subject to any applicable payroll and other taxes required to
be withheld.
5. Certain Additional Payments by the Company:
(a) Anything in this Agreement to the contrary notwithstanding,
if it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment") , would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of the Company, within the meaning of Section
28OG of the Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with respect to such
excise tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax") , then the Executive
shall be entitled to receive an additional payment or payments (a "Gross-Up
Payment") in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b) Subject to the provisions of Section 5 (f) hereof, all
determinations required to be made under this Section 5, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change of Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its determination and detailed supporting calculations to
both the Company and the Executive within 15 calendar days after the Termination
Date, if applicable, and any other such time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any Excise Tax
is payable by the Executive, the Company shall pay the required Gross-Up Payment
to the Executive within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
5(f) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 5(b) hereof.
(d) The federal, state and local income or other tax returns
filed by the Executive and the Company (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the Excise
Tax payable by the Executive. The Executive shall make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated by Sections
5 (b) and (d) hereof shall be borne by the Company. If such fees and expenses
are initially advanced by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as promptly as practicable but no later than 10 business days after the
Executive actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid (in each case, to the extent known by the Executive).
The Executive shall not pay such claim prior to the earlier of (a) the
expiration of the 30-calendar-day period following the date on which he gives
such notice to the Company and (b) the date that any payment of amount with
respect to such claim is due. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with respect
to such claim by an attorney competent in respect of the subject matter
and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Section 5
(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5 (f) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided however, that the Executive may
participate therein at his cost and expense) and may, at its option,
either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay the tax claimed and sue
for a refund, the Company shall advance the amount of such payment to
the Executive on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 5 (f) hereof, the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5 (f) hereof) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(f) hereof,
a determination is made that the Executive is not entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance shall be forgiven and
shall not be required repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be pursuant to this
Section 5.
6. Obligations Absolute; No Mitigation; No Effect On
Other Rights.
(a) The obligations of the Company to make the payment to the
Executive, and to make the arrangements, provided for herein are absolute and
unconditional and may not be reduced by any circumstances, including without
limitation any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or any third party at any time.
(b) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
(c) The provisions of this Agreement, and any payment provided
for herein, shall not supersede or in any way limit the rights, benefits, duties
or obligations which the Executive may now or in the future have under any
benefit, incentive or other plan or arrangement of the Company or any other
agreement with the Company.
7. Not an Employment Agreement. Subject to the terms of this or
any other agreement or arrangement between the Company and the Executive that
may then be in effect, nothing herein shall prevent the Company from terminating
the Executive's employment.
8. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all or substantially all of the Company's business or
assets which executes and delivers an agreement provided for in this Section
8(a) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law, including any parent or subsidiary of such a
successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement or contemplated hereby shall be in
writing and shall be deemed to have been duly given when personally delivered or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
101 Merritt Seven, 7th Floor
Norwalk, CT 06851
Attention: Frank T. MacInnis, Chairman of the Board
and in the case of the Executive, to the Executive at the most current address
shown on the Executive's employment records. Either party may designate a
different address by giving notice of change of address in the manner provided
above, except that notices of change of address shall be effective only upon
receipt.
10. Expenses. In addition to all other amounts payable to the
Executive under this Agreement, the Company shall pay or reimburse the Executive
for legal fees (including without limitation, any and all court costs and
attorneys' fees and expenses) , incurred by the Executive in connection with or
as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; unless, in the case of an action brought by the Executive, it is
determined by an arbitrator or by a court of competent jurisdiction that such
action was frivolous and was not brought in good faith.
11. Confidentiality. The Executive shall retain in confidence any
and all confidential information concerning the Company and its respective
business which is now known or hereafter becomes known to the Executive, except
as otherwise required by law and except information (i) ascertainable or
obtained from public information, (ii) received by the Executive at any time
after the Executive's employment by the Company shall have terminated, from a
third party not employed by or otherwise affiliated with the Company or (iii)
which is or becomes known to the public by any means other than a breach of this
Section 11. Upon any termination of Executive's employment, the Executive shall
not take or keep any proprietary information or documentation belonging to the
Company.
12. Miscellaneous. No provision of this Agreement may be amended,
altered, modified, waived or discharged unless such amendment, alteration,
modification, waiver or discharge is agreed to in writing signed by the
Executive and such officer of the Company as shall be specifically designated by
the Committee or by the Board. No waiver by either party, at any time, of any
breach by the other party of, or of compliance by the other party with, any
condition or provision of this Agreement to be performed or complied with by
such other party shall be deemed a waiver of any similar or dissimilar provision
or condition of this Agreement or any other breach of or failure to comply with
the same condition or provision at the same time or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without giving effect to its conflict of laws rules. Any
action brought by the Executive or the Company shall be brought and maintained
in a court of competent jurisdiction in the State of New York.
13. Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
hereto waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
14. Revocation. This Agreement may be revoked at any time prior
to the Effective Date, without prior notice to Executive, upon the resolution of
the Board that the continued existence of this Agreement and of similar
agreements with other employees of the Company is no longer in the best
interests of the Company.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
16. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior oral or written agreements, commitments or
understanding with respect to the matters provided for herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EMCOR GROUP, INC.
By:________________________________
Frank T. MacInnis
Chairman of the Board and
Chief Executive Officer
____________________________________
Executive: R. Kevin Matz
Exhibit 10(g)
CONTINUITY AGREEMENT
This Agreement ("Agreement") is dated as of June 22, 1998, by and
between the EMCOR GROUP, INC., a Delaware corporation (the "Company"), and MARK
A. POMPA (the "Executive").
WHEREAS, the Company's Board of Directors (the "Board") considers
the continued services of key executives of the Company to be in the best
interests of the Company and its stockholders; and
WHEREAS, the Board desires to assure, and has determined that it
is appropriate and in the best interests of the Company and its stockholders to
reinforce and encourage the continued attention and dedication of key executives
of the Company to their duties of employment without personal distraction or
conflict of interest in circumstances arising from the possibility or occurrence
of a change of control of the Company; and
WHEREAS, the Board has authorized the Company to enter into
continuity agreements with those key executives of the Company who are
designated by the Compensation and Personnel Committee of the Board of Directors
("Committee"), such agreements to set forth the severance compensation which the
Company agrees under certain circumstances to pay such executives; and
WHEREAS, the Executive is a key executive of the Company and has
been designated by the Committee as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term of Agreement. On the date on which a Change of Control
occurs (the "Effective Date"), this Agreement shall become effective. If
Executive ceases to be employed by reason of an Anticipatory Termination (as
defined in Section 3 (c)) prior to the Effective Date, then Executive shall
receive the severance benefits provided herein and the Effective Date of this
Agreement shall be deemed to be the date immediately preceding the occurrence of
an Anticipatory Termination. If Executive ceases to be employed for any reason
other than an Anticipatory Termination prior to a Change of Control, this
Agreement shall terminate and have no effect and Executive shall receive such
severance payments as are provided in any existing agreement between the
Executive and the Company.
If a Change of Control occurs, the Executive's employment shall be continued
hereunder for the period (the "Employment Period") commencing on the Effective
Date and ending on the second anniversary of the date on which a Change of
Control occurs, subject to the termination of Executive's employment as
described hereinafter. Any existing employment agreement between the Executive
and the Company shall continue to be effective following the Change of Control,
but severance amounts under this Agreement shall be reduced by amounts payable
under any such employment agreement.
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 stockholders 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
stockholders 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).
2. Employment following Change of Control. Executive shall have
at least the same titles and responsibilities as those in effect immediately
prior to the Change of Control. Executive shall receive an annual base salary
which is not less than that in effect immediately prior to the Change of Control
and the Company shall review the salary annually with a view to increasing it;
provided any such increase shall be in the sole discretion of the Board. Once
increased, base salary can not be decreased. The Executive shall also be paid an
annual bonus (the "Bonus") which shall be no less than the higher of (i) the
bonus paid or payable in respect of the year prior to the Change of Control, or
(ii) the average of the annual bonuses paid or payable in respect of the three
years prior to the Change of Control. In addition, the Executive shall be
provided with incentive compensation, pension, general insurance and fringe
benefits and perquisites that are commensurate with the benefits and perquisites
provided to Executive immediately prior to the Change of Control or, if more
favorable to Executive, at the level made available to other similarly situated
executive officers of the Company after the Change of Control. Upon the Change
of Control, the Company shall also cause Executive's outstanding options to
become immediately exercisable.
3. Termination Following Change of Control.
(a) The Executive shall be entitled to the severance benefits
provided in Section 4 hereof in the event Executive's employment is terminated
(A) within two years following a Change of Control (i) by the Company without
Cause, (ii) by Executive for Good Reason, or (iii) for any reason during the
30-day period immediately following the first anniversary of the Change of
Control or (B) prior to a Change of Control, as a result of an Anticipatory
Termination.
Notwithstanding the foregoing, except as set forth in item (iii) above,
Executive shall not be entitled to severance benefits in the event of a
termination of employment on account of death, Disability or Retirement, but
excluding any such termination which is coincident with or subsequent to a
termination which would otherwise give rise to severance benefits. For purposes
of this Agreement:
(i) "Disability" shall mean an illness or injury preventing
Executive from performing his duties, as they existed immediately prior
to the illness or injury, on a full time basis for 180 consecutive
business days.
(ii) "Retirement" shall mean a termination of employment by
Executive pursuant to late, normal or early retirement under a pension
plan sponsored by the Company, as defined in such plan.
(b) Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to
Executive by the Board or an officer of the Company which specifically
identifies the manner in which the Board or the officer believes that
Executive has not substantially performed Executive's duties; or
(ii) (A) the conviction of, or plea of guilty or nolo contendere
to, a felony or (B) the willful engaging by Executive in gross
misconduct which is materially and demonstrably injurious to the
Company.
In each case above, for a termination of employment to be for Cause: (a) the
Executive must be provided with a Notice of Termination (as described in Section
3 (d)); (b) the Executive must be provided with an opportunity to be heard by
the Board no earlier than 30 days following the Notice of Termination (during
which notice period Executive has failed to cure or resolve the behavior in
question); and (c) there must be a good faith determination of Cause by at least
3/4 of the non-employee outside directors of the Company.
(c) Good Reason and Anticipatory Termination. For purposes of
this Agreement, "Good Reason" shall mean:
(i) Executive's annual salary is reduced below the higher of (A)
the amount in effect on the Effective Date, or (B) the highest amount in
effect at any time thereafter;
(ii) Executive's annual bonus is reduced below the Bonus;
(iii) Executive's duties and responsibilities or the program of
incentive compensation and retirement and general insurance benefits
offered to Executive are materially and adversely diminished in
comparison to the duties and responsibilities or the program of benefits
enjoyed by Executive on the Effective Date;
(iv) Executive is required to be based at a location more than 50
miles from the location where Executive was based and performed services
on the Effective Date; or
(v) failure to provide for the assumption of this Agreement by
any successor entity;
provided, however, that any diminution of duties or responsibilities that occurs
solely as a result of the fact that the Company ceases to be a public company
shall not, in and of itself, constitute Good Reason.
Any event or condition described in clauses (i) through (iv) or a termination
without Cause, either of which occurs prior to a Change of Control but which
Executive reasonably demonstrates (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change of Control (a "Third Party"), or (B) otherwise arose in connection with,
or in anticipation of a Change of Control, shall constitute Good Reason for
purposes of this Agreement, notwithstanding that it occurred prior to a Change
of Control ("Anticipatory Termination").
Executive shall give the Company written notice of any event which he claims is
the basis for Good Reason and the Company shall have 30 days within which to
cure or resolve the behavior in question before Executive can terminate for Good
Reason.
(d) Notice of Termination. Any purported termination of the
Executive's employment with the Company shall be communicated by a Notice of
Termination to the Executive, if such termination is by the Company, or to the
Company, if such termination is by the Executive. For purposes of this
Agreement, "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provisions so indicated. For purposes of this Agreement, no purported
termination of Executive's employment with the Company shall be effective
without such a Notice of Termination having been given.
(e) Dispute Resolution. Disputes arising from the operation of
this Agreement, including, but not necessarily being limited to, the manner of
giving the Notice of Termination, the reasons or cause for the Executive's
termination or the amount of severance compensation due to the Executive
subsequent to the Executive's termination, may be resolved, at the Executive's
discretion, by arbitration; provided, however, that disputes arising under
Section 11 of this Agreement shall not be resolved under this Section 3 (e). In
the event that any such dispute which the Executive elects to be resolved by
arbitration, after notice thereof is given to the other party in writing, is not
able to be resolved by mutual agreement of the parties within sixty (60)
calendar days of the giving of such notice, the Executive and the Company hereby
agree to promptly submit such a dispute to binding arbitration in New York, New
York in accordance with New York law and the rules and procedures of the
American Arbitration Association. During any period in which a dispute is
pending that the Executive elects to be resolved by arbitration, the Executive
shall continue to receive his salary (including any Bonus) and benefits as if
his employment with the Company had continued through the date of the arbiters'
determination, and any such payments or benefits shall not be offset against any
severance, either under this Agreement or otherwise, to which Executive may be
entitled.
4. Compensation Upon Termination After a Change of Control.
If within two (2) years after the Effective Date, the Executive's
employment by the Company shall be terminated in accordance with Section 3 (a)
(the "Termination"), the Executive shall be entitled to the following payments
and benefits:
(a) Severance. As soon as practicable after the Termination, but
in any event no later than 10 business days following such Termination, the
Company shall pay or cause to be paid to the Executive, a lump sum cash amount
equal to two and one-quarter (2-1/4) times the sum of (i) the Executive's annual
base salary on the Effective Date (the "Base Salary"), (ii) the Bonus, and (iii)
the value of the perquisites (e.g., car allowance, club dues, etc., including
any ordinary tax gross-ups for perquisites) provided to Executive in respect of
the year prior to the Change of Control. In addition, at the time of the above
payment, the Executive shall be entitled to an additional lump sum cash payment
equal to the sum of (A) Executive's annual salary through the date of
termination, (B) a pro rata portion of the Bonus (calculated through the date of
termination), and (C) an amount, if any, equal to compensation previously
deferred (excluding any qualified plan deferral) and any accrued vacation pay,
in each case, in full satisfaction of Executive's rights thereto.
(b) Additional Benefits. The Executive shall be entitled to
continued medical, dental and life insurance coverage for the Executive and the
Executive's eligible dependents on the same basis as in effect prior to the
Change of Control or the Executive's Termination of employment, whichever is
deemed to provide for more substantial benefits, until the earlier of (A)
thirty-six (36) months (the "Separation Period") after the Executive's
Termination or (B) the commencement of comparable coverage with a subsequent
employer; provided, however, that such continued coverage shall not count
against any continued coverage required by law.
(c) Outplacement. If so requested by the Executive, outplacement
services shall be provided by a professional outplacement provider at a cost to
the Company of not more than 20% of the Executive's Base Salary.
(d) Withholding. Payments and benefits provided pursuant to this
Section 4 shall be subject to any applicable payroll and other taxes required to
be withheld.
5. Certain Additional Payments by the Company:
(a) Anything in this Agreement to the contrary notwithstanding,
if it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment") , would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of the Company, within the meaning of Section
28OG of the Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with respect to such
excise tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax") , then the Executive
shall be entitled to receive an additional payment or payments (a "Gross-Up
Payment") in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b) Subject to the provisions of Section 5 (f) hereof, all
determinations required to be made under this Section 5, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change of Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its determination and detailed supporting calculations to
both the Company and the Executive within 15 calendar days after the Termination
Date, if applicable, and any other such time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any Excise Tax
is payable by the Executive, the Company shall pay the required Gross-Up Payment
to the Executive within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
5(f) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 5(b) hereof.
(d) The federal, state and local income or other tax returns
filed by the Executive and the Company (or any filing made by a consolidated tax
group which includes the Company) shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the Excise
Tax payable by the Executive. The Executive shall make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated by Sections
5 (b) and (d) hereof shall be borne by the Company. If such fees and expenses
are initially advanced by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as promptly as practicable but no later than 10 business days after the
Executive actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid (in each case, to the extent known by the Executive).
The Executive shall not pay such claim prior to the earlier of (a) the
expiration of the 30-calendar-day period following the date on which he gives
such notice to the Company and (b) the date that any payment of amount with
respect to such claim is due. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with respect
to such claim by an attorney competent in respect of the subject matter
and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Section 5
(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5 (f) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided however, that the Executive may
participate therein at his cost and expense) and may, at its option,
either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay the tax claimed and sue
for a refund, the Company shall advance the amount of such payment to
the Executive on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 5 (f) hereof, the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5 (f) hereof) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(f) hereof,
a determination is made that the Executive is not entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance shall be forgiven and
shall not be required repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be pursuant to this
Section 5.
6. Obligations Absolute; No Mitigation; No Effect On
Other Rights.
(a) The obligations of the Company to make the payment to the
Executive, and to make the arrangements, provided for herein are absolute and
unconditional and may not be reduced by any circumstances, including without
limitation any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or any third party at any time.
(b) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
(c) The provisions of this Agreement, and any payment provided
for herein, shall not supersede or in any way limit the rights, benefits, duties
or obligations which the Executive may now or in the future have under any
benefit, incentive or other plan or arrangement of the Company or any other
agreement with the Company.
7. Not an Employment Agreement. Subject to the terms of this or
any other agreement or arrangement between the Company and the Executive that
may then be in effect, nothing herein shall prevent the Company from terminating
the Executive's employment.
8. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all or substantially all of the Company's business or
assets which executes and delivers an agreement provided for in this Section
8(a) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law, including any parent or subsidiary of such a
successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement or contemplated hereby shall be in
writing and shall be deemed to have been duly given when personally delivered or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
101 Merritt Seven, 7th Floor
Norwalk, CT 06851
Attention: Frank T. MacInnis, Chairman of the Board
and in the case of the Executive, to the Executive at the most current address
shown on the Executive's employment records. Either party may designate a
different address by giving notice of change of address in the manner provided
above, except that notices of change of address shall be effective only upon
receipt.
10. Expenses. In addition to all other amounts payable to the
Executive under this Agreement, the Company shall pay or reimburse the Executive
for legal fees (including without limitation, any and all court costs and
attorneys' fees and expenses) , incurred by the Executive in connection with or
as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; unless, in the case of an action brought by the Executive, it is
determined by an arbitrator or by a court of competent jurisdiction that such
action was frivolous and was not brought in good faith.
11. Confidentiality. The Executive shall retain in confidence any
and all confidential information concerning the Company and its respective
business which is now known or hereafter becomes known to the Executive, except
as otherwise required by law and except information (i) ascertainable or
obtained from public information, (ii) received by the Executive at any time
after the Executive's employment by the Company shall have terminated, from a
third party not employed by or otherwise affiliated with the Company or (iii)
which is or becomes known to the public by any means other than a breach of this
Section 11. Upon any termination of Executive's employment, the Executive shall
not take or keep any proprietary information or documentation belonging to the
Company.
12. Miscellaneous. No provision of this Agreement may be amended,
altered, modified, waived or discharged unless such amendment, alteration,
modification, waiver or discharge is agreed to in writing signed by the
Executive and such officer of the Company as shall be specifically designated by
the Committee or by the Board. No waiver by either party, at any time, of any
breach by the other party of, or of compliance by the other party with, any
condition or provision of this Agreement to be performed or complied with by
such other party shall be deemed a waiver of any similar or dissimilar provision
or condition of this Agreement or any other breach of or failure to comply with
the same condition or provision at the same time or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without giving effect to its conflict of laws rules. Any
action brought by the Executive or the Company shall be brought and maintained
in a court of competent jurisdiction in the State of New York.
13. Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
hereto waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
14. Revocation. This Agreement may be revoked at any time prior
to the Effective Date, without prior notice to Executive, upon the resolution of
the Board that the continued existence of this Agreement and of similar
agreements with other employees of the Company is no longer in the best
interests of the Company.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
16. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior oral or written agreements, commitments or
understanding with respect to the matters provided for herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EMCOR GROUP, INC.
By:______________________________
Frank T. MacInnis
Chairman of the Board and
Chief Executive Officer
_________________________________
Executive: Mark A. Pompa
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
EMCOR's Condensed Consolidated Financial Statements for the six months
ended June 30, 1998 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<CIK> 0000105634
<NAME> EMCOR Group, Inc.
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<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 95412
<SECURITIES> 0
<RECEIVABLES> 534291
<ALLOWANCES> 22061
<INVENTORY> 6431
<CURRENT-ASSETS> 712928
<PP&E> 47818
<DEPRECIATION> 19506
<TOTAL-ASSETS> 756549
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<BONDS> 117108
<COMMON> 107
0
0
<OTHER-SE> 116544
<TOTAL-LIABILITY-AND-EQUITY> 756549
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<CGS> 942955
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<NET-INCOME> (301)
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</TABLE>
