EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of April 1, 1997 is
entered into by and between Xxxxxx Building Products, Inc. ("Building Products")
and Xxxxx X. Xxxxx ("Executive").
WHEREAS, Building Products recognizes that Executive's contribution to the
growth and success of Building Products has been substantial;
WHEREAS, Executive possesses an intimate knowledge of the business and
affairs of Building Products, its policies, methods, personnel and problems;
WHEREAS, Building Products desires that Executive remain in the employ of
Building Products to assure itself of the continued services of Executive in
light of the major issues that have absorbed and will continue to absorb
Building Products' and Executive's attention; and
WHEREAS, Building Products and Executive wish to enter into this Agreement
effective as of the date hereof to reflect their mutual agreements regarding
Executive's employment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency all of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT. (a) During the Term (as hereinafter defined) hereof,
Building Products hereby agrees to continue to employ Executive, and Executive
agrees to continue to provide dedicated services to Building Products and its
subsidiaries, on the terms and conditions set forth herein.
(b) TERM. The term of this Agreement (the "Term") shall commence on
the date hereof and shall continue until the earlier to occur of (i) the
termination of Executive's employment with Building Products pursuant to the
provisions of paragraph 5(a) through 5(d) hereunder and (ii) March 31, 2000;
PROVIDED, HOWEVER, that unless Building Products or Executive gives the
other written notice of its intention to terminate this Agreement not less than
30 days prior to the last day of each month, commencing April 30, 1998, the term
of this Agreement automatically shall be extended so that, as of the last day of
each month thereafter, the remaining term of this Agreement, subject to clause
(i) above, shall always be two years.
2. POSITION AND DUTIES. Executive shall serve as President and Chief
Executive Officer of Building Products and shall have such responsibilities,
powers and duties as are normally attendant such position, and as may from time
to time be prescribed by the Board of Directors of Building Products, provided
that such duties and responsibilities are substantially consistent with
Executive's present duties and those of a senior executive officer. Executive
agrees to devote his full and undivided business time and attention to his
duties and responsibilities as President and Chief Executive Officer of Building
Products and not to engage in any other business activity that would interfere
with his duties and responsibilities under this Agreement.
3. COMPENSATION. Executive shall receive a base salary at the annual
rate of $175,000 (the "Minimum Rate"), subject to increase from time to time in
the sole discretion of the Board of Directors of Building Products. Any
increase in base salary or other compensation shall in no way limit or reduce
any other obligation of Building Products hereunder.
4. BENEFITS; VACATION. During the Term hereof, Executive shall be
entitled (a) to continue to participate in or receive benefits under all
compensation plans, insurance plans, benefit plans and fringe benefit plans or
arrangements presently in effect (or plans and arrangements providing Executive
with substantially similar benefits), and shall be eligible to participate in
any such plans or arrangements which are made available by Building Products in
the future to its executives and key management employees, and (b) to not less
than three (3) weeks of paid vacation each year together with all paid holidays
given to senior executive officers. Nothing paid to Executive under any such
plan or arrangement shall be deemed to be in lieu of compensation to Executive
hereunder.
5. TERMINATION.
(a) TERMINATION FOR ANY REASON. Building Products may terminate
Executive's employment at any time subject to providing
2
the severance benefits, if any, as hereinafter specified according to the terms
hereof. The "Date of Termination" shall mean the date on which Executive's
employment hereunder terminates, and shall be specified in a written notice.
(b) TERMINATION FOR CAUSE. Building Products may terminate
Executive's employment for Cause. For the purposes of this Agreement, "Cause"
shall mean (i) the deliberate and willful failure by Executive to substantially
perform Executive's duties with Building Products, other than any such failure
resulting from Executive's incapacity due to physical or mental illness, (ii)
the willful engaging by Executive in gross misconduct injurious to Building
Products in the sole determination of the Board of Directors of Building
Products acting in good faith, (iii) the conviction of Executive for fraud,
misappropriation, embezzlement or any felony or, (iv) the failure of Executive
to assist Xxxxxxx Partners, L.P. ("Xxxxxxx") and Building Products in connection
with the consummation of the Transaction (as defined in that certain Transaction
Incentive Agreement, dated of even date herewith, among Building Products, RBPI
Holding Corporation, Xxxxxxx and Executive) in such manner as Building Products
shall reasonably require; PROVIDED, HOWEVER, that Executive shall not be in
violation of clause (iv) of this sentence until he has received written notice
of such violation and 15 days' opportunity to cure. For purposes of this
subparagraph, no act, or failure to act, on Executive's part shall be considered
"willful" unless done, or omitted to be done, by Executive not in good faith and
without reasonable belief by Executive that Executive's action or omission was
in the best interest of Building Products.
(c) TERMINATION FOR GOOD REASON. Executive may terminate his
employment hereunder for Good Reason. "Good Reason" shall mean (i) any
reassignment of Executive to duties materially inconsistent with those attendant
his position, title and status with Building Products as set forth in paragraph
2 hereof, (ii) any reduction in Executive's base salary below the Minimum Rate
or the removal of Executive from participation in any employee benefit plan
generally provided to all executive officers unless Executive is provided with
substantially similar benefits pursuant to another plan or arrangement, (iii)
any material breach by Building Products of any provision of this Agreement or
the failure by Building Products to obtain the assumption of and the agreement
to perform this Agreement by any successor as contemplated in paragraph 11(f),
(iv) any requirement that Executive relocate out of the Dallas/Fort Worth
3
metroplex area or (v) any requirement that Executive perform any illegal acts
(upon advice of counsel) or acts that a reasonable person in similar
circumstances would consider unethical.
(d) TERMINATION FOR DISABILITY; RETIREMENT.
(i) If, as a result of Executive's incapacity due to physical or
mental illness, Executive shall have been absent from his duties with Building
Products on a full time basis for six (6) consecutive months, and within thirty
(30) days after written notice of intention to terminate is given, Executive
shall not have returned to the full time performance of Executive's duties,
Building Products may terminate this Agreement for "Disability".
(ii) Termination by Building Products or Executive of Executive's
employment based on "Retirement" shall mean termination at normal retirement age
in accordance with Building Products' retirement policy, generally applicable to
its salaried employees or in accordance with any retirement arrangement
established with Executive's consent with respect to Executive.
6. COMPENSATION UPON TERMINATION.
(a) Upon termination of Executive's employment (i) by Building
Products for any reason other than for Cause, Disability, Retirement or Death,
or (ii) by Executive for Good Reason, in lieu of any severance payments that
would otherwise be due Executive upon termination of his employment, which
severance benefits are hereby waived and relinquished by Executive, Building
Products shall:
(i) pay Executive his full base salary through the Date of
Termination at the rate in effect at the time notice of termination is given
(but in no event less than the Minimum Rate), and such bonus (if any), with
respect to the immediately preceding fiscal year then ended (provided same has
not already been paid) which has been earned by Executive pursuant to Building
Products' bonus program then in effect.
(ii) pay Executive for all accrued and unused vacation through the
Date of Termination;
(iii) pay Executive his full base salary at the rate in effect at
the time notice of termination is given (but in no event less than the Minimum
Rate), during the remainder of the
4
Term in accordance with Building Products' customary payment policies in effect
for senior executives, plus the pro rata portion of a bonus, if any, with
respect to the then current bonus period applicable to Executive (including any
hold back or deferred bonus) to which the Executive would otherwise be entitled
but for the termination of Executive's employment. Executive shall not forfeit
any bonus for the sole reason that he was not employed by Building Products or
its successors or assigns at the end of the applicable bonus period or any date
subsequent to the Date of Termination. The provisions hereof shall control over
the provisions contained in any bonus plan applicable to Executive.
(iv) maintain in full force and effect, for the continued benefit
of Executive for the remainder of the Term all employee benefit plans relating
to hospitalization, medical, life insurance and disability programs or
arrangements in which Executive was entitled to participate and in which he was
participating immediately before the Date of Termination provided that
Executive's continued participation is possible under the general terms and
provisions of such plans and programs. In the event that Executive's
participation in any such plan or program is barred or otherwise impractical,
Building Products shall arrange to provide Executive with benefits substantially
similar to those which Executive was entitled to receive under such plans and
programs immediately prior to the Date of Termination.
(b) Executive shall not be required to mitigate the amount of any
payment provided for in subparagraph 6(a)(iii) hereof by seeking other
employment or otherwise. Building Products shall no longer have an obligation
to provide benefits under subparagraph 6(a)(iv) relating to hospitalization,
medical, life insurance and disability programs or arrangements to the extent
Executive is covered by any hospitalization, medical, life insurance and
disability program or arrangement pursuant to any subsequent employment.
(c) Upon termination of Executive's employment for Cause, Building
Products shall pay Executive his full base salary through the Date of
Termination at the rate in effect at the time notice of termination is given
(but in no event less than the Minimum Rate), and Building Products shall have
no further obligations to Executive under this Agreement.
(d) If Executive is terminated due to Disability in accordance with
the provisions of subparagraph 5(d) hereof,
5
Building Products' sole obligation to Executive shall be to pay Executive his
full base salary through the Date of Termination at the rate in effect at the
time notice of termination is given (but in no event less than the Minimum
Rate).
(e) If Executive terminates his employment hereunder for Good Reason,
EXCEPT in any instance wherein Good Reason involves or is related to any
violation of law or governmental rule or regulation on the part of Building
Products or its shareholder, officers, directors, managers, employees, agents,
successors or assigns, the payment of compensation pursuant to this Section 6
shall be the sole obligation of Building Products arising from such termination
or the circumstances constituting Good Reason and the receipt of such
compensation shall be the sole and exclusive remedy of Executive arising from
such termination or the circumstances constituting Good Reason.
7. EXCISE TAXES. 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 equal to the excise tax
imposed with respect to any such amount on account of Internal Revenue Code
section 280G.
8. UNAUTHORIZED DISCLOSURE. Executive acknowledges and agrees that all
of the documents and information relating to Building Products or its business
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 (collectively the "Confidential Information")
are considered confidential and that, during the Term hereof and thereafter, he
shall secure the information with the same degree of security as he provides for
his own, personal confidential information and documents and 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"), Confidential
Information or use any Confidential Information for any purpose other than the
6
performance of his duties and responsibilities hereunder; PROVIDED, HOWEVER,
that Confidential Information shall not include any information (i) known
generally to others unrelated to Business Products or readily available to said
others - from sources other than Executive (other than as a result of
unauthorized disclosure by Executive), or (ii) otherwise known or available to
Executive prior to his employment by Building Products. Notwithstanding the
foregoing, Executive may disclose 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, and may
disclose confidential information (a) to the extent required by judicial process
and (b) with the written consent of the Building Products' Board of Directors or
a person authorized thereby.
9. NON-COMPETE.
(a) The term of this Section 9 shall be for a period commencing
simultaneously with the Term and ending on the 1st anniversary of the
termination of Executive's employment with Building Products for any reason
whatsoever (the "Restricted Period") and provided Executive receives
compensation pursuant to paragraph 6(a)(iii) hereunder, Executive shall not,
during the Restricted Period, (i) directly or indirectly, engage, participate,
or make any financial investment (other than a passive investment), in, or
become employed by or render advisory or other services to or for any Person
(within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended) or other business enterprise which is engaged, directly or
indirectly, in competition with any member of the Building Products Group, in
any geographic area or territory in which any member of the Building Products
Group is then engaged in such business, or (ii) solicit, induce or encourage any
employee of the Building Products Group to leave his or her employment.
(b) Executive expressly recognizes and agrees that the restraints imposed
by this Section 9 are (i) reasonable as to time; (ii) reasonably necessary to
protect the legitimate business interests of Building Products; and (iii) not
oppressive. Executive further expressly recognizes and agrees that the failure
by Executive to observe and comply with the covenants and agreements in this
Section 9 will cause irreparable
7
harm to Building Products, that it is and will continue to be difficult to
ascertain the harm and damages to Building Products that such a failure by
Executive would cause, that the consideration received by Executive for entering
into these covenants and agreements is fair, that the covenants and agreements
and their enforcement will not deprive Executive of his ability to earn a
reasonable living in the field of manufactured windows and doors, and that
Executive has acquired knowledge and skills in this field that will allow him to
obtain employment without violating these covenants and agreements. Executive
further expressly acknowledges that he has been encouraged to and has consulted
independent counsel, and has reviewed and considered this Agreement with that
counsel before executing this Agreement.
10. ENFORCEMENT. The parties hereto recognize that the covenants of
Executive hereunder are special, unique and of extraordinary character.
Accordingly, it is the intention of the parties that, in addition to any other
rights and remedies which Building Products may have in the event of any breach
of Sections 8 and 9 hereof, Building Products shall be entitled to demand
specific performance, including without limitation, temporary and permanent
injunctive relief, and all other appropriate equitable relief against Executive
in order to enforce against Executive, or in order to prevent any breach or any
threatened breach by Executive of, the covenants and agreements contained in
Sections 8 and 9 hereof. In case of any such breach of this Agreement, nothing
herein contained shall be construed to prevent Building Products from seeking
such other remedy in the courts as it may elect or invoke.
11. NOTICE. 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:
If to Executive: If to Building Products:
---------------- ------------------------
Xxxxx X. Xxxxx Board of Directors
0000 Xxxxxx Xxxx Xxxxxx Building Products, Inc.
Xxxxx, XX 00000 0000 XXX Xxxxxxx
Xxxxx 000, XX 00
Xxxxxx, XX 00000
8
or to such other address as any party hereto may have furnished to the other in
writing.
12. MISCELLANEOUS.
(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 and such officer as may be specifically
designated by the Board of Directors of Building Products.
(b) No waiver by either 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, 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 Building Products and
Building Products' successors and assigns. Building Products will require, in
connection with the sale of all or substantially all of the assets of Building
Products, that the
9
successor to all or substantially all of the business and/or assets of Building
Products, expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Building Products would be required to
perform it if no such succession had taken place. The failure of 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 Building Products in accordance with paragraphs
6(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.
13. 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.
14. 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.
15. The parties agree that this Agreement and the Transaction Incentive
Agreement of substantially concurrent date herewith: (a) contain and constitute
the entire understanding and agreement among them respecting the subject matter
hereof, (b) supersede and cancel 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 severance payments hereunder, such
rights shall be no greater than the right of any unsecured general creditor of
Building Products.
[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.
XXXXXX BUILDING PRODUCTS, INC. EXECUTIVE
By: /s/Xxxxx X. Xxxxxxx /s/Xxxxx X. Xxxxx
------------------------- ---------------------------
Xxxxx X. Xxxxxxx Xxxxx X. Xxxxx
11
