{"id":39099,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/employment-agreement-encompass-management-co-and-donald-l.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"employment-agreement-encompass-management-co-and-donald-l","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/employment-agreement-encompass-management-co-and-donald-l.html","title":{"rendered":"Employment Agreement – Encompass Management Co. and Donald L. Luke"},"content":{"rendered":" EMPLOYMENT AGREEMENT\n\n\n This Employment Agreement (this \"Agreement\") is effective as of April 10,\n2000, between Encompass Management Co., a Delaware corporation (the \"Company\"),\nand Donald L. Luke, a resident of Harris County, Texas (\"Employee\"). In\nconsideration of the premises and the mutual covenants contained herein, the\nparties hereby agree as follows:\n\n 1. Employment. The Company hereby agrees to employ Employee and\nEmployee hereby agrees to work for the Company as its Executive Vice President\nand Chief Operating Officer. Employee's principal office shall be in Houston,\nTexas. So long as Employee is employed by the Company, Employee shall devote\nEmployee's skill, energy and best efforts to the faithful discharge of\nEmployee's duties as an employee of the Company. In providing services\nhereunder, Employee shall comply with and follow all directives, policies,\nstandards and regulations from time to time established by the Board of\nDirectors of the Company.\n\n 2. Term of Employment. Employee's employment by the Company pursuant\nto this Agreement shall continue in effect from the date of this Agreement and\nend on July 31, 2000, unless terminated in accordance with Section 8.\n\n 3. Representations and Warranties. Employee represents and warrants\nthat Employee is under no contractual or other restrictions or obligations that\nwill significantly limit Employee's activities on behalf of the Company or will\nprohibit or limit the disclosure or use of by Employee of any information which\ndirectly or indirectly relates to the nature of the Company or the services to\nbe rendered by Employee under this Agreement.\n\n 4. Compensation. Subject to the provisions of Section 8, Employee will\nbe entitled to the compensation and benefits set forth in this Section 4.\n\n (a) During the term of employment of Employee hereunder, the Company shall\npay Employee a Base Salary, payable semi-monthly, in equal semi-monthly\ninstallments at a rate equal to $300,000 per year pro-rated through July 31,\n2000 (\"Base Salary\").\n\n (b) Employee shall be eligible to receive a bonus pursuant to the incentive\ncompensation program in effect from time to time for executive employees of the\nCompany prorated through July 31, 2000 (such prorated portion to be determined\nbased upon the number of working days Employee is employed by the Company prior\nto July 31, 2000 divided by 365 and to be paid on the same date as other\nexecutive employees of the Company receive their bonuses). The target bonus of\nEmployee under such program, prior to proration, shall not be less than 90% of\nEmployee's Base Salary.\n\n 1\n\n \n (c) All payments of salary and other compensation to Employee shall be made\nafter deduction of any taxes required to be withheld with respect thereto\nunder applicable federal and state laws.\n\n (d) Unless the term of employment of Employee hereunder is terminated\nprior to July 31, 2000, (i) by Employee with Good Reason under Section 8(c)(i)\nbelow, or without Good Reason and without Company approval under Section 8(d),\nor (ii) by the Company with or without Cause, Employee and the Company will, as\nof August 1, 2000, enter into a consulting agreement, substantially in the form\nof Exhibit B attached hereto, pursuant to which Employee will provide consulting\nservices to the Company from August 1, 2000 through May 30, 2001, and shall be\nentitled to compensation for consulting services rendered and certain other\nbenefits as set forth therein. In the event the term of employment of Employee\nhereunder is terminated by Employee without Good Reason but with Company\napproval (as contemplated under Section 8(c)(ii) below), the Company and\nEmployee will enter into the consulting agreement from the date of termination\nof employment through May 30, 2001, provided that the consulting fees provided\ntherein will commence as of August 1, 2000 in recognition of the salary payments\nmade under Section 8(c)(ii).\n\n 5. Fringe Benefits; Expenses. (a) During the term of employment of\nEmployee hereunder, Employee shall participate in employee benefit plans\nsponsored by the Company for its executive employees (other than stock award,\nstock bonus, stock purchase, stock option and other stock-related plans),\nincluding sick leave and disability leave, health insurance, dental insurance\nand pension and\/or profit sharing plans; provided, however, that except as\nprovided below, the nature, amount and limitations of such plans shall be\ndetermined from time to time by the Board of Directors of the Company.\n\n (b) The Company will reimburse Employee for all reasonable business\nexpenses incurred by Employee in the scope of Employee's employment; provided,\nhowever, that Employee must file expense reports with respect to such expenses\nin accordance with the Company's policies as are in effect from time to time.\n\n (c) During the term of employment of Employee hereunder, Employee\nshall be entitled to a minimum of four weeks paid vacation and to paid holidays\nand other paid leave set forth in the Company's policies in effect from time to\ntime. Any vacation not used during the term of employment of Employee hereunder\nmay not be used during any subsequent period.\n\n (d) During the term of employment of Employee hereunder, the Company\nwill pay all license fees, occupation taxes and reasonable educational costs and\nexpenses necessary to maintain Employee's good standing under any professional\nlicenses.\n\n (e) During the term of employment of Employee hereunder, the Company\nshall use reasonable efforts to provide (i) life insurance payable to Employee's\ndesignated beneficiary in an amount at least three times Employee's Base Salary\nand (ii) disability insurance on behalf of Employee which, as a goal, shall\nprovide for salary continuation in the event of permanent disability in an\namount equal to the lesser of (i) 60% of Employee's Annual Base Salary, or (ii)\n$10,000 per month.\n\n 2\n\n \n 6. Indemnification and Insurance. The Company shall indemnify\nEmployee with respect to matters relating to Employee's services as an officer\nand\/or director of the Company or any of its Affiliates (as defined in Exhibit A\nattached hereto) to the extent set forth in the Company's By-laws and in\naccordance with the terms of any other indemnification which is generally\napplicable to executive officers of the Company or any of its Affiliates that\nmay be provided by the Company or any such Affiliate from time to time. The\nforegoing indemnity is contractual and will survive any adverse amendment to or\nrepeal of the By-laws. The Company will also cover Employee under a policy of\nofficers' and directors' liability insurance providing coverage that is\ncomparable to that provided now or hereafter to any other executive officer or\ndirector of the Company. The provisions of this Section 6 will survive the\ntermination of Employee's employment for any reason and the term of this\nAgreement.\n\n 7. Acceleration and Exercise of Options. Provided Employee's\nemployment has not been terminated by the Company for Cause or by the Employee\nother than for Good Reason prior to such date, all stock options then held by\nEmployee and not otherwise vested shall become immediately vested and\nexercisable in full on August 1, 2000, and each such option shall remain in\nforce and be exercisable at anytime during the original term of said option. No\nadditional options to purchase Company Common Stock have been or will be issued\nto Employee subsequent to September 1, 1999. Exhibit C sets forth the date of\ngrant, number of shares, exercise price, and term of each present option held by\nEmployee.\n\n 8. Termination.\n\n (a) Either the Company or Employee may terminate Employee's employment\nhereunder prior to July 31, 2000 at any time by delivery of sixty (60) days\nprior written notice by the terminating party of its election to terminate this\nAgreement to the other party. Promptly after such termination of employment,\nexcept as provided in Section 8(f), the Company shall pay to Employee an amount\nequal to the sum of (i) Employee's earned but unpaid Base Salary through the\ndate of termination of employment, (ii) vacation pay earned but not taken to the\ndate of such termination, and (iii) all other amounts previously deferred by\nEmployee or earned but not paid as of such date under all Company incentive or\ndeferred compensation plans or programs.\n\n (b) Except as provided in Section 8(f), if the Company terminates\nEmployee's employment prior to July 31, 2000 without Cause, then the Company\nshall promptly pay or otherwise provide to Employee the following amounts in\naddition to those set forth in Section 8(a):\n\n (i) An amount equal to two times the sum of (A) Employee's Base Salary\n then in effect and (B) Employee's target bonus described in Section 4(b)\n (assuming the maximum target bonus will be earned), payable in a single\n lump sum by certified or bank cashier's check within 30 days of such\n termination; and\n\n (ii) An amount equal to the product of (A) the maximum monthly premium\n payment that may be charged to continue coverage for Employee and\n Employee's \n\n 3\n\n \n dependents under the Company's health insurance plan under COBRA\n and under all life insurance and disability policies provided by Employer\n for Employee, multiplied by (B) 24 months (payable over such period). Any\n unpaid amount under this clause (ii) will cease if Employee obtains\n substantially similar coverage under new employment.\n\n (c) If Employee terminates Employee's employment prior to July 31,\n2000 then the Company shall promptly pay to Employee the following amounts:\n\n (i) If such termination was for Good Reason (as defined in Exhibit A\n attached hereto), then in addition to the amounts set forth in\n Section 8(a), the amounts set forth in Sections 8(b)(i) and\n 8(b)(ii) above; or\n\n (ii) If such termination was with Company approval, then in addition\n to the amounts set forth in Section 8(a), an amount equal to the\n sum of (A) Employee's unpaid Base Salary from the date of\n termination of employment through July 31, 2000, (B) vacation pay\n earned but not taken from the date of termination of employment\n through July 31, 2000, and (C) all other amounts previously\n deferred by Employee or earned but not paid from the date of\n termination of employment through July 31, 2000 under all Company\n incentive or deferred compensation plans or programs, payable in\n a single lump sum by certified or bank cashier's check within 30\n days of such termination. In addition, the Company shall make\n available to Employee the benefits set forth in Section 5(a) and\n (e) continuing through May 30, 2001 to the extent it is legally\n permitted to do so.\n\n (d) If Employee terminates Employee's employment prior to July 31, 2000\n without Company approval or Good Reason, then only the amounts set\n forth in Section 8(a) shall be payable to Employee.\n\n (e) In the event this Agreement is terminated by the Company without Cause\nor pursuant to Section 8(f) or by Employee with Good Reason, or with Company\napproval, Employee agrees to accept, in full settlement of any and all claims,\nlosses, damages and other demands that Employee may have arising out of such\ntermination, as liquidated damages and not as a penalty, the payments set forth\nin this Agreement. Employee hereby waives any and all rights Employee may have\nto bring any cause of action or proceeding contesting any termination without\nCause or Good Reason; provided, however, that such waiver shall not be deemed to\naffect Employee's rights to enforce any other obligations of the Company\nunrelated to such employment. Under no circumstances shall Employee be entitled\nto any compensation or confirmation of any benefits under this Agreement for any\nperiod of time following Employee's date of termination if Employee's\ntermination is for Cause.\n\n (f) If at any time during the term of Employee's employment hereunder,\nEmployee is unable due to physical or mental disability, to perform effectively\nEmployee's duties hereunder, the Company shall continue payment of compensation\nas provided in Section 4 through July 31, 2000 to the extent not covered by the\nCompany's disability insurance policies. After July 31, \n\n 4\n\n \n2000, the Company, at its sole option, may continue payment of Employee's salary\nfor such additional periods as the Company elects, or may terminate Employee's\nemployment hereunder without any further obligations to Employee hereunder. If\nEmployee should die during the term of Employee's employment hereunder,\nEmployee's employment and the Company's obligations hereunder shall terminate as\nof the end of the month in which Employee's death occurs.\n\n (g) During the Term of this Agreement or the Consulting Agreement, and\nduring the one (1) year period after the Employee receives the lump sum payments\nprovided in Section 8(b) or (c)(i) above, as the case may be, Employee shall\nsign any lock-up letters, standstill agreements, or other similar documentation\nspecifically required by an underwriter in connection with a public offering of\nsecurities by the Company or take other actions reasonably related thereto as\nrequested by the Board of Directors of the Company; provided, however, that\nequivalent agreements are being required of Company management and the period of\nany such lock-up or standstill agreements shall not exceed the shorter of (i)\n180 days or (ii) the balance of the term of the consulting agreement or the one\n(1) year period specified above, whichever is applicable. In the event Employee\nfails to sign any such letters, agreements or similar documentation or take any\nsuch action, the Company may seek and obtain specific performance of such\ncovenant, including any injunction requiring execution thereof or the taking of\nany such actions, and Employee hereby appoints the then president of the Company\nin office from time to time to sign any such documents on Employee's behalf so\nlong as such documents are prepared on the same basis as other shareholders\ngenerally or as all Company management shareholders.\n\n 9. No Mitigation Obligation. The Company acknowledges that it will be\ndifficult and may be impossible (i) for Employee to find reasonably comparable\nemployment following termination of Employee's employment and (ii) to measure\nthe amount of damages which Employee may suffer as a result of the termination\nof Employee's employment. Accordingly, all amounts paid to Employee under this\nAgreement following Employee's termination of employment are acknowledged by the\nCompany to be reasonable and to be liquidated damages, and Employee will not be\nrequired to mitigate the amount of such payments by seeking other employment or\notherwise, nor will any profits, income, earnings or other benefits from any\nsource whatsoever (including from other employment) create any mitigation,\noffset, reduction or any other obligation on the part of Employee under this\nAgreement.\n\n 10. Covenant Not to Compete.\n\n (a) During Employee's employment with the Company or any of its Affiliates\nand thereafter during the Restricted Period (as defined in Exhibit A attached\nhereto), regardless of the reason for the termination of Employee's employment,\nEmployee will not engage in or carry on, directly or indirectly, either for\nhimself or as a member of a partnership or as a shareholder, investor, owner,\nofficer or director of a company or other entity, or as an employee, agent,\nassociate or consultant of any person, partnership, corporation or other entity,\nany business in any State of the United States or in any other part of the world\nthat directly competes with any services or products produced, sold, conducted,\ndeveloped, or in the process of development by the Company or its Affiliates on\nthe date of termination of Employee's employment.\n\n 5\n\n \n (b) Notwithstanding the foregoing, the ownership of less than one percent\nof any class of securities of a publicly-held company whose gross assets exceed\n$100,000,000 shall not be deemed to constitute a prohibited activity under\nSection 10(a).\n\n (c) Employee acknowledges that the limitations set forth herein on\nEmployee's rights to compete with the Company and its Affiliates are reasonable\nand necessary for the protection of the Company and its Affiliates. In this\nregard, Employee specifically agrees that the limitations as to period of time\nand geographic area, as well as all other restrictions on Employee's activities\nspecified herein, are reasonable and necessary for the protection of the Company\nand its Affiliates. In particular, Employee acknowledges that the parties\nanticipate that Employee will be actively seeking markets for the products and\nservices of the Company and its Affiliates throughout the United States during\nEmployee's employment with the Company.\n\n (d) In the event that there shall be any violation of the covenant not to\ncompete set forth in this Section 10, then the time limitation thereof shall be\nextended for a period of time equal to the period of time during which such\nviolation continues; and in the event the Company is required to seek relief\nfrom such violation in any court, board of arbitration or other tribunal, then\nthe covenant shall be extended for a period of time equal to the pendency of\nsuch proceedings, including all appeals.\n\n (e) Employee agrees that the remedy at law for any breach by Employee of\nthis Section 10 will be inadequate and that the Company shall also be entitled\nto injunctive relief.\n\n 11. Confidential Information. During the term of Employee's employment\nhereunder, and for five years after Employee's termination of employment,\nEmployee shall not use or disclose, without the prior written consent of the\nCompany, Confidential Information (as defined in Exhibit A attached hereto)\nrelating to the Company or any of its Affiliates, and upon termination of\nEmployee's employment will return to the Company all written materials in\nEmployee's possession embodying such Confidential Information. Employee will\npromptly disclose to the Company all Confidential Information, as well as any\nbusiness opportunity which comes to Employee's attention during the term of\nEmployee's employment with the Company. Employee will not take advantage of or\ndivert any business opportunity for the benefit of Employee or any other Person\n(as defined in Exhibit A attached hereto) without the prior written consent of\nthe Company. Employee agrees that the remedy at law for any breach by Employee\nof this Section 11 will be inadequate and that the Company shall also be\nentitled to injunctive relief.\n\n 12. Intellectual Property.\n\n (a) To the extent they relate to, or result from, directly or indirectly,\nthe actual or anticipated operations of the Company or any of its Affiliates,\nEmployee hereby agrees that all patents, trademarks, copyrights, trade secrets,\nand other intellectual property rights, all inventions, whether or not\npatentable, and any product, drawing, design, recording, writing, literary work\nor other author's work, in any other tangible form developed in whole or in part\nby Employee during the term of this Agreement, or otherwise developed, purchased\nor acquired by \n\n 6\n\n \nthe Company or any of its Affiliates, shall be the exclusive property of the\nCompany or such Affiliate, as the case may be (\"Intellectual Property\").\n\n (b) Employee will hold all Intellectual Property in trust for the Company\nand will deliver all Intellectual Property in Employee's possession or control\nto the Company upon request and, in any event, at the end of Employee's\nemployment with the Company.\n\n (c) Employee shall assign and does hereby assign to the Company all\nproperty rights that Employee may now or hereafter have in the Intellectual\nProperty. Employee shall take such action, including, but not limited to, the\nexecution, acknowledgment, delivery and assistance in preparation of documents,\nand the giving of testimony, as may be requested by the Company to evidence,\ntransfer, vest or confirm the Company's right, title and interest in the\nIntellectual Property.\n\n (d) Employee will not contest the validity of any invention, any copyright,\nany trademark or any mask work registration owned by or vesting in the Company\nor any of its Affiliates under this Agreement.\n\n 13. Relocation Expenses. Employee shall be entitled to the reimbursement\nof relocation expenses of up to $10,000 if Employee has relocated his principal\nresidence outside of the Houston, Texas metropolitan area before July 31, 2001.\n\n 14. Definitions. As used in this Agreement , the terms defined in Exhibit\nA have the means assigned to such terms in such exhibit.\n\n 15. Notices. All notices, requests, demands and other communications\nrequired by or permitted under this Agreement shall be in writing and shall be\nsufficiently delivered if delivered by hand, by courier service, or sent by\nregistered or certified mail, postage prepaid, to the parties at their\nrespective addresses listed below:\n \n (a) If to Employee:\n __________________\n\n __________________ \n\n __________________\n\n (b) If to the Company:\n Encompass Management Co.\n 3 Greenway Plaza, Suite 2000\n Houston, Texas 77046\n Attention: Corporate Secretary\n Facsimile: 713-626-4766\n\nAny party may change such party's address by such notice to the other parties.\n\n 16. Set-off Rights. The Company's obligations to make the payments and\nprovide the benefits required by this Agreement and otherwise to perform its\nobligations hereunder shall \n\n 7\n\n \nnot be affected by any set off, counterclaim, recoupment, defense or other\nclaim, right or action that the Company may have against Employee or others,\nunless such amount is a determinable liability of the Employee to the Company.\n\n 17. Assignment. This Agreement is personal to Employee, and Employee shall\nnot assign any of Employee's rights or delegate any of Employee's duties\nhereunder without the prior written consent of the Company. Neither Employee nor\nEmployee's spouse will have the right to commute, encumber, or otherwise dispose\nof any payments under this Agreement. The Company shall have the right to assign\nthis Agreement to a successor in interest in connection with a merger, sale of\nsubstantially all assets, or the like; provided however, that an assignment of\nthis Agreement to an entity with operations, products or services outside of the\nindustries in which the Company is then active shall not be deemed to expand the\nscope of Employee's covenant not to compete with such operations, products or\nservices without Employee's written consent. The Company shall require any\nPerson who is the successor (whether direct or indirect, by purchase, merger,\nconsolidation, reorganization, or otherwise) to all or substantially all of the\nbusiness and\/or assets of the Company to expressly assume and agree to perform,\nby a written agreement in form and substance reasonably satisfactory to\nEmployee, all of the obligations of the Company under this Agreement. As used\nin this Agreement, the term \"Company\" means the Company as hereinbefore defined\nand any successor to its business and\/or assets as aforesaid which assumes and\nagrees to perform this Agreement by operation of law, written agreement, or\notherwise.\n\n 18. Survival. The provisions of this Agreement shall survive the\ntermination of Employee's employment hereunder in accordance with their terms.\n\n 19. Governing Law. This Agreement shall be governed by, and construed\nand enforced in accordance with, the laws of Texas without regard to the choice-\nof-law principles thereof.\n\n 20. Binding Upon Successors. This Agreement shall be binding upon, and\nshall inure to the benefit of, the parties hereto and their respective heirs,\nlegal representatives, successors and permitted assigns.\n\n 21. Entire Agreement. This Agreement constitutes the entire agreement\nbetween the Company and Employee with respect to the terms of employment of\nEmployee by the Company and supersedes all prior agreements and understandings,\nwhether written or oral, between them concerning such terms of employment.\n\n 22. Amendments and Waivers. This Agreement may be amended, modified or\nsupplemented, and any obligation hereunder may be waived, only by a written\ninstrument executed by the parties hereto. The waiver by either party of a\nbreach of any provision of this Agreement shall not operate as a waiver of any\nsubsequent breach. No failure on the part of any party to exercise, and no\ndelay in exercising, any right or remedy hereunder shall operate as a waiver\nhereof, nor shall any single or partial exercise of any such right or remedy by\nsuch party preclude any other or further exercise thereof or the exercise of any\nother right or remedy.\n\n 8\n\n \n 23. Cumulative Rights And Remedies. All rights and remedies hereunder are\ncumulative and are in addition to all other rights and remedies provided by law,\nagreement or otherwise. Employee's obligations to the Company and the\nCompany's rights and remedies hereunder are in addition to all other obligations\nof Employee and rights and remedies of the Company created pursuant to any other\nagreement.\n\n 24. Construction. Each party to this Agreement has had the opportunity\nto review this Agreement with legal counsel. This Agreement shall not be\nconstrued or interpreted against any party on the basis that such party drafted\nor authored a particular provision, parts of or the entirety of this Agreement.\n\n 25. Severability. In the event that any provision or provisions of this\nAgreement is held to be invalid, illegal or unenforceable by any court of law or\notherwise, the remaining provisions of this Agreement shall nevertheless\ncontinue to be valid, legal and enforceable as though the invalid or\nunenforceable parts had not been included therein. In addition, in such event\nthe parties hereto shall negotiate in good faith to modify this Agreement so as\nto effect the original intent of the parties as closely as possible with respect\nto those provisions which were held to be invalid, illegal or unenforceable.\n\n 26. Attorneys' Fees and Costs. If any action at law or in equity is\nbrought to enforce or interpret the terms of this Agreement, the prevailing\nparty shall be entitled to reasonable attorneys' fees, costs and necessary\ndisbursements in addition to any other relief to which it may be entitled.\n\n 27. Encompass Services Corporation Performance Guarantee. Encompass\nServices Corporation, the parent of Company, guarantees the timely performance\nof all covenants and financial obligations of Company hereunder.\n\n 9\n\n \n IN WITNESS WHEREOF, the Company and Employee have executed this Agreement\non the date first above written.\n\n COMPANY\n \n ENCOMPASS MANAGEMENT CO.\n \n \n By:\/S\/ JOSEPH M. IVEY\n ------------------\n Name: Joseph M. Ivey\n ----------------\n Title: President\n --------------\n \n ENCOMPASS\n \n ENCOMPASS SERVICES CORPORATION\n \n \n By: \/S\/ JOSEPH M. IVEY\n ------------------\n Name: Joseph M. Ivey\n -----------------\n Title: President\n ---------------\n \n EMPLOYEE:\n \n \/S\/ D. L. LUKE\n --------------\n Donald L. Luke\n\n 10\n\n \n EXHIBIT A\n\n DEFINITIONS\n \n\n \"Annual Base Salary\" means the salary of Employee in effect at the relevant\ntime determined in accordance with Section 4(a) hereof.\n\n \"Affiliate\" means, with respect to any Person, each other Person who\ncontrols, is controlled by, or is under common control with the Person\nspecified.\n\n \"Cause\" when used in connection with the termination of employment with the\nCompany, means the termination of Employee's employment by the Company by reason\nof (i) the conviction of Employee of a crime involving moral turpitude by a\ncourt of competent jurisdiction; (ii) the proven commission by Employee of an\nact of fraud upon the Company; (iii) the willful and proven misappropriation of\nany funds or property of the Company by Employee; (iv) the willful, continued\nand unreasonable failure by Employee to perform material duties assigned to\nEmployee after reasonable notice and opportunity to cure such performance has\nbeen given by the Company; (v) the knowing engagement by Employee in any direct,\nmaterial conflict of interest with the Company without compliance with the\nCompany's conflict of interest policy, if any, then in effect; (vi) the knowing\nengagement by Employee, without the written approval of the Board of Directors\nof the Company, in any activity which competes with the business of the Company\nor any of its Affiliates or which would result in a material injury to the\nCompany or any of its Affiliates; or (vii) the knowing engagement in any\nactivity which would constitute a material violation of the provisions of the\nCompany's Insider Trading Policy or Business Ethics Policy, if any, then in\neffect.\n\n \"Confidential Information\" includes information conveyed or assigned to the\nCompany or any of its Affiliates by Employee or conceived, compiled, created,\ndeveloped, discovered or obtained by Employee from and during Employee's\nemployment relationship with the Company, whether solely by Employee or jointly\nwith others, which concerns the affairs of the Company or its Affiliates and\nwhich the Company could reasonably be expected to desire be held in confidence,\nor the disclosure of which would likely be embarrassing, detrimental or\ndisadvantageous to the Company or its Affiliates and without limiting the\ngenerality of the foregoing includes information relating to inventions, and the\ntrade secrets, technologies, algorithms, products, services, finances, business\nplans, marketing plans, legal affairs, supplier lists, client lists, potential\nclients, business prospects, business opportunities, personnel assignments,\ncontracts and assets of the Company or any of its Affiliates and information\nmade available to the Company or any of its Affiliates by other parties under a\nconfidential relationship. Confidential Information, however, shall not include\ninformation (a) which is, at the time in question, in the public domain through\nno wrongful act of Employee, (b) which is later disclosed to Employee by one not\nunder obligations of confidentiality to the Company or any of its Affiliates or\nEmployee, (c) which is required by court or governmental order, law or\nregulation to be disclosed, or (d) which the Company has expressly given\nEmployee the right to disclose pursuant to written agreement.\n\n 11\n\n \n \"Good Reason\" means the occurrence of any of the following events:\n\n (a) Employee is assigned duties, taken as a whole, that are materially\ninconsistent with, or materially diminished from, Employee's positions, duties,\nresponsibilities and status with the Company immediately prior to such action,\nor Employee's status, reporting responsibilities, titles or offices are\nmaterially diminished from those in effect immediately prior to such action, or\nEmployee's duties and responsibilities are materially increased without a\ncorresponding reasonable increase in the Employee's compensation except in each\ncase in connection with the termination of Employee's employment by the Company\nfor Cause or on account of disability, or as a result of the Employee's death,\nor by the Employee for other than Good Reason; provided, however, that Good\nReason shall not be triggered under this subsection (a) by an immaterial action\nnot taken in bad faith or by an action that is remedied by the Company promptly\nafter receipt of written notice from Employee; or\n\n (b) Employee's Annual Base Salary is reduced from that which was in effect\nprior to such action unless such reduction is part of a general reduction in\ncompensation within the officer ranks due to economic or company-wide\nconsiderations; or\n\n (c) The Company takes any action to materially reduce or eliminate\nEmployee's participation in the Company's benefit or compensation plans unless\nsuch reduction or elimination is part of a general reduction in benefits within\nthe officer ranks due to economic or company-wide considerations; or\n\n (d) The Company requires the Employee at any time to relocate more than 50\nmiles from where Employee's principal office was located immediately prior to\nsuch event; or\n\n (e) The amendment, modification or repeal of any provision of the\nCertificat of Incorporation or Bylaws of the Company that was in effect\nimmediately prior to the commencement of a Protected Period, if such amendment,\nmodification or repeal would materially adversely affect Employee's rights to\nindemnification by the Company; or\n\n (g) The Company shall violate or breach any obligation of the Company\n(regardless whether such obligation be set forth in the Bylaws of the Company\nand\/or in this Agreement or any other separate agreement entered into between\nthe Company and Employee) to indemnify Employee against any claim, loss, expense\nor liability sustained or incurred by Employee by reason, in whole or in part,\nof the fact that Employee is or was an officer or director of the Company; or\n\n (h) The Company shall violate or breach any other material obligation of\nthe Company owing to Employee relating to Employee's employment with the\nCompany, provided that in the event of a violation or breach that is reasonably\nsubject to being cured by the Company, Good Reason shall only occur if the\nCompany shall fail or refuse to commence a cure within 15 days after written\nnotice thereof is given by Employee to the Company or shall thereafter fail to\ndiligently prosecute such cure to completion; or\n\n 12\n\n \n (i) The Company shall fail to keep in force, for the benefit of Employee,\ndirectors' and officers' insurance policy with coverage amounts and scope at\nleast equal to the coverage amounts in effect on the date hereof; or\n\n (j) The Company shall fail to obtain from a successor (including a\nsuccessor to a material portion of the business or assets of the Company) a\nsatisfactory assumption in writing of the Company's obligations under this\nAgreement (including the obligation to enter the consulting agreement as of\nAugust 1, 2000); or\n\n (k) The Company shall fail to provide Employee with office space, related\nfacilities and support personnel (including, but not limited to, administrative\nand secretarial assistance) that are both commensurate with the Employee's\nposition and Employee's responsibilities to and position with the Company and\nnot materially dissimilar to the office space, related facilities and support\npersonnel provided to other executive officers of the Company; or\n\n (l) The Company notifies Employee of the Company's intention not to\nobserve or perform one or more of the material obligations of the Company under\nthis Agreement.\n\n \"Person\" means any individual, corporation, trust, partnership, limited\npartnership, foundation, association, limited liability company, joint stock\nassociation or other legal entity.\n\n \"Restricted Period\" means the period beginning on the date of the\ntermination or resignation of Employee's employment with the Company and its\nAffiliates and ending as follows, as applicable:\n\n (i) six months after the termination of Employee's employment if\n Employee is not entitled to benefits under Section 8(b) or Section 8(c);\n or;\n\n (ii) two years after the termination of Employee's employment, if\n Employee receives all of the benefits under Section 8(b) or 8(c) (after\n giving effect to any permissible setoff).\n\n 13\n\n \n EXHIBIT B\n \n CONSULTING AGREEMENT\n\n\n This Consulting Agreement, dated as of August 1, 2000, (\"Agreement\") is\nbetween Donald L. Luke (\"Consultant\"), and Encompass Management Co. (\"Company\").\nIn consideration of the mutual covenants contained herein, Consultant and\nCompany agree as follows:\n\n1. Engagement. Consultant has certain skills and expertise related to\nthe Company's business which Company would like to utilize in its operations.\nTherefore, Consultant agrees to render consulting services for the period\ndescribed in Section 3.a, subject to the terms and conditions set forth herein.\n\n2. Responsibilities of Consultant. During the term of this Agreement,\nConsultant agrees to provide services (\"Consulting Services\") with respect to\nthe management and operation of the Company as reasonably requested by the\nCompany in the areas of operational problems and opportunities, senior\nmanagement special projects, Board of Directors projects, mergers & acquisitions\nand national accounts\/key customers\n\n3. Term.\n\na. Term. The period of Consultant's engagement under this Agreement shall\ncommence as of August 1, 2000 and shall continue through May 30, 2001, unless\nthis Agreement is terminated pursuant to Section 3.b (\"Term\").\n\nb. Termination. This Agreement may be terminated with or without cause or\nreason by either Consultant or Company upon 30 calendar days prior written\nnotice, provided that if the Company terminates the Agreement other than for the\nreasons set forth in the following sentence, the Company shall be obligated to\npay Consultant the remaining balance of the monthly payments due under Section 4\nhereof through the remaining Term of the Agreement in a lump sum due at the\neffective time of termination. This Agreement may be terminated by Company\nwithout notice if Consultant (1) commits any act of gross misconduct or in any\nmaterial way breaches his obligations under this Agreement; (2) engages in any\nmisconduct which, in the opinion of Company, brings him, Company, or any\naffiliated entity into disrepute; (3) is convicted of any felony or any criminal\noffense; or (4) commits any act of dishonesty relating to the business of the\nCompany or any affiliated entity.\n\n4. Remuneration. For the Consulting Services rendered by Consultant\nunder this Agreement, Company shall pay Consultant during the Term the amount of\n$25,000 per month. In addition, during the Term:\n\na. the Company will reimburse Consultant for all reasonable business expenses\n incurred by Consultant in providing the Consulting Services; provided,\n however, that Consultant \n\n 14\n\n \n must file expense reports with respect to such expenses in accordance with\n the Company's policies as are in effect form time to time;\n\nb. the Company shall use reasonable efforts to provide (i) life insurance\n payable to Consultant's designated beneficiary in an amount equal to at\n least $900,000 and (ii) disability insurance on behalf of Consultant which,\n as a goal, shall provide monthly payments to Consultant in the event of\n permanent disability in an amount equal to the lesser of (i) 60% of the base\n consulting fees per month through May 30, 2001, or (ii) $10,000 per month\n through May 30, 2001; and\n\nc. to the extent permitted by applicable law, Company plans and as described in\n the Employment Agreement, Consultant shall participate in health insurance,\n life insurance and dental insurance plans of the Company; provided, however,\n that the nature, amount and limitations of such plans shall be determined\n from time to time by the Board of Directors of the Company. These benefits\n will continue in effect until January 31, 2002.\n\n5. Status. Consultant, as an independent contractor, is responsible for, and\nshall have control over, the details and means of performing the Consulting\nServices. Nothing contained in this Agreement shall be construed as creating an\nemployer-employee relationship between Company and Consultant.\n\n6. Activities. During the Term of this Agreement, Consultant shall devote such\nof his time and efforts as in his judgment may reasonably be required from time\nto time to perform his duties under this Agreement as may be requested by the\nCompany. As long as Consultant complies with the provisions of Section 9 of\nthis Agreement, Consultant may perform services for other persons or entities.\n\n7. Taxes. Consultant represents and warrants that he will report all income\nearned from Company pursuant to this Agreement and will pay all taxes required\nto be paid under the law. Consultant shall indemnify and hold harmless Company\nfrom any liability, damages (whether actual, consequential, special or\npunitive), claims, expenses, fees, penalties, or costs incurred in connection\nwith or arising from any failure by Consultant to pay such taxes.\n\n8. Benefits. Except as stated in Section 4 above, Consultant agrees and\nunderstands that, as an independent contractor, he is not entitled to receive\nany employee benefits from Company.\n\n9. Trade Secrets, Confidential Information, Non-Compete. Company and\nConsultant acknowledge and agree that, during the term of his association with\nCompany, Consultant will have access to certain confidential information\nrelating to the business of Company and affiliated entities (the \"Confidential\nInformation\"). To ensure the continued secrecy of the Confidential Information,\nConsultant agrees that he will not, during the Term, or at any time thereafter,\ndivulge, furnish or make accessible to anyone, any knowledge or information with\nrespect to any of the Confidential Information relating to the business of\nCompany other than (a) pursuant to statutory and legal requirements, (b)\npursuant to mandatory court order, subpoena or other legal process, or (c) with\nthe consent of or pursuant to instructions from Company. Consultant also agrees\nthat, during the Term of this Agreement and for a period of two (2) years\nthereafter, \n\n 15\n\n \nConsultant will not engage in or carry on, directly or indirectly, either for\nhimself or as a member of a partnership or as a shareholder, investor, owner,\nofficer or director of a company or other entity, or as an employee, agent,\nassociate or consultant of any person, partnership, corporation or other entity,\nany business in any State of the United States that directly competes with any\nservices or products produced, sold, conducted, developed, or in the process of\ndevelopment by the Company or its Affiliates at the end of the Term of this\nAgreement. Notwithstanding the foregoing, the ownership of less than one percent\nof any class of securities of a publicly-held company whose gross assets exceed\n$100,000,000 shall not be deemed to constitute a prohibited activity under this\nSection 9. Consultant acknowledges that the limitations set forth herein on\nConsultant's rights to compete with the Company and its Affiliates are\nreasonable and necessary for the protection of the Company and its Affiliates.\nIn this regard, Consultant specifically agrees that the limitations as to period\nof time and geographic area, as well as all other restrictions on Consultant's\nactivities specified herein, are reasonable and necessary for the protection of\nthe Company and its Affiliates. In particular, Consultant acknowledges that the\nparties anticipate that Consultant will be actively seeking markets for the\nproducts and services of the Company and its Affiliates throughout the United\nStates during the Term hereof. In the event that there shall be any violation of\nthe covenant not to compete set forth in this Section, then the time limitation\nthereof shall be extended for a period of time equal to the period of time\nduring which such violation continues; and in the event the Company is required\nto seek relief from such violation in any court, board of arbitration or other\ntribunal, then the covenant shall be extended for a period of time equal to the\npendency of such proceedings, including all appeals. Consultant agrees that the\nremedy at law for any breach by Consultant of this Section will be inadequate\nand that the Company shall also be entitled to injunctive relief.\n\n10. Mediation and Arbitration. If any dispute arises out of or relates to this\nAgreement, or the breach thereof, and if such dispute cannot be settled by the\nparties through negotiation, the parties agree to try in good faith to settle\nthe dispute by mediation. If the dispute cannot be settled by negotiation or\nmediation, the dispute shall be settled by final and binding arbitration in\nHouston, Texas, under the Commercial Arbitration Rules of the American\nArbitration Association. This section shall not apply to disputes arising out\nof Section 9.\n\n11. Notices. Any notice, request, instruction, correspondence or other\ndocument to be given hereunder by either party to the other (collectively called\n\"Notice\") shall be in writing and delivered in person or by courier service\nrequiring acknowledgment of receipt of delivery or mailed by certified mail,\npostage prepaid and return receipt requested, or by telecopier, as follows:\n\n If to Consultant, addressed to:\n\n -------------------------------\n\n -------------------------------\n\n -------------------------------\n\n 16\n\n \n If to the Company:\n\n Encompass Management Co.\n 3 Greenway Plaza, Suite 2000\n Houston, Texas 77046\n Attention: Corporate Secretary\n Facsimile: 713-626-4766\n\n\nNotice given by personal delivery, courier service or mail shall be effective\nupon actual receipt. Notice given by telecopier shall be confirmed by\nappropriate answer back and shall be effective upon actual receipt if received\nduring the recipient's normal business hours, or at the beginning of the\nrecipient's next business day after receipt if not received during the\nrecipient's normal business hours. All Notices by telecopier shall be confirmed\npromptly after transmission in writing by certified mail or personal delivery.\nAny party may change any address to which Notice is to be given to it by giving\nNotice as provided above of such change of address.\n\n12. Governing Law. The provisions of this Agreement shall be governed by and\nconstrued and enforced in accordance with the laws of the State of Texas without\nregard to the choice-of-law principles thereof.\n\n13. Entire Agreement; Amendments and Waivers. This Agreement constitutes the\nentire agreement between the parties hereto pertaining to the subject matter\nhereof and supersedes all prior agreements, understandings, negotiations and\ndiscussions, whether oral or written, of the parties, and there are no\nwarranties, representations or other agreements between the parties in\nconnection with the subject matter hereof except as set forth specifically\nherein or contemplated hereby. No supplement, modification or waiver of this\nAgreement shall be binding unless executed in writing by the party to be bound\nthereby. The failure of a party to exercise any right or remedy shall not be\ndeemed or constitute a waiver of such right or remedy in the future. No waiver\nof any of the provisions of this Agreement shall be deemed or shall constitute a\nwaiver of any other provision hereof (regardless of whether similar), nor shall\nany such waiver constitute a continuing waiver unless otherwise expressly\nprovided.\n\n14. Binding Effect and Assignment. This Agreement shall be binding upon and\ninure to the benefit of the parties and their respective permitted successors\nand assigns; but neither this Agreement nor any of the rights, benefits or\nobligations hereunder shall be assigned, by operation of law or otherwise, by\nany party without the prior written consent of the other party.\n\n15. Severability. If any provision of the Agreement is rendered or declared\nillegal or unenforceable by reason of any existing or subsequently enacted\nlegislation or by decree of a court of last resort, Company and Consultant shall\npromptly meet and negotiate substitute provisions for those rendered or declared\nillegal or unenforceable, but all of the remaining provisions of this Agreement\nshall remain in full force and effect.\n\n 17\n\n \n16. Headings. The headings of the sections herein are inserted for convenience\nof reference only and are not intended to be a part of or to affect the meaning\nor interpretation of this Agreement.\n\n17. Execution. This Agreement may be executed in multiple counterparts each of\nwhich shall be deemed an original and all of which shall constitute one\ninstrument.\n\n18. Encompass Services Corporation Performance Guarantee. Encompass Services\nCorporation, the parent of Company, guarantees the timely performance of all\ncovenants and financial obligations of Company hereunder.\n\n\n IN WITNESS WHEREOF, the parties have executed this Agreement on the date\nfirst written above to be effective as of such date.\n\n\n COMPANY\n\n ENCOMPASS MANAGEMENT CO.\n\n\n By:______________________\n Name:____________________\n Title:___________________\n\n\n ENCOMPASS\n\n ENCOMPASS SERVICES CORPORATION\n\n\n By:______________________\n Name:____________________\n Title:___________________\n\n\n\n\n CONSULTANT:\n\n\n -------------------------\n Donald L. Luke\n\n 18\n\n \n EXHIBIT C\n \n\n\n List of Donald L. Luke Options\n Outstanding at February 22, 2000\n\n\n<\/pre>\n
\n\nDate of Grant Number of Shares Exercise Price Term
\n—————————————————————————————————–
\n
\n8\/1\/97 10,304 (1) $3.08\/share 7\/31\/2007
\n—————————————————————————————————–
\n11\/7\/97 56,500 $14.00\/share 11\/6\/2002
\n—————————————————————————————————–
\n12\/9\/98 15,000 $12.94\/share 12\/8\/2003
\n—————————————————————————————————–
\n<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n(1) after the cash tender of a portion of the Founder Options in the
\nGroupMAC\/BOSC Merger<\/p>\n
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