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Exhibit
10.12
EXHIBIT B
E MPLOYMENT
A GREEMENT
(Charles
Carroll)
THIS EMPLOYMENT AGREEMENT
(the “Agreement”), dated as of February 13, 2008,
is made by and between Chill Acquisition, Inc., a Delaware
corporation (the “Company”), and Charles Carroll
(“Executive”).
WHEREAS, the Company, Chill
Holdings, Inc., a Delaware corporation and the sole shareholder of
the Company (“Holdings” or “Parent”), and
Goodman Global, Inc., a Delaware corporation
(“Goodman”) entered into an Agreement and Plan of
Merger, dated as of October 21, 2007 (the “Merger
Agreement”), pursuant to which it is intended that Company
will merge with and into Goodman (the “Merger”),
whereby the Company will cease to exist and Goodman will become a
wholly-owned subsidiary of Parent;
WHEREAS, upon the
consummation of the Merger, the contracts and obligations of the
Company shall become the contracts and obligations of
Goodman;
WHEREAS, Executive and
Goodman entered into an employment agreement, originally dated as
of November 18, 2004, and as subsequently amended on
March 7, 2006 (the “Employment Agreement”), which
generally sets forth Executive’s severance rights and related
obligations in the event Executive’s employment with Goodman
is terminated under certain circumstances;
WHEREAS, Executive currently
serves as Chief Executive Officer;
WHEREAS, upon the
consummation of the Merger, the Company desires to secure for
itself and its successors and assigns, which shall, pursuant to the
terms of the Merger Agreement, include Goodman, the continuing
services of Executive, and Executive desires to provide such
continuing services, in each case, pursuant to the terms and
conditions hereof;
NOW, THEREFORE, in
consideration of the promises and the mutual covenants herein
contained, the Company and Executive hereby agree as
follows:
1. Effectiveness; Prior
Agreements; Term of Employment .
(a) Effectiveness .
Notwithstanding anything to the contrary herein, the operative
provisions of this Agreement shall only become effective upon the
occurrence of the closing of the Merger (the date of such closing
being hereinafter referred to as the “Commencement
Date” or the “Closing”). In the event the Merger
Agreement is terminated without the Closing having occurred, this
Agreement shall be terminated without further obligation or
liability of either party hereto. Effective as of the Closing, the
Company will merge into Goodman and Goodman will assume all
obligations of the Company, including all obligations of the
Company under this Agreement and therefore all references to the
“Company” hereunder shall mean Goodman, unless the
context clearly indicates otherwise.
(b) Prior Agreements .
Effective as of the Commencement Date, this Agreement shall
supercede all prior agreements between Executive and the Company or
any of its affiliates
regarding the terms and conditions of
Executive’s employment and severance rights with the Company
and its affiliates, including, without limitation, the Employment
Agreement (together with all other prior agreements and
understandings, the “Prior Agreements”). Subject to the
exceptions set forth herein, it is expressly agreed that from and
after the Commencement Date, neither the Company nor any of its
affiliates shall have any obligations or rights under, and
Executive shall have no further obligations or rights under, any
Prior Agreement, including, without limitation, any severance,
termination or change of control related benefits; except
that (i) all prior grants or assignments by Executive to the
Company of any rights (including, without limitation, any rights
under any license) to any intellectual property, authorship,
inventions, materials, documents or other work product under any
Prior Agreement shall continue in full force in effect prior to,
from and after the Commencement Date, and
(ii) Executive’s rights to indemnification, exculpation
and the advancement of expenses under the current indemnification
agreement between the Company and Executive shall continue in full
force with respect to claims arising from Executive’s
pre-Commencement Date services with the Company and such rights
shall continue for the longer of (x) the applicable statute of
limitations with respect to any such claim, or (y) the
six-year period commencing on the Commencement Date;
provided , that, rights to indemnification with respect of
any claim pending or asserted or any claim made within such period
shall continue until the resolution of such claim.
(c) Term and Position
. Subject to the provisions of Section 6 of this Agreement,
Executive shall serve as the Chief Executive Officer of the Company
and Holdings for the period commencing on the Commencement Date and
ending upon the earlier of (i) the date a suitable replacement
commences employment as the next Chief Executive Officer of the
Company, and (ii) June 30, 2008 (the “Interim
Employment Term”). During the Interim Employment Term,
Executive shall also serve as the Chairman of the Board of
Directors of the Company and of Holdings (the “Board”).
Following the Interim Employment Term, Executive shall serve as the
Chairman of the Board, unless otherwise agreed. In the event
Executive is no longer serving as Chairman of the Board following
the Interim Employment Term, he will be given the opportunity to
serve as a non-executive employee of the Company for the period
ending no earlier than June 30, 2010 (the period of any such
employment together with the Interim Employment Term, the
“Employment Term”). During the Employment, Executive
shall have such duties and authority as shall be determined from
time to time by the Board and such duties and authorities shall be
commensurate with Executive’s position at such
time.
2. Duties . During the
Employment Term, Executive shall devote Executive’s full
business time and attention to the performance of Executive’s
duties hereunder and shall not engage in any other business,
profession or occupation for compensation or otherwise which would
conflict or interfere with the rendition of such services either
directly or indirectly, without the prior written consent of the
Board; provided that, nothing herein shall preclude
Executive from (i) continuing to serve on any board of
directors or trustees of any business corporation or any charitable
organization, (ii) being involved in charitable activities, or
(iii) managing his personal and family passive investments;
provided further that, in each case, and in the aggregate,
such activities shall not materially conflict or materially
interfere with the performance of Executive’s duties
hereunder or conflict with Section 7 hereof.
3. Salary and Annual
Bonus .
(a) Base Salary .
During the Interim Employment Term, the Company shall pay Executive
a base salary at the annual rate of $1,073,900, payable in regular
installments in accordance with the Company’s usual payment
practices. Following the Interim Employment Term and continuing for
the remainder of the Employment Term, the Company shall pay
Executive a base salary at the annual rate of $150,000, payable in
regular installments in accordance with the Company’s usual
payment practices. Without limiting the foregoing, Executive shall
be entitled to such increases in Executive’s base salary, if
any, as may be determined from time to time in the sole discretion
of the Board upon its annual review of Executive’s
compensation and Executive’s annual base salary, as in effect
from time to time, shall hereinafter be referred to as the
“Base Salary. Except as expressly set forth above with
respect to the period following the Interim Employment Term, the
Board may reduce the Base Salary only if such reduction is part of
a general cost reduction and is consistent with reductions
generally made to other executives of the Company.
(b) Annual Bonus .
During the Interim Employment Term, Executive shall be eligible to
earn a pro rata annual bonus award for fiscal year 2008 (based on
the ratio of (i) the number of days Executive serves as the
Chief Executive Officer of the Company during fiscal year 2008, to
(ii) 365 days) (the “Annual Bonus”) in a target
amount (assuming Executive served as the Chief Executive Officer
during the entire fiscal year) equal to 100% of Executive’s
Base Salary (the “Target Bonus”) and a maximum bonus
opportunity (assuming Executive served as the Chief Executive
Officer during the entire fiscal year) of 481.4% of the Target
Bonus, based upon the achievement of the performance goals
established by the Board within the first three months of the
fiscal year. Without limiting the foregoing, Executive’s
Annual Bonus shall be calculated in accordance with the table
attached hereto as Exhibit A (the “Annual Bonus
Table”), whereby the Annual Bonus that shall become payable
for fiscal year 2008 shall be the pro-rata portion of the amount
equal to the “Percentage of Base Salary” that
corresponds with the highest “Level of Achievement”
attained by the Company for such year (which, as set forth on
Schedule A, shall be tied to the Company’s
“EBITDA”). For these purposes, the Company’s
“EBITDA” for fiscal year 2008 shall mean the
“Consolidated EBITDA,” as such term is defined in the
Term Loan Credit Agreement, dated as of February 13, 2008,
among Chill Intermediate Holdings, Inc., the Company, the lending
institutions party thereto, Barclays Capital
(“Barclays”) and General Electric Capital Corporation
(“GECC”), as Joint Lead Arrangers, Barclays, Calyon New
York Branch and GECC, as joint bookrunners, and GECC as the
administrative agent, as may be amended, modified, extended,
refinanced, renewed or replaced form time to time. The
Company’s “Target” EBITDA for fiscal year 2008
shall be set forth on Schedule A attached hereto. The Annual
Bonus, if any, shall be paid to Executive prior to the expiration
of the period ending two and one-half months after the end of
fiscal year 2008.
4. Equity
Participation . Executive’s equity participation in
Parent, the Company and any of their subsidiaries or affiliates
shall be documented pursuant to the Chill Holdings, Inc. 2008 Stock
Incentive Plan (the “Equity Plan”), award agreements
issued under the Equity Plan or otherwise (including any option or
option rollover agreements), the Management Stockholders Agreement
of Chill Holdings, Inc. (the “Management Stockholders
Agreement”), and any contribution or subscription agreements
relating to the equity of Parent or the Company, each as executed,
if applicable, by the Company, Executive, the other “Initial
Management Investors” (as defined in the Management
Stockholders Agreement) and Parent (collectively, the “Equity
Documents”). The Company and Executive each acknowledges that
the terms and conditions of
the aforementioned Equity Documents
govern Executive’s acquisition, holding, sale or other
disposition of Executive’s equity in the Parent, the Company
or any of their affiliates, and all of Executive’s rights
with respect thereto.
5. Employee Benefits .
During the Employment Term, Executive shall be entitled to
participate in the Company’s employee benefit plans and
payroll practices, as in effect from time to time (collectively,
“Employee Benefits”), on the same basis as those
benefits are generally made available to other similarly situated
executives of the Company.
6. Termination of
Employment . The Employment Term and Executive’s
employment hereunder may be terminated by either party at any time
and for any reason; provided that Executive will be required to
give the Company at least 60 days advance written notice of any
termination initiated by Executive. Notwithstanding any other
provision of this Agreement, the provisions of this Section 6
shall exclusively govern Executive’s rights upon termination
of employment with the Company and its affiliates; provided
that Executive’s rights with respect to Executive’s
equity participation in Parent, the Company and their affiliates
shall be governed solely by the Equity Documents. For the avoidance
of doubt, Executive’s services in any non-employee capacity
shall also constitute part of Executive’s
“employment” for purposes of this Agreement.
(a) For Cause by the
Company or For Any Reason Other than Good Reason by Executive .
The Employment Term and Executive’s employment may be
terminated by the Company for Cause (as defined below) or by
Executive without Good Reason (as defined in Section 6(c)
below).
(i) For purposes of this
Agreement, Executive can be terminated by the Company for
“Cause” due to:
(A) Executive’s willful
failure to substantially perform his duties (other than any such
failure resulting from Executive’s physical or mental
incapacity);
(B) Executive’s willful
failure to carry out, or comply with, in any material respect, any
lawful and reasonable directive of the Board, not inconsistent with
the terms of the agreement;
(C) Executive’s
commission at any time of any act or omission that results in, or
that may reasonably be expected to result in, a conviction, plea of
no contest or imposition of unadjudicated probation for any felony
or crime involving moral turpitude;
(D) Executive’s
unlawful use (including being under the influence) or possession of
illegal drugs on the Company’s premises or while performing
the executive’s duties and responsibilities under the
agreement; or
(E) Executive’s
commission at any time of any act of fraud, embezzlement,
misappropriation, material misconduct, or breach of fiduciary duty
against the Company or any of its affiliates (or any of their
respective predecessors or successors), which shall not include any
good faith disputes regarding immaterial amounts that relate to
Executive’s expense account, reimbursement claims or other de
minimis matters.
(ii) If Executive’s
employment is terminated by the Company for Cause, or if Executive
resigns without Good Reason, Executive shall be entitled to
receive:
(A) the Base Salary through
the date of termination;
(B) any Annual Bonus earned,
but unpaid, as of the date of termination for the immediately
preceding fiscal year, paid in accordance with Section 3
(except to the extent payment is otherwise deferred pursuant to any
applicable deferred compensation arrangement with the Company or
any of its affiliates);
(C) reimbursement for any
unreimbursed business expenses that have been properly incurred by
Executive prior to the date of Executive’s termination and
that are or have been submitted in accordance with the applicable
Company policy;
(D) such Employee Benefits,
if any, as to which Executive may be entitled under the employee
benefit plans of the Company, which shall include payment for any
unused vacation in accordance with the Company’s policy then
in effect or as otherwise required by applicable law (the amounts
described in clauses (A) through (D) hereof being
referred to as the “Accrued Rights”).
(iii) Following termination
of Executive’s employment by the Company for Cause or by
Executive without Good Reason, and except as set forth in
Section 6(a)(ii) directly above, Executive shall have no
further rights to any compensation or any other benefits under this
Agreement; provided that Executive’s rights with
respect to Executive’s equity participation with the Company
or any of its affiliates shall be governed solely by the Equity
Documents.
(b) Disability or
Death . The Employment Term and Executive’s employment
hereunder shall terminate upon Executive’s death and may be
terminated by the Company as a result of Executive’s
“Disability.”
(i) For purposes of this
Agreement, “Disability” means a physical or mental
illness, injury or condition that prevents Executive from
performing any or all of the essential functions of
Executive’s job duties for at least 90 consecutive calendar
days, or for at least 120 calendar days, whether or not
consecutive, in any 365 calendar day period, as determined by a
licensed physician reasonably satisfactory to the Company and
Executive. The Board’s good faith determination that
Executive has a Disability will be final and binding for purposes
of determining the rights and obligations of the parties under this
Agreement.
(ii) If Executive’s
employment and other services are terminated on account of
Executive’s death or Disability, Executive or
Executive’s estate (as the case may be) shall be entitled to
receive the Accrued Rights.
(iii) Following termination
of Executive’s employment and other services due to death or
Disability, and except as set forth in Section 6(b)(ii)
directly above, Executive shall have no further rights to any
compensation or any other benefits under this Agreement;
provided that Executive’s rights with respect to
Executive’s equity participation with the Company or any of
its affiliates shall be governed solely by the Equity
Documents.
(c) Without Cause or by
Executive for Good Reason .
(i) The Employment Term and
Executive’s employment may be terminated by the Company
without Cause or by Executive’s resignation for Good
Reason.
(ii) Except to the extent
expressly contemplated by this Agreement, Executive shall be able
to terminate his employment for “Good Reason” following
the occurrence of any of the following:
(A) a failure of the Company
to continue Executive in his current position or other
substantially similar or more senior position;
(B) a material diminution in
the nature or scope of Executive’s responsibilities, duties
or authority;
(C) a failure of the Company
to make any material payment or provide any material benefit under
the Agreement;
(D) a material breach by the
Company of the Agreement or any option agreement between Executive
and the Company; or
(E) the Company relocates
Executive’s primary place of employment to a place outside of
the 75-mile radius of Executive’s current primary place of
employment (it being understood that neither a temporary work
assignment nor travel on the Company’s business shall
constitute such a relocation);
provided that the
occurrence of any of the foregoing events (A), (B), (C),
(D) or (E) shall only constitute Good Reason if the
Company fails to cure such event within 30 days after receipt from
Executive of written notice of such occurrence; provided ,
further , that Good Reason shall cease to exist following
the later of 30 days following its occurrence or Executive’s
knowledge thereof, unless Executive has given the Company written
notice thereof prior to such date. For the avoidance of doubt, the
parties hereto acknowledge and agree that the changes to
Executive’s position (and related duties and authority) as a
result or upon the expiration of the Interim Employment Term shall
not constitute Good Reason.
(iii) If Executive’s
employment is terminated by the Company without Cause (other than
by reason of death or Disability) or if Executive resigns for Good
Reason during the Interim Employment Term, Executive shall be
entitled to receive from the Company:
(A) the Accrued Rights;
and
(B) subject to
Executive’s continued compliance with the provisions of
Sections 7 and 8, and upon execution of the “Release”
within 60 days after receipt, which shall be delivered to Executive
within 10 days following the termination of Executive’s
employment and which shall be substantially in the form attached
hereto as Exhibit B :
(1) equal, or substantially
equal, payments totaling, in the aggregate, 200% of the sum of the
Base Salary and the Target Bonus, whi
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