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Exhibit
10.20
EXHIBIT B
F ORM
OF S EVERANCE A
GREEMENT
THIS SEVERANCE AGREEMENT (the
“Agreement”), dated as of February 13, 2008, is
made by and between Chill Acquisition, Inc., a Delaware corporation
(the “Company”), and
[ ]
(“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 a severance agreement, originally dated as of
[ ], and as
subsequently amended on February 6, 2006 (the “Severance
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
[ ];
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 Severance 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 . Subject to
the provisions of Section 5 of this Agreement, Executive shall
be employed by the Company for a period commencing on the
Commencement Date and ending on the fourth anniversary thereof
(such period, the “Term”) and on the terms and
conditions set forth herein; provided , however ,
that commencing on the fourth anniversary of the Commencement Date
and on each anniversary thereafter (each an “Extension
Date”), the Term shall be automatically extended for an
additional one-year period, unless either the Company or Executive
provides the other party hereto 90 days prior written notice before
the next Extension Date that the Term shall not be so extended;
provided , further , that any such notice of
non-renewal shall be given in accordance with Section 10(g) of
this Agreement.
2. Position and Duties
.
(a) Position . During
the Term, Executive shall serve as
[ ], of the Company
and of Holdings. In such position, Executive shall have such duties
and authority as shall be determined from time to time by the
Company’s Chief Executive Officer (the “CEO”) or
its Board of Directors (the “Board”) and such duties
and authorities shall be commensurate with Executive’s
position.
(b) Duties . During
the 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 6 hereof.
3. Salary and Annual
Bonus .
(a) Base Salary .
During the Term, the Company shall pay Executive a base salary at
the annual rate of $[•], payable in regular installments in
accordance with the Company’s usual payment practices.
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. Notwithstanding the
foregoing or anything to the contrary herein, 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 Term, Executive shall be eligible to earn an annual
bonus award (the “Annual Bonus”) in respect of each
full fiscal year of the Company for which he was employed, in a
target amount equal to [•]% of Executive’s Base Salary
(the “Target Bonus”) and a maximum bonus opportunity of
[•]% of the Target Bonus, based upon the achievement of the
performance goals established by the Board within the first three
months of each fiscal year during the Term. 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 amount of the Annual
Bonus that shall become payable for any fiscal year shall be 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 any applicable fiscal year 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 the
applicable fiscal year.
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. Termination of
Employment . The 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 5 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.
(a) For Cause by the
Company or For Any Reason Other than Good Reason by Executive .
The Term and Executive’s employment hereunder may be
terminated by the Company for Cause (as defined below) or by
Executive without Good Reason (as defined in Section 5(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 5(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 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 is 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 due to death or Disability, and
except as set forth in Section 5(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 Term and
Executive’s employment hereunder may be terminated by the
Company without Cause or by Executive’s resignation for Good
Reason.
(ii) For purposes of 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.
(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, 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 6 and 7, 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, 100% of the sum of the
Base Salary and the Target Bonus, which shall be payable in
accordance with the Company’s normal payroll practices over
the twenty-four month period commencing on the date of termination,
provided that the first payment shall be made on the seventy-fifth
day following the termination of Executive’s employment and
shall include any amounts that would have otherwise been due prior
to such seventy-fifth day; and
(2) a prorated Annual Bonus
for the year of termination, which shall be based on year to date
financial performance of the Company and which will be payable when
such Annual Bonus would have otherwise been paid pursuant to
Section 3 of this Agreement had Executive’s employment
not terminated.
(iv) Following termination of
Executive’s employment by the Company without Cause (other
than by reason of Executive’s death or Disability) or by
Executive for Good Reason, and except as set forth in
Section 5(c)(iii) 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
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