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EXHIBIT 10.1
STEEL CITY PRODUCTS, INC.
XXXXXXX X. XXXXX EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of this 1st day of April
1998 by and between XXXXXXX X. XXXXX (hereinafter referred to as "Xx. Xxxxx")
and STEEL CITY PRODUCTS, INC.(hereinafter referred to as the "Company").
1. BACKGROUND. Xx. Xxxxx is currently an employee of the Company pursuant to
an agreement dated as of September 1, 1993 (the "Prior Agreement"), which
has been extended beyond its stated expiration. The parties now wish to
enter into this Agreement, which is intended to replace and supersede in
all respects the Prior Agreement.
2. CONSIDERATION. The parties are entering into this Agreement for and in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
3. TERM OF EMPLOYMENT.
a. Xx. Xxxxx'x employment hereunder shall commence on April 1, 1998
(the "Commencement Date.")
b. This Agreement shall expire (subject to the provisions of Section
16, below) on the earlier to occur of (i) a termination of Xx.
Xxxxx'x employment pursuant in Section 11, Section 12 or Section 13,
below; or (ii) the close of business on February 29, 2000 (the
"Expiration Date").
4. TITLE, REPORTING RELATIONSHIP & RESPONSIBILITIES.
a. So long as this Agreement is in effect, Xx. Xxxxx shall be elected
Chairman of the Company's Board of Directors, and shall report to
the Board of Directors of the Company.
b. Xx. Xxxxx shall perform all of the customary duties and fulfill all
of the customary responsibilities of a chairman of the board of a
publicly traded corporation. Xx. Xxxxx shall determine in his own
discretion the amount of time that is required for him to fulfill
these duties and responsibilities and he shall carry them out to the
best of his abilities. Nothing herein shall be construed to prevent
Xx. Xxxxx from serving as an officer or director or participating in
the activities of any family, religious, charitable, community
service or political activity so long as such participation does not
interfere with his carrying out his duties and responsibilities
hereunder.
5. COMPENSATION. Xx. Xxxxx'x compensation shall be as follows:
a. Base Salary. The Company shall pay Xx. Xxxxx a base salary of no
less than $4,167 per month plus such merit increases as the Board of
Directors of the Company shall
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determine from time to time in its sole discretion ("Base Salary").
Base Salary shall be paid in
Xxxxxxx X. Xxxxx Employment Agreement
installments no less frequently than twice monthly at the same time
as other employees of the Company are paid.
b. Deferred Compensation. In recognition of the salary voluntarily
foregone by Xx. Xxxxx since October 1995, the Company shall pay him
deferred compensation of $5,000 per month for 23 months (the
"Deferred Compensation"), commencing with the month of April 1998.
c. Special Bonus. The Board of Directors of the Company's parent in its
sole discretion may grant to Xx. Xxxxx on a quarterly basis a
special bonus (the "Special Bonus") not to exceed, however, $25,000
in any fiscal year of the Company.
d. Annual Bonus.
i. Subject to the terms hereof, the Company shall pay to Xx.
Xxxxx an annual cash bonus (the "Annual Bonus"), for each
calendar year on the March 15 following the conclusion of each
calendar year, from a bonus pool equal to 8% of the Company's
consolidated net income before interest, taxes, depreciation,
LIFO adjustments, corporate overhead, and inter-company
exchanges or charges, and amortization, prepared in accordance
with generally accepted accounting principles consistently
applied and in a manner consistent with bonus calculations for
the calendar year 1997. The bonus pool shall be divided
amongst the Company's executives by the Compensation Committee
of the Company's Board of Directors based upon the
recommendations of the Chairman of the Board of Directors of
the Company.
ii. Unless the Company shall have no earnings for a given calendar
year, Xx. Xxxxx'x Annual Bonus shall be not less than 15% of
his Base Salary, unless his employment terminates before the
end of a calendar year, in which event the provisions relating
to termination of employment shall govern the payment of his
Annual Bonus for such year.
6. BENEFITS.
a. Health, Insurance etc. Xx. Xxxxx shall be entitled to the same
health and other benefits as are made available to the Company's
senior officers generally, and on the same terms and conditions.
b. The Company shall furnish Xx. Xxxxx with the use of a Company-leased
automobile with a monthly rental rate not to exceed $500 per month
or a Company-owned automobile that, if leased, would have a monthly
lease rate of no more than $500; or in lieu of either of the
foregoing, the Company shall pay him a monthly automobile allowance
of $500. The cost of all insurance, maintenance and repairs for, and
gasoline consumed by, such automobile shall be paid or reimbursed
(as the case may be) to Xx. Xxxxx other than the cost of gasoline
for his personal use of such automobile.
c. All of the benefits described in this Section 6 are hereinafter
referred to collectively as the "Benefits."
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Xxxxxxx X. Xxxxx Employment Agreement
7. BUSINESS EXPENSE REIMBURSEMENT. Xx. Xxxxx shall be reimbursed in
accordance with Company policy from time to time in effect for all
reasonable business expenses incurred by him in the performance of his
duties hereunder.
8. INDEMNIFICATION. Xx. Xxxxx shall be indemnified by the Company with
respect to claims made against him as a director, officer and/or employee
of the Company, of its parent, or of any of their subsidiaries (as the
case may be) to the fullest extent permitted by the Company's charter,
by-laws and the law of its state of incorporation.
9. CONFIDENTIAL INFORMATION.
a. During his employment by the Company and after his employment
terminates for whatever reason, Xx. Xxxxx shall not disclose to any
person or entity Confidential Information (as defined below) except
in the proper performance of his duties and responsibilities under
this Agreement or except as may be expressly authorized by the Board
of Directors of the Company and shall not use Confidential
Information for the benefit of any person or entity other than the
Company. For purposes of this Agreement, "Confidential Information"
is defined as including trade secrets, customer names and lists,
vendor names and lists, product costs and selling prices, business
plans, marketing plans, non-public financial data, product
specifications and designs, the existence, nature, substance,
progress and results of research and development projects, concepts,
inventions, discoveries, formulae, processes, drawings, documents,
records, software, or any other information of the Company, its
parent or of any of their subsidiaries that is not generally
available, or any such information of any third party that is held
by the Company, its parent or any of their subsidiaries under an
obligation of confidentiality.
b. Xx. Xxxxx'x obligation of confidentiality shall not, however, relate
to any information --
i. that is or becomes publicly known through no act or fault of
Xx. Xxxxx;
ii. that is received by Xx. Xxxxx (without a breach of this or any
other agreement) from a third party with no restrictions as to
its disclosure; or
iii. that is required to be disclosed pursuant to applicable law, a
court order or a judicial proceeding, including a proceeding
to enforce this Agreement.
10. NON-COMPETE OBLIGATIONS.
a. Xx. Xxxxx'x obligations with respect to competing with the Company
and soliciting its employees shall be as follows:
i. Within the Market Area (as defined below) Xx. Xxxxx shall not
render services or advice, whether for compensation or without
compensation and whether as an employee, officer, director,
principal or otherwise, to any person or organization with
respect to any product, service or process in existence or
under development
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that is competitive with (1) the business of the Company on
the date hereof; (2) the business of the Company in which Xx.
Xxxxx was actively engaged during his employment by the
Company or of which he has detailed knowledge; or with (3) any
planned business
Xxxxxxx X. Xxxxx Employment Agreement
of the Company in which Xx. Xxxxx had an active part in the
planning or of which he has detailed knowledge.
ii. Xx. Xxxxx shall not either directly or indirectly as agent or
otherwise in any manner solicit influence or encourage any
customer of the Company to take away or to divert or direct
its business to Xx. Xxxxx or to any person or entity by or
with which Xx. Xxxxx is employed, associated, affiliated or
otherwise related, other than the Company.
iii. Xx. Xxxxx shall not recruit or otherwise solicit or induce any
employee of the Company to terminate his or her employment or
otherwise cease his or her relationship with his or her
employer.
b. Xx. Xxxxx'x obligations under this Section 10 shall continue (i) so
long as he is an employee of the Company and (ii) after his
employment terminates, (whether by reason of the expiration of this
Agreement or pursuant to Section 11, Section 12 or Section 13,
below, or otherwise) for (x) a period of six months, or (y) for the
period, if any, during which the Company is obligated to continue to
pay, or as to which it has in a lump sum paid, Xx. Xxxxx'x Base
Salary, whichever period is longer.
c. Definitions.
i. "Market Area" is defined as an area within a 200 mile radius
of any facility of the Company.
ii. For purposes of this Section 10, the word "Company" shall
include the Company's parent and any subsidiary of the Company
or such parent.
11. TERMINATION BY THE COMPANY: Prior to the Expiration Date, the Company may
terminate Xx. Xxxxx'x employment only pursuant to the terms and conditions
contained in this Section 11.
a. Without Cause; Death; Disability. The Company may terminate Xx.
Xxxxx'x employment without Cause (as the word "Cause" is defined
below) or by reason of his death or permanent disability by giving
Xx. Xxxxx written notice of such termination. In the event the
Company gives such notice, Company shall do the following:
i. continue to pay to Xx. Xxxxx for each full calendar month in
the period between the date of such termination and the
Expiration Date; or for a period of 12 months, whichever
period is longer, one-twelfth of his Base Salary;
ii. pay to Xx. Xxxxx any Deferred Compensation to which he is
entitled through the Expiration Date, but which has not been
paid to him;
iii. pay to Xx. Xxxxx any Special Bonus awarded to him, but not
paid;
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iv. after the end of the calendar year of the Company in which
such termination of employment occurs, pay to Xx. Xxxxx any
Annual Bonus that, but for the termination of his employment,
would have been paid to him for such year, pro-rated, however,
for the number of days during such year that Xx. Xxxxx was an
employee of the Company;
Xxxxxxx X. Xxxxx Employment Agreement
v. provide to Xx. Xxxxx the Benefits for the period during which
it is required to continue to pay him his Base Salary under
Section 11(a)(i), above; and
vi. cause all stock options held by Xx. Xxxxx to become
exercisable in full and to remain exercisable until their
stated expiration date (without regard, for such purpose, to
the termination of his employment).
b. Insurance Payments. Any payments made to Xx. Xxxxx under any
disability plans, the premiums for which were not paid by Xx. Xxxxx,
shall serve to reduce the amounts payable under Section 11(a)(i),
above.
c. For Cause. The Company may terminate Xx. Xxxxx'x employment for
Cause by giving written notice thereof to Xx. Xxxxx, in which event
the Company shall pay him any Base Salary accrued, but not paid
through the date of such termination; shall continue to pay him the
monthly installments of Deferred Compensation as provided in Section
5(b), above; and shall pay him any Special Bonus awarded prior to
the date of such termination, but not paid.
d. Definition of Cause. "Cause" shall mean gross or wilful misconduct
by Xx. Xxxxx in connection with his employment; the breach by Xx.
Xxxxx of any material obligation under this Agreement, including,
but not limited to the obligations set forth in Section 9 and
Section 10, above; a material breach in connection with the
performance by Xx. Xxxxx of his employment responsibilities; any act
of dishonesty or fraud; or the commission by Xx. Xxxxx of a felony.
e. Withholdings. All amounts payable to Xx. Xxxxx under this Agreement
shall be subject to such withholdings therefrom as the Company is
legally required to make.
12. RESIGNATION BY XX. XXXXX.
a. Mr. Xxxxx xxx resign his employment with the Company on 30 days'
prior written notice to the Company.
b. The Company may deem any such notice given by Xx. Xxxxx as a
resignation by him, effective upon the giving of such notice, of any
or all directorships and offices then held by him in the Company,
its parent and any of their subsidiaries, but the Company shall
nevertheless continue to pay to Xx. Xxxxx (i) his Base Salary during
the thirty-day notice period; and (ii) the Deferred Compensation
until all twenty-three payments thereof have been made.
c. No Annual Bonus shall be payable to Xx. Xxxxx with respect to the
fiscal year in which he resigns his employment with the Company.
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Xxxxxxx X. Xxxxx Employment Agreement
d. In the event of Xx. Xxxxx'x resignation, all stock options then held
by him shall remain in effect until their stated expiration date
(without regard, for such purpose, to the termination of his
employment).
13. CHANGE IN CONTROL.
a. Anything herein to the contrary notwithstanding, if after a Change
in Control (as defined below) either (i) Xx. Xxxxx'x employment is
terminated without Cause and other than by reason of his death or
permanent disability; or (ii) Xx. Xxxxx resigns his employment
pursuant to Section12, above, by written notice given within his 180
days of the effective date of the Change in Control, the Company
shall pay and provide to Xx. Xxxxx the amounts and benefits that it
is required to pay and provide in the case of a termination without
Cause under Section 11(a), above, except that --
i. All payments shall be made in a lump sum within 15 days of the
date of the termination of his employment, and the payment of
Base Salary shall be increased by 25%.
b. A "Change in Control" shall mean any transaction that results in a
sale of substantially all of the assets, business or common stock of
the Company to a third party or entity that is not controlled by the
senior managers of the Company or by a majority of the Board of
Directors of the parent of the Company on the date hereof.
14. NOTICES. All notices required or permitted under this Agreement shall be
in writing and shall be deemed given by a party when hand delivered to the
other party or when deposited with a delivery service that provides
next-business-day delivery and proof of delivery, addressed to the other
party as follows:
If to the Company: If to Xx. Xxxxx:
At its headquarters address At his most recent residence address
attention of the President. on the books of the Company.
With a copy to: With a copy to:
Xxxxx X. Xxxxxx Xxxx Xxxxx, Esq.
General Counsel Xxxxxxx, Xxxxx & Xxxxxxx
00 Xxxxxxx Xxxxxx 0000 Xxxxx Xxxxxxxx
X.X. Xxx 000 Xxxxxxxxxx, XX 00000
Xxxxxxx, Xxxxxxxxxxxxx 00000
or to such other address of a party as such party may by notice hereunder
designate to the other party.
15. SEVERABILITY. If any provision or part of a provision of this Agreement is
finally declared to be invalid by any tribunal of competent jurisdiction,
such part shall be deemed automatically adjusted, if possible, to conform
to the requirements for validity, but, if such adjustment is not possible,
it shall be deemed deleted from this Agreement as though it had never been
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Xxxxxxx X. Xxxxx Employment Agreement
included herein. In either case, the balance of any such provision and of
this Agreement shall remain in full force and effect. Notwithstanding the
foregoing, however, no provision shall be deleted if it is clearly
apparent under the circumstances that either or both of the parties would
not have entered into this Agreement without such provision.
16. SURVIVAL. Notwithstanding the expiration or earlier termination of this
Agreement or of Xx. Xxxxx'x employment for any reason, the terms and
conditions of Section 9 and Section 10 and any other obligations of the
parties that by their terms are to be performed or are to have continued
effect after such termination shall survive such expiration or
termination.
17. PRORATION. All amounts payable to Xx. Xxxxx hereunder for a period shorter
than the period for which they are described herein shall be pro-rated on
a daily basis using a 365-day year.
18. INJUNCTIVE RELIEF. It is acknowledged and agreed that the Company shall
have the right to bring an action to enjoin any violation by Xx. Xxxxx of
his obligations under Section 9 and Section 10, above, because a suit for
monetary damages alone would be an inadequate remedy.
19. ARBITRATION.
a. Except as otherwise provided below, this Agreement and any
controversy, claim or dispute between the parties directly or
indirectly concerning this Agreement or the breach hereof or the
subject matter hereof, including questions concerning the scope and
applicability of this Section 18 shall be finally settled by
arbitration held in Pittsburgh, Pennsylvania in accordance with the
provisions of this Section and the rules of commercial arbitration
then followed by the American Arbitration Association or any
successor to the functions thereof.
b. The arbitrator or arbitrators (the "arbitrators") shall be chosen in
accordance with such rules. A majority of the arbitrators shall have
the right and authority to determine how their decision or
determination as to each issue or matter in dispute may be
implemented or enforced. Any decision or award of a majority of the
arbitrators shall be final and conclusive on the parties to this
Agreement, and there shall be no appeal therefrom other than for
fraud or willful misconduct. Notwithstanding anything in this
Section 18 to the contrary, no arbitrator in any such proceeding
shall have authority or power to (i) modify or alter any express
condition or provision hereof by an award or otherwise; or (ii)
award punitive or exemplary damages for or against any party to any
such proceeding.
c. The parties hereto agree that an action to compel arbitration
pursuant to this Agreement may be brought in the appropriate court
of the Commonwealth of Pennsylvania sitting in Pittsburgh,
Pennsylvania. Application may also be made to such court for
confirmation of any decision or award of a majority of the
arbitrators, for an order of enforcement and for any other remedies
that may be necessary to effectuate such decision
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Xxxxxxx X. Xxxxx Employment Agreement
or award. Each of the parties hereto hereby consents to the
jurisdiction of the arbitrators and of such court and waives any
objection to the jurisdiction of such arbitrators and court.
d. Notwithstanding anything contained in this Section 18 to the
contrary, the parties hereby agree that this Section 18 shall not
apply to any action brought by a party seeking an injunction or
other equitable relief.
e. In any controversy, claim or dispute subject to arbitration under
the terms of this Section 18, the parties shall pay the fees and
expenses of the arbitrators in accordance with any decision or award
of a majority of the arbitrators.
20. MISCELLANEOUS.
a. This Agreement --
i. Supercedes and replaces in its entirety the Prior Agreement;
ii. contains the entire understanding of the parties on the
subject matter hereof;
iii. shall not be amended, and no term hereof shall be waived,
except by written agreement of the parties signed by each of
them;
iv. shall be binding upon and inure to the benefit of the parties
and their successors, personal representatives and permitted
assigns;
v. may be executed in one or more counterparts, each of which
shall be deemed an original hereof, but all of which shall
constitute but one and the same agreement; and
vi. shall not be assignable by either party without the prior
written consent of the other party, except that the Company
may assign this Agreement to any entity acquiring
substantially all of the stock, business or assets of the
Company, provided that the acquiror assumes all of the
Company's obligations hereunder.
b. The words "herein," "hereof," "hereunder," "hereby," "herewith" and
words of similar import when used in this Agreement shall be
construed to refer to this Agreement as a whole. The word
"including" shall mean including, but not limited to any one or more
enumerated items.
c. Each provision of this Agreement shall be interpreted and enforced
without the aid of any canon, custom or rule of law requiring or
suggestion construction against the party drafting or causing the
drafting of such provision.
d. No representation, affirmation of fact, course of prior dealings,
promise or condition in connection herewith or usage of the trade
not expressly incorporated herein shall be binding on the parties.
e. The failure to insist upon strict compliance with any term, covenant
or condition contained herein shall not be deemed a waiver of such
term, nor shall any waiver or
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relinquishment of any right at any one or more times be deemed a
waiver or relinquishment of such right at any other time or times.
f. The captions of the paragraphs herein are for convenience only and
shall not be used to construe or interpret this Agreement.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the domestic laws of the Commonwealth of Pennsylvania
without giving effect to any choice of law or conflict of law provision or
rule (whether of the Commonwealth of Pennsylvania or of any other
jurisdiction) that would cause the application hereto of the laws of any
jurisdiction other than the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
STEEL CITY PRODUCTS, INC.
By: /s/ Xxxx X. Lever /s/ Xxxxxxx X. Xxxxx
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Xxxx X. Lever XXXXXXX X. XXXXX
Director
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