TRANSACTION INCENTIVE AGREEMENT
THIS TRANSACTION INCENTIVE AGREEMENT (this "Agreement") dated as of
January 1, 1997 is entered into by and among RBPI Holding Corporation
("Holding"), Xxxxxx Building Products, Inc. ("Building Products"), and Xxxxx X.
Xxxxx ("Executive").
WHEREAS, Xxxxxxx Partners, L.P. ("Xxxxxxx") is the principal stockholder of
Holding;
WHEREAS, Holding is the principal stockholder of Building Products;
WHEREAS, Executive is the President and Chief Executive Officer of Building
Products;
WHEREAS, Executive possesses an intimate knowledge of the business and
affairs of Building Products, its policies, methods, personnel and problems;
WHEREAS, Xxxxxxx and Building Products have entered into discussions
regarding a possible transaction involving (1) a merger or consolidation of
Building Products with or into another unrelated entity, (2) a sale, transfer or
disposition of outstanding Building Products Common Stock or the common equity
of Holding, or (3) a transfer of all or substantially all the assets of Building
Products (in a single transaction or series of related transactions) in exchange
for consideration to be distributed to the holders of Building Products' Common
Stock (not including, however, a transaction which is effected primarily for the
purpose of changing the jurisdiction of incorporation of Building Products or
the form of organization of Building Products; a reorganization within the
Building Products Group (as hereinafter defined); a transaction in which the
current owners of Building Products' Common Stock and Holding's common equity
and their proportionate equity ownership interest in the surviving entity
comprising the business of Building Products remain substantially the same as on
the date hereof, or which is otherwise technical in nature; or a transaction
that does not involve the sale of at least fifty-one percent (51%) of Building
Products assets or Common Stock or the common equity of Holding to an unrelated
entity) (the "Transaction");
WHEREAS, Xxxxxxx, Holding and Building Products desire that Executive
continue in his position with Building Products until the consummation of the
Transaction or such later date as Building Products shall, in its sole and
absolute discretion, determine and to assist Building Products if, as and when
requested by Building Products, in the negotiation and consummation of the
Transaction;
WHEREAS, Holding and Building Products, in order to achieve their
objectives as set forth above and as an inducement for Executive to continue in
the employ of Building Products to assist Building Products if, as and when
requested by Building Products, in the negotiation and consummation of the
Transaction, are desirous of providing a bonus to Executive should the
Transaction be consummated during Executive's employment with Building Products;
WHEREAS, absent this Agreement, Holding and/or Building Products are under
no legal obligation to provide additional compensation to Executive in addition
to the compensation and benefits Executive is presently receiving; and
WHEREAS, Executive desires to remain in the employ of Building Products and
is willing to assist Building Products if, as and when requested by Building
Products, in the negotiation and consummation of the Transaction in accordance
with the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency all of which are hereby acknowledged by the parties
hereto, each of the parties hereto agrees as follows:
1. (a) Subject to the fulfillment of the specific conditions set forth
in paragraph 4 hereof and the general agreements contained herein, Executive
shall receive from Building Products, in the manner provided in paragraph 2, a
bonus (the "Transaction Bonus") as set forth below:
(i) Two hundred and fifty thousand dollars in cash ($250,000);
and
(ii) Two hundred thousand dollars ($200,000) in the form of
deferred compensation pursuant to a deferred compensation plan between Executive
and Building Products.
2
(b) For purposes of this Agreement:
(i) "Common Equity Holders" shall mean Xxxxxxx, Holding (in the
event of a sale of the Common Stock of Building Products), or Building Products
(in the event of a sale of all or substantially all the assets of Building
Products), together with any other common equity holders of such entities at the
time the Transaction is consummated.
(ii) The term "Closing Date" shall mean the effective date of the
transfer of assets, Building Products Common Stock or Holding common equity to
the purchaser of all or substantially all the assets or Common Stock of Building
Products or the common equity of Holding in the Transaction (the "Purchaser")
and the receipt of the cash portion of the Gross Proceeds (other than
prepayments or deposits or post-Closing Date payments) by the Common Equity
Holders.
2. If a Transaction is consummated and the conditions to the obligation
to pay the Transaction Bonus to Executive as provided herein have been
satisfied, the cash portion of the Transaction Bonus shall be paid to Executive
in cash within 30 days after the Closing Date, net of the following items which
Executive hereby consents may be deducted: (i) all applicable payroll deductions
(e.g., taxes, F.I.C.A.), (ii) other amounts required by law and (iii) any
outstanding amounts owed by Executive to Xxxxxxx, Holding and/or Building
Products.
3. Any provision of this Agreement to the contrary notwithstanding, if
any amount otherwise payable to Executive pursuant to this Agreement would cause
Executive to be subject to an excise tax with respect to such amount on account
of Internal Revenue Code section 280G (excess parachute payments), Building
Products will make a cash payment to Executive equal to the excise tax imposed
with respect to any such amount on account of Internal Revenue Code section
280G.
4. The payment of the Transaction Bonus to Executive as provided in
paragraph 1 is subject to the satisfaction of all of the following conditions:
(a) The Transaction shall have been consummated and the Closing Date
shall have occurred on terms and conditions satisfactory to Xxxxxxx, Holding and
Building Products in their sole and absolute discretion, and all third parties
whose consent
3
or approval is required to consummation of the Transaction shall have provided
such consent or approval, as applicable;
(b) Executive shall not have been terminated by Building Products for
failure to comply with the provisions of Section 4(c) prior to the Closing Date;
(c) From the date hereof to and including the Closing Date, (i)
Executive shall have assisted Xxxxxxx and Building Products in connection with
the consummation of the Transaction in such manner as Building Products shall
reasonably require, (ii) Executive shall fully discharged his responsibilities
to Building Products, including performance of all assigned job duties, in all
material respects and (iii) Executive shall not have breached any material
duties or obligations to Building Products. Compliance with each of the
foregoing conditions shall be determined to the sole satisfaction of Building
Products;
(d) From the date hereof to and including the Closing Date, and from
the Closing Date until the date of full payment of the Transaction Bonus,
Executive shall not have commenced or instigated any legal, equitable or
administrative complaint, proceeding, action or suit against Xxxxxxx, Holding,
Building Products, any of their directors, officers, employees, partners or
stockholders, the Purchaser or any investment banker or lender involved in the
Transaction nor have sought any stay, injunction, restraining order or the like,
with respect to the negotiation or consummation of the Transaction or the
funding or any other aspect of the Transaction, other than a complaint or
proceeding to enforce Executive's rights hereunder;
(e) By the close of business on any date specified by Building
Products, Executive shall have returned to Building Products any and all items
of Building Products' property (and any property of any company affiliated with
Building Products) which are in Executive's possession or under his control,
including, without limitation, keys, parking card, calculator, equipment, files,
manuals, correspondence and any and all other documents or property which
Executive has had possession of during the course of Executive's employment with
Building Products or which are then under Executive's control; and
(f) Executive shall have paid or satisfied all amounts owed by
Executive to Building Products and any company affiliated with Building Products
that have been incurred in the course of Executive's employment or otherwise,
including, without
4
limitation, personal expenses, company loans or advances and unearned draws or
commissions.
5. In consideration of, and as a condition to, Building Products'
agreement to pay the Transaction Bonus to Executive, and subject to the terms
and conditions contained herein, Executive will on the Closing Date (a)
acknowledge and agree that he has and will make no claim of any kind against
Xxxxxxx or its partners, Holding or Building Products, or any of their parent
and affiliated companies, or any of the partners, officers, directors, agents,
executives, representatives, successors and assigns of such entities (all such
persons and entities herein collectively called the "Company"), including, but
not limited to, any claim based on any state or federal statutory or common law
that applies or is asserted to apply, directly or indirectly, to the employment
relationship, (b) except for claims for the enforcement hereof or enforcement of
his rights as expressly stated under any Employment Agreement in effect between
Executive and the Company and/or Building Products (an "Employment Agreement"),
release any and all claims, demands, actions or causes of action of any kind
which Executive may have on the Closing Date or may acquire subsequent to the
Closing Date against the Company resulting from, growing out of, connected with
or relating in any way to Executive's employment with Building Products, or the
termination of such employment, including, without limitation, any and all
claims for damages (actual, compensatory, liquidated, exemplary or punitive),
back pay, front pay, bonuses, severance pay, loss of past and future executive
benefits, injunctive relief, declaratory relief, attorneys' fees, costs of
court, disbursements, interest or any other form of legal or equitable relief to
which Executive claims or might claim entitlement as a result of any alleged act
of unlawful employment discrimination, failure to pay compensation, wrongful
discharge, breach of contract (express or implied) or the misappropriation of
any intellectual property, (c) except for claims arising out of the express
terms of any Employment Agreement, acknowledge and agree that by accepting the
Transaction Bonus, Executive has given up his right to file any charge,
complaint, suit or other legal action against the Company based on Executive's
employment with Building Products prior to the Closing Date or the termination
of his employment on the Closing Date, and (d) agree that after the payment of
the Transaction Bonus Executive will not commence or instigate any legal,
equitable or administrative complaint, proceeding, action or suit against the
Company, the Purchaser or any investment banker or lender involved in the
Transaction with respect to the
5
negotiation or consummation of the Transaction or the funding or any other
aspect of the Transaction, except for any action, suit or proceeding which may
be necessary to enforce Executive's right to indemnification by the Company for
acts or actions taken by Executive in his capacity as an officer, director or
employee of Building Products.
6. THE TERMS OF THIS AGREEMENT DO NOT CONSTITUTE, AND SHOULD NOT BE
RELIED UPON AS, A GUARANTEE OR CONTRACTUAL COMMITMENT BY HOLDING OR BUILDING
PRODUCTS OF EMPLOYMENT FOR ANY DEFINITE PERIOD OF TIME. EXECUTIVE IS EMPLOYED
AT WILL, AND NOTHING CONTAINED IN THIS AGREEMENT LIMITS THE RIGHT OF BUILDING
PRODUCTS OR EXECUTIVE TO TERMINATE ITS AT-WILL RELATIONSHIP AT ANY TIME WITH OR
WITHOUT REASON OR ADVANCE NOTICE. The Purchaser shall be under no obligation to
offer employment to Executive, and neither Holding nor Building Products shall
be obligated to condition the Transaction on the offering of employment to any
individual, including Executive, or to continue the employment of Executive
after the Closing Date or the date hereof.
7. The term of this Agreement shall commence on the date hereof and shall
continue until the earlier to occur (the "Termination Date") of (i) the
termination of Executive's employment with Building Products pursuant any
Employment Agreement or otherwise and (ii) December 31, 1997; PROVIDED, HOWEVER,
that in the event a definitive and fully negotiated agreement of sale between
Xxxxxxx, Holding and/or Building Products, as the case may be, and the Purchaser
shall have been fully executed prior to the Termination Date, this Agreement
shall extend until the earlier of the Closing Date of such Transaction (if and
only if such Transaction is consummated) or termination of such Transaction. In
the event that this Agreement shall expire or terminate, Building Products shall
have no obligation to pay all or any portion of the Transaction Bonus, or any
other payment in respect thereof, to Executive. Should the Transaction Bonus be
paid to Executive, paragraphs 5, 6 and 9 hereof shall survive any completion,
termination or expiration of this Agreement.
8. None of Xxxxxxx, Holding or Building Products shall be under any duty
to Executive to (a) make any agreement to sell or otherwise dispose of any of
Building Products' Common Stock or assets, (b) close any Transaction or (c)
negotiate any particular selling price or to obtain any particular amount of
gross proceeds, it being understood that the decision whether to proceed with a
Transaction, and the terms and conditions of any
6
Transaction, shall be in the sole and absolute discretion of Xxxxxxx, Holding or
Building Products, as appropriate.
9. Executive acknowledges and agrees that all of the documents and
information to which he has had access during his employment, including, but not
limited to, this Agreement, all information pertaining to any specific business
transactions in which Building Products is or was involved, all information
pertaining in any way to customers of Building Products, and in general, the
business and operations of Building Products, are considered confidential and
that, during the period of Executive's employment with Building Products and for
the one (1) year period thereafter following termination of Executive's
employment with Building Products, he shall not disclose to any person, other
than an executive of Building Products or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by
Executive of his duties as an executive of Building Products or its parent
corporation or any subsidiary thereof (individually or collectively as the
context may require, the "Building Products Group"), material confidential
information obtained by him while in the employ of Building Products including,
but not limited to, confidential information with respect to any of the Building
Products Group's products, improvements, formulas, customers, distribution of
products or methods of manufacture; provided, however, that confidential
information shall not include any information (i) known generally to the public
(other than as a result of unauthorized disclosure by Executive), (ii) otherwise
known or available to Executive prior to his employment by Building Products, or
(iii) not treated as confidential by Building Products (other than as a result
of unauthorized disclosure by Executive), except that Executive may disclose (a)
the existence of and the terms of this Agreement to Executive's spouse,
attorney, accountant, tax return preparer, financial planner and, to the extent
necessary, to those persons who have a need to know such information in
connection with future employment, if each such person has agreed to keep its
existence and provisions confidential, (b) to the extent required by judicial
process and (c) with the written consent of the Building Products' Board of
Directors or a person authorized thereby.
10. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
7
If to Holding or
Building Products: If to Executive:
------------------ ----------------
Board of Directors Xxxxx X. Xxxxx
Xxxxxx Building 6883 Alcove Lane
Products, Inc. Xxxxx, XX 00000
0000 XXX Xxxxxxx
Xxxxx 000, XX 00
Xxxxxx, XX 00000
With a copy to:
---------------
Xxxxx X. Xxxxxxx
Xxxxxxx Partners, L.P.
000 Xxxxx Xx. Xxxx
Xxxxxx, XX 00000
or to such other address as any party hereto may have furnished to the other in
writing.
11. (a) No provision of this Agreement may be amended, modified, waived
or discharged unless such amendment, modification, waiver or discharge is agreed
to in writing and signed by Executive, Holding and such officer as may be
specifically designated by the Board of Directors of Building Products.
(b) No waiver by any party hereto at any time of any breach by the
other party hereto of, or in compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(c) The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Texas.
(d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect; provided,
however, that if any provision of this Agreement is deemed or held to be
illegal, invalid, or unenforceable there shall be added hereto automatically a
provision as similar as possible to such illegal,
8
invalid, or unenforceable provision as shall be legal, valid and enforceable.
(e) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amount would still be payable to Executive hereunder if Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Executive's devisee,
legatee, or other designee or, if there be no such designee, to Executive's
estate.
(f) This Agreement shall be binding upon Holding, Building Products
and their related successors and assigns. Holding and Building Products will
require any entity that purchases all or substantially all of the assets of
Building Products to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that Holding and Building Products would be
required to perform it if no such succession had taken place. The failure of
Holding or Building Products to obtain such agreement prior to the effectiveness
of any such succession shall constitute a breach of this Agreement and shall
entitle Executive to compensation from Holding in accordance with paragraphs
1(a) and (b) hereof.
(g) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
12. Executive acknowledges that he has read this Agreement, that his
execution hereof is knowing and voluntary, that Executive had a reasonable time
to deliberate regarding this Agreement, and that Executive understands that he
had the right to consult with an attorney regarding this Agreement.
13. No right or interest of Executive hereunder may be sold, assigned,
transferred or pledged, in whole or in part, by operation of law or otherwise,
by Executive except pursuant to Executive's testamentary disposition or the laws
of descent and distribution.
14. The parties agree that this Agreement: (a) contains and constitutes
the entire understanding and agreement between them respecting the subject
matter hereof, (b) supersedes and
9
cancels any previous discussions, negotiations, agreements, commitments and
writings respecting such subject matter, and (c) shall not be deemed or
construed to create a trust fund or grant a security interest of any kind for
the benefit of Executive, and to the extent that Executive acquires any rights
to receive the Transaction Bonus hereunder, such rights shall be no greater than
the right of any unsecured general creditor of Holding or Building Products.
15. The parties hereto agree that Executive's continued employment by the
Company or Building Products subsequent to the Closing Date shall have no effect
on the obligations of the parties hereto, including, without limitation, the
obligation to pay the Transaction Bonus.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
10
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first written above
/s/Xxxxx X. Xxxxx
-----------------------------------
XXXXX X. XXXXX
XXXXXX BUILDING PRODUCTS, INC.
By: /s/Xxxxx X. Xxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
RBPI HOLDING CORPORATION
By:/s/Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
11
