EMPLOYMENT AGREEMENT
Exhibit
10.91
This
Employment
Agreement (the "Agreement")
is made and
entered into effective April 1, 2006, by and between Xxxxxxx X. Xxxxxx
("Executive"),
and Building
Materials Holding Corporation, a Delaware corporation (the "Company").
WITNESSETH
WHEREAS,
Executive
is currently employed by the Company as its Senior Vice President and Chief
Financial Officer;
WHEREAS,
the
Company desires to obtain the benefit of the services of Executive, and
Executive desires to provide his service to the Company as provided for in
this
Agreement; and
WHEREAS,
the
Company wishes to extend the duration of Executive's services and further
clarify the terms and conditions of his employment by entering into this
Agreement with Executive and Executive is willing to commit his services to
the
Company, on the terms and conditions set forth below.
NOW,
THEREFORE, in
consideration of the premises and the mutual covenants herein contained,
Executive and the Company hereto agree as follows:
1. Term
This
Agreement
shall commence on April 1, 2006 (the "Effective
Date")
and shall
continue in effect until the later of (i) May 31, 2009 or (ii) the date that
the
employment contract between the Company and Xxxxxx X. Xxxxxx is terminated,
such
period being referred to herein as the "Employment
Term."
2. Employment
2.1 Engagement.
The Company
hereby employs Executive and Executive hereby agrees to be employed by the
Company, subject to the terms and conditions herein set forth. During the
Employment Term, Executive shall be employed as Senior Vice President and Chief
Financial Officer of the Company, and shall be responsible for the duties
normally and customarily attendant to such offices. Executive shall report
directly to the Company's Chairman, Chief Executive Officer and President,
and
also shall render such other services and duties of an executive nature
consistent with the duties of a senior executive officer of the Company as
may
from time to time be designated by the Board of Directors (the "Board").
2.2 Exclusive
Employment.
During the
Employment Term, Executive shall devote his full business time to his duties
and
responsibilities set forth in Section 2.1. Without limiting the generality
of
the foregoing, Executive shall not, without the prior written approval of the
Board, during the Employment Term, render services of a business, professional
or commercial nature to any other person, firm or corporation, whether for
compensation or otherwise, except that Executive may engage in civic,
philanthropic and community service activities so long as such activities do
not
materially interfere with Executive’s ability to comply with this Agreement and
are not otherwise in conflict with the policies or interest of the Company,
and
Executive may serve on the board of directors of two companies without Company
approval provided that such companies are not competitive with the Company
or
inconsistent with Executive’s role with the Company.
3. Compensation
and General Benefits
3.1 Base
Salary.
During the
Employment Term, the Company shall pay Executive a base salary in an annualized
amount equal to three hundred and sixty five thousand dollars ($365,000)
("Base
Salary")
payable pro rata
on the Company's regular payday, and subject to adjustment as hereinafter
provided.
3.2 Salary
Reviews.
Executive's Base
Salary shall be reviewed annually by the Compensation Committee of the Board
for
the purpose of considering increases thereof. In conducting this review, the
Compensation Committee of the Board shall consider appropriate factors,
including, without limitation, Executive's performance, the Company's financial
condition and compensation afforded to senior executives of comparable
corporations. The Base Salary shall not be decreased without the written consent
of Executive.
3.3 Bonus.
During the
Employment Term, Executive shall be eligible to participate in and to receive
benefits under the Company’s regular officers’ bonus plan or such successor
annual incentive or bonus plans that the Company may adopt from time to time
for
the benefit of its senior executives (collectively referred to as the "Annual
Bonus Plan") and to earn incentive or bonus awards under the Annual Bonus Plan,
in accordance with the terms of the Annual Bonus Plan as in effect from time
to
time. Notwithstanding any provision in the Annual Bonus Plan to the contrary,
if
Executive's employment is terminated for any reason, except in the case the
Executive is involuntarily terminated by the Company for Cause during the
Employment Term, then the Executive shall be paid at the end of the then-current
performance cycle an amount equal to the Executive’s target bonus under the
Annual Bonus Plan for such performance cycle multiplied by a fraction, the
numerator of which is equal to the number of whole calendar months that the
Executive worked during such performance cycle and the denominator of which
is
equal to 12. To the extent that the foregoing referenced target bonus is based
upon a percentage of the Executive’s base compensation, then such target bonus
shall be based upon the Executive’s annualized base compensation as of the date
his employment is terminated.
3.4 Equity
Incentive
Compensation.
(a) Equity
Bonus.
Company agrees to
provide Executive with the opportunity to earn an equity bonus (the
"Equity
Bonus")
that grants to
Executive 20,000 units. At the end of the first year of the Employment Term,
Executive will earn a cash bonus equal to the greater of (1) 20,000 multiplied
by the average closing price of the company's stock over the five (5) business
days immediately preceding the Equity Bonus Payment Date or (2) $150,000. The
Equity Bonus shall be paid within thirty (30) days after March 31, 2007.
Executive must be employed by the Company on March 31, 2007 in order to receive
payment of the Equity Bonus, and the Equity Bonus shall be forfeited in its
entirety if Executive voluntarily terminates employment without Good Reason
or
Executive is involuntarily terminated for Cause before March 31, 2007. Company
agrees to provide Executive with the opportunity to earn an Equity Bonus for
the
period of April 1, 2007 through March 31, 2008 and the period of April 1, 2008
through March 31, 2009 calculated for each such period as follows: the greater
of (1) 10,000 multiplied by the average closing price of the Company’s stock
over the five (5) business days immediately preceding April 1, 2008 and April
1,
2009 or (2) $300,000. The Equity bonus will be paid within 30 days of the
calculation date of each year. Executive must be employed by the Company on
the
respective payment dates in order to receive payment of the Equity Bonus, and
the Equity Bonus shall be forfeited in its entirety if Executive voluntarily
terminates employment without Good Reason of Executive is involuntarily
terminated for Cause before the respective payment dates.
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(b) Adjustment
to
Equity Units.
The number of
equity units granted to the Executive under Section 3.4(a) and the related
minimum value per unit shall be proportionately adjusted for any increase or
decrease in the number of issued shares of common stock (“Shares”) of the
Company resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of Shares, or any other increase or decrease
in
the number of issued Shares effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of
the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustments shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive.
(c) Equity
Incentive
Plan.
Executive may be
eligible to receive additional incentive compensation subject to the discretion
of the Compensation Committee which may take into consideration the Equity
Bonus
in the form of stock option or restricted stock grants under the 2004 Incentive
and Performance Plan. All grants made under the 2004 Incentive and Performance
Plan shall be at the discretion of the Compensation Committee of the Board.
Except as expressly provided herein, Executive shall be eligible for incentive
compensation under the 2004 Incentive and Performance Plan on at least the
same
basis as other similarly situated members of senior management of the Company,
and pursuant to the terms and conditions of such plan as in effect from time
to
time.
(d) LTIP.
The Long-Term
Incentive Plan ("LTIP") provides for the award of long-term incentive
compensation based upon the attainment of pre-defined performance goals with
respect to each applicable three-year performance cycle. As of the Effective
Date, Executive participated in and was entitled to receive compensation under
the LTIP for each of the following three-year performance cycles: January 1,
2004 through December 31, 2006; January 1, 2005 through December 31, 2007;
and
January 1, 2006 through December 31, 2008 (each a "Participating Performance
Cycle"); provided, however, that Executive shall receive 100% of the amount
otherwise payable for the period January 1, 2004 through December 31, 2006;
66.67% of the amount otherwise payable for the period January 1, 2005 through
December 31, 2007; and 33.33% of the amount otherwise payable for the period
January 1, 2006 through December 31, 2008. Executive will not participate in
and
is not eligible to receive compensation under the LTIP for each of the following
three-year performance cycles: January 1, 2007 through December 31, 2009;
January 1, 2008 through December 31, 2010; and January 1, 2009 through December
31, 2011. Notwithstanding any provision of the LTIP to the contrary, if for
any
reason Executive’s participation in the LTIP is terminated prior to the
completion of the Participating Performance Cycle, except in the case where
such
termination is due to the Executive’s involuntary termination for Cause or
voluntary termination not including termination for Good Reason, death or
disability, then the Executive shall be paid at the end of such Participating
Performance Cycle an amount equal to the Executive’s target bonus under the LTIP
multiplied by a fraction the numerator of which is equal to the number of whole
years that the Executive has worked during the Participating Performance Cycle
and the denominator of which is equal to 3. To the extent that the foregoing
referenced target bonus is based upon a percentage of the Executive’s base
compensation, then such target bonus shall be based upon the Executive’s
annualized base compensation as of the date his participation in the LTIP
terminated. Except as expressly provided herein, Executive shall be eligible
on
at least the same basis as other similarly situated members of senior management
of the Company to receive amounts payable under the LTIP in accordance with
normal plan rules at the end of each Participating Performance
Cycle.
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(e) Change
of
Control.
If there is a
Change of Control of the Company, any Equity Bonus to which Executive otherwise
is entitled under Section 3.4(a) will immediately vest in full upon such Change
of Control. Such vested payment(s) shall be paid within five (5) business days
following a Change of Control. Any Equity Bonus payable pursuant to this Section
3.4(e) shall be calculated using the price of the Company’s stock on the date of
the Change of Control. A "Change in Control" of the Company shall be deemed
to
have occurred if (i) there shall be consummated (x) any consolidation or merger
of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Common Stock are to
be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior
to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the business and/or assets of
the
Company, or (ii) the stockholders of the Company approve a plan or proposal
for
the liquidation or dissolution of the Company, or (iii) any "person" (as defined
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including any group), shall become the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of
fifty (50%) percent or more of the Company's outstanding Common Stock, or (iv)
if for any reason a majority of the Board is not comprised of "Continuing
Directors," where a "Continuing Director" of the Corporation as of any date
means a member of the Board who (x) was a member of the Board two years prior
to
such date and at all times through such date or (y) was nominated for election
or elected to the Board with the affirmative vote of at least two-thirds of
the
directors who were Continuing Directors at the time of such nomination or
election; provided,
however,
that no
individual initially elected or nominated as a director of the Corporation
as a
result of an actual or threatened election contest with respect to directors
or
any other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed to be a Continuing
Director. Payments made under this Section 3.4(e) shall be taken into account
under Paragraph 6 of the Severance Plan (as defined below) to the extent
applicable for purposes of calculation of the “gross up” under such Paragraph
6.
3.5 Vacation.
Executive shall
be entitled to four weeks paid vacation in any fiscal year during the Employment
Term in accordance with Company vacation and leave policies. Vacation time
shall
be planned and taken consistent with Executive's duties and obligations
hereunder.
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3.6 Other
Benefits.
During the
Employment Term, Executive (and his spouse and dependents) shall be entitled
to
participate in the Company's executive perquisite plan, supplemental retirement
plan, liability insurance, life insurance, disability insurance, dental
insurance, hospitalization insurance, medical, accident, and other employee
benefit plans from time to time adopted by the Company on the same basis as
other similarly situated members of senior management of the Company and
pursuant to the terms and conditions of such plans and programs. The Company
shall have the right to change insurance carriers and benefit plans as may
be
appropriate in light of future market conditions and shall have the right to
purchase individual policies covering Executive if necessary.
3.7 Post-Termination
Health Care Coverage.
Upon termination
of employment, but only as provided in Section 7, Executive shall be eligible
to
participate in the Company’s health care plan, either on an individual basis or
family basis to include his dependent spouse, until such time as he becomes
eligible to participate in the BMHC Retirement Health Care Plan (“Retiree Health
Care Plan”). If Executive wishes to participate in the Company’s health care
plan after his termination of employment, then Executive must pay each month
to
the Company an amount equal to one-half of the COBRA benefit cost applicable
to
the selected coverage (i.e.,
individual or
family coverage).
3.8 Retiree
Health
Care Coverage.
Executive shall
be eligible to participate in the Retiree Health Plan in accordance with its
terms and conditions. For purposes of determining whether the Executive has
met
the Retiree Health Plan’s eligibility requirements, the Executive’s prior
periods of employment with organizations that provide services similar to the
Company shall be taken into account. If for any reason the Executive is unable
to participate in the Retiree Health Plan, then the Company shall pay to the
Executive each month an amount equal to the Retiree Health Plan’s “Monthly
Cost.” Assuming that the Executive had participated in and received coverage
under the Retiree Health Plan, the Monthly Cost shall equal the Company’s
hypothetical monthly cost of providing such coverage.
After the
Executive attains age 65, the Retiree Health Plan shall be secondary to
Medicare.
3.9 Reimbursement
of
Expenses.
Upon submission
of appropriate documentation in accordance with Company policy, the Company
will
promptly reimburse Executive for all reasonable business expenses incurred
by
Executive in pursuing the business of the Company, including, without
limitation, expenditures for entertainment and travel. The Company shall make
such reimbursement to the Executive no later than thirty (30) days after
Executive’s submission to the Company of all required expense documentation. The
Executive’s right to reimbursement in accordance with this Section 3.9 and the
Company’s policies as in effect from time to time shall survive termination of
the Agreement.
3.10 Director
and
Officers Insurance.
During the
Employment Term, the Company shall obtain and maintain a Director and Officers
insurance policy which covers Executive and provides for a level of insurance
coverage and benefits that are customary and usual for a publicly-held
company.
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3.11 Supplemental
Executive Retirement Plan Benefits.
Executive
participates in the Executives’ Supplemental Retirement Income Plan of Building
Materials Holding Corporation (“SERP”). Notwithstanding any provision of the
SERP to the contrary, if the Executive’s employment with the Company is
involuntarily terminated without Cause, voluntarily terminated due to Good
Reason as described in Section 7.7 (d), or terminates upon expiration of this
Agreement , then the Executive shall immediately become fully vested in his
benefits under the SERP. Notwithstanding any provision of this Agreement to
the
contrary, no provison of this Agreement shall be construed as limiting, in
any
manner or form, Executive’s right to benefits under the SERP.
4. Confidential
Information
During
the term of
this Agreement and forever thereafter, Executive agrees to keep confidential
all
information provided by the Company, including any such information and material
relating to any customer, vendor, licensor, licensee, or other party transacting
business with the Company (collectively, "Confidential Information"), and not
to
release, use, or disclose the Confidential Information, except with the prior
written permission of the Company. Executive further covenants and agrees that
every document, computer disk, computer software program, notation, record,
diary, memorandum, development, investigation, or the like, and any method
or
manner of doing business, of the Company (or containing any other secret or
confidential information of the Company) made or acquired by Executive during
his employment, is and shall be the sole and exclusive property of the Company.
Confidential Information does not include, however, information which (i) is
or
becomes generally available to the public other than as a result of a disclosure
by Executive, [(ii)
was available
to Executive on a non-confidential basis prior to its disclosure by Company,
(iii) becomes available to Executive on a non-confidential basis from a person
other than Company who is not otherwise bound by a confidentiality agreement
with Company, or is not otherwise prohibited from transmitting the information
to Executive, or (iv) the Executive is required to disclose pursuant to court,
administrative hearing officer or other judicial or duly authorized governmental
representative request or demand for such disclosure, unless the Company has
obtained an appropriate protective order that prohibits such disclosure and
the
Company has advised the Executive of such protective order prior to the
Executive’s fulfillment of such request or demand.
5. Covenants
of Executive.
5.1 Non-Compete.
Executive agrees
that, during the Employment Term and for a period of one year following a
termination of employment other than following a Change of Control, he will
not,
directly or indirectly, engage in any business or activity competitive with
the
business activities of the Company. The foregoing shall not apply to passive
investments by Executive of up to 5% of the outstanding stock of any publicly
traded company or to service by Executive on boards of directors of companies
as
permitted under this Agreement, regardless of whether such company competes
with
the Company.
5.2 Solicitation
of
Employees.
During the
Employment Term and for a period of one year following a termination of
employment other than following a Change of Control, (i) he shall not, directly
or indirectly, individually, or together through any other person, firm,
corporation or entity, hire any member of senior management of the Company
(defined as an officer with a title of vice president or higher) who is then
in
the employ of the Company, or (ii) solicit for hire any employee of the Company,
provided, however, that general solicitations not targeted to Company employees
shall not be deemed to violate this clause (ii).
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5.3 Solicitation
of
Customers and Suppliers.
Executive agrees
that, during the Employment Term and for a period of one year following a
termination of employment other than following a Change of Control, he shall
not, directly or indirectly, individually, or together through any other person,
firm, corporation or entity, (i) solicit the business of any material customers
of or supplies to the Company, or (ii) discourage any person or entity which
is
a customer of the Company from continuing its business relationship with the
Company.
5.4 Compliance
with
Company Policies.
Executive agrees
that, during the Employment Term, he shall comply with the Company's employee
manual and other policies and procedures reasonably established by the Company
from time to time concerning matters such as management, supervision,
recruiting, diversity, and sexual harassment.
5.5 Cooperation.
For a period of
three years following his termination of employment under this Agreement, he
shall, upon Company’s reasonable request and in good faith and with his best
efforts, subject to his reasonable availability, cooperate and assist Company
in
any dispute, controversy, or litigation in which Company may be involved and
with respect to which Executive obtained knowledge while employed by the Company
or any of its affiliates, successors, or assigns, including, but not limited
to,
his participation in any court or arbitration proceedings, giving of testimony,
signing of affidavits, or such other personal cooperation as counsel for the
Company shall request. Any such activities shall be scheduled, to the extent
reasonably possible, to accommodate Executive’s business and personal
obligations at the time. The Company shall pay Executive’s reasonable travel and
incidental out-of-pocket expenses incurred in connection with any such
cooperation, as well as the reasonable costs of an attorney Executive engages
to
advise him in connection with the foregoing.
5.6 Return
of
Business Records and Equipment.
Upon termination
of Executive's employment hereunder, Executive shall promptly return to the
Company: (i) all documents, records, procedures, books, notebooks, and any
other
documentation in any form whatsoever, including but not limited to written,
audio, video or electronic, containing any information pertaining to the Company
which includes confidential information, including any and all copies of such
documentation then in Executive's possession or control regardless of whether
such documentation was prepared or compiled by Executive, Company, other
employees of the Company, representatives, agents, or independent contractors,
and (ii) all equipment or tangible personal property entrusted to Executive
by
the Company. Executive acknowledges that all such documentation, copies of
such
documentation, equipment, and tangible personal property are and shall at all
times remain the sole and exclusive property of the Company.
6. Covenants
of the Company
Indemnification.
In the event
Executive is made, or threatened to be made, a party to any legal action or
proceeding, by reason of the fact that Executive is or was an employee, director
or officer of the Company or serves or served any other entity in any capacity
at the Company's request, Executive shall be indemnified by the Company, and
the
Company shall pay Executive's related expenses when and as incurred, including
but not limited to attorney fees, all to the fullest extent permitted by law.
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7. Termination.
7.1 Termination
Upon
Death or Disability.
If Executive's
employment is terminated as a result of death or Disability prior to the
expiration of the Employment Term, Executive (or Executive's estate, or other
designated beneficiary(s) as shown in the records of the Company in the case
of
death) shall be entitled to receive (i) any earned but unpaid Base Salary;
(ii)
payment of any accrued and unpaid vacation pay through the Date of Termination;
(iii)
payment of any unreimbursed business expenses; (iv) a pro-rata amount of the
annual bonus that Executive would be eligible to receive under the Company's
Annual Bonus Plan for the year in which Executive's termination occurs;
(v)
LTIP benefits in accordance with the terms of the LTIP, as modified by Section
3.4(d) hereof; (vi) benefits under the Supplemental Retirement Plan ("SERP"),
provided that Executive shall become fully vested in his benefits under the
SERP
upon termination pursuant to this Section 7.1; (vii) the benefits provided
for
in Sections 3.7 and 3.8 hereof; and (viii) any other benefits that Executive
is
entitled to receive as of the Date of Termination under applicable benefit
plans
of the Company,
less standard
withholdings for tax and social security purposes. Except as required by law,
after the Date of Termination, the Company shall have no obligation to make
any
other payment, including severance or other compensation, of any kind to
Executive (or
Executive's
estate, or other designated beneficiary(s) as shown in the records of the
Company in the case of death) upon
a termination
of employment by death or Disability.
7.2 Voluntary
Termination.
If Executive
terminates employment with the Company without Good Reason, Executive agrees
to
provide the Company with ninety (90) days' prior written notice. The Company
may
accelerate the termination of Executive's employment and the right to any
further compensation to a date prior to the 90th day upon written notice thereof
being delivered to Executive by the Company. In the event that Executive's
employment is terminated under this Section 7.2, Executive shall receive payment
for (i) any earned and unpaid Base Salary; (ii) payment of any accrued and
unpaid vacation pay through the Date of Termination; (iii) payment of any
unreimbursed business expenses; (iv) earned but unpaid amount of the annual
bonus that Executive would be eligible to receive under the Company's Annual
Bonus Plan, but only those amounts that were earned during the fiscal year
immediately preceding the fiscal year during which the Executive's termination
occurs; and (v) benefits the Executive is entitled to receive under the employee
benefit plans of the Company, including the SERP, if any, less standard
withholdings for tax and social security purposes, through the Date of
Termination. Except
as required
by law,
after
the Date of
Termination the Company shall have no further obligation to pay any compensation
of any kind or severance payment of any kind nor to make any further payment
in
lieu of notice to Executive.
7.3 Termination
for
Cause.
The Company may
terminate Executive's employment with the Company at any time for Cause. In
the
event that Executive's employment is terminated under this Section 7.3,
Executive shall receive (i) payment for all earned but unpaid Base Salary;
(ii)
payment for accrued but unused vacation; (iii) payment of any unreimbursed
business expenses; and (iv) benefits the Executive is then entitled to receive
under the employee benefit plans of the Company, if any, but excluding bonuses
otherwise payable under the Company's Annual Bonus Plan, less standard
withholdings for tax and social security purposes, through the Date of
Termination. Except
as required
by law,
after
the Date of
Termination the Company shall have no further obligation to pay any severance
or
compensation of any kind nor to make any payment in lieu of notice to Executive.
Except as required by law, all benefits provided by the Company to Executive
under this Agreement or otherwise shall cease as of the Date of
Termination.
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7.4 Termination
Without Cause.
The Company may,
at any time and without prior written notice, terminate Executive without Cause.
In the event that Executive's employment with the Company is terminated without
Cause, Executive shall receive (i) payment for all earned but unpaid Base
Salary; (ii) payment for accrued but unused vacation; (iii) payment of any
unreimbursed business expenses; (iv) a pro-rata amount of the annual bonus
that
Executive would be eligible to receive under the Company's Annual Bonus Plan
for
the year in which Executive's termination occurs; (v) LTIP benefits in
accordance with the terms of the LTIP, as
modified by
Section 3.4(d) hereof; (vi) benefits under the SERP, provided that Executive
shall become fully vested in his benefits under the SERP upon termination
pursuant to this Section 7.4; (vii) the benefits provided for in Sections 3.7
and 3.8 hereof; (viii) payment of the Equity Bonus as provided in Section 3.4
hereof, provided
that
Executive shall become fully vested in his benefits under Section 3.4 upon
termination pursuant to this Section 7.4,
and (ix) any other
benefits that Executive is entitled to receive as of the Date of Termination
under applicable benefit plans of the Company,
less standard
withholdings for tax and social security purposes.
Except as
specifically provided in this Section 7.4 and except as required by law, all
benefits provided by the Company to Executive under this Agreement or otherwise
shall cease as of the Date of Termination.
7.5 Termination
for
Good Reason.
Notwithstanding
anything in this Section 7 to the contrary, Executive may voluntarily terminate
his employment with the Company and receive the benefits detailed in Section
7.4
upon or within 180 days following the occurrence of an event constituting Good
Reason.
7.6 Certain
Definitions.
For purposes of
this Agreement, the following term shall have the meanings set forth
below.
(a) "Cause"
shall mean that
Executive shall: (i) commit an act of fraud, embezzlement or misappropriation
involving the Company; (ii) be convicted by a court of competent jurisdiction
of, or enter a plea of guilty of no contest to, any felony involving moral
turpitude or dishonesty (other than driving while intoxicated or while under
the
influence of alcohol or drugs); (iii) commit an act, or fail to commit an act,
involving the Company which amounts to, or with the passage of time would amount
to, willful misconduct, gross negligence or a breach of this Agreement and
which
results or will result in material harm to the Company; or (iv) willfully fail
to perform the responsibilities and duties specified herein for a period of
ten
(10) days following receipt of written notice from the Company which
specifically describes past instances of willful failure of performance;
provided that in the case of (iv) above, during the 10-day period following
receipt of such notice, Executive shall be given the opportunity to take
reasonable steps to cure any such claimed past failure of
performance.
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(b) "Date
of
Termination"
shall mean
(i) if Executive is terminated by the Company for Disability, 30 days after
written notice of termination is given to Executive (provided that Executive
shall not have returned to the performance of his duties on a full-time basis
during such 30-day period) or (ii) if Executive's employment is terminated
by the Company for any other reason or by Executive, the date on which a written
notice of termination, specifying in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment is given; provided that, in the case of a termination for Cause,
Executive shall not have cured the matter or matters stated in the notice of
termination within the 10-day notice period provided in Section 7.6(a)
above.
(c) "Disability"
shall mean a
physical or mental disability that renders Executive unable, as determined
in
good faith by a licensed physician, to perform the essential functions of his
position, even with reasonable accommodation, for 180 days within any 12-month
period. The Company and Executive or his legal representative shall use their
best efforts to agree on the physician to determine Disability. If they cannot
agree within 10 days after the first party makes a written proposal stating
the
name of a physician, then the other party shall select a physician within 10
days and within 10 days thereafter the two physicians shall select a third
physician. All such physicians must be board certified in the medical area
giving rise to the alleged Disability. The determination of the third physician
shall be final and binding. If one party fails to select a physician within
the
10-day period, the physician named by the other party shall make the
determination of Disability.
(d) "Good
Reason"
shall mean
Executive's resignation from employment within 180 days after the occurrence
of
one of the following events:
(i)
a change of
Executive's title as Chief Financial Officer or a material reduction in
Executive's responsibilities without Executive's written consent;
(ii)
any one of the
following reductions in Executive’s compensation by the Company: (1) reduction
in Base Salary at any time during the Employment Term; (2) reduction in the
number of Equity Bonus units granted to Executive for a fiscal year to a number
of Equity Bonus units that is less than the number of such units required to
be
granted to Executive under Section 3.4(a) of the Agreement; (3) reduction in
the
amount of cash bonus paid to Executive under the Company's Bonus Plan to an
amount that is less than the highest cash bonus paid to Executive under the
Bonus Plan for any of the three fiscal years immediately preceding the fiscal
year in which the Executive provides notice to the Company of his termination
for Good Reason (“Good Reason Notice”); (4) reduction in the amount contributed
as a Company matching or profit-sharing contribution (“Employer Contribution”)
made on behalf of Executive under the Company's 401(k) plan (or any successor
plan) to an amount that is less than the highest Employer Contribution made
on
behalf of the Executive for any of the three fiscal years immediately preceding
the fiscal year in which Good Reason Notice occurs, unless such reduction is
required to comply with the requirements under the Internal Revenue Code that
are applicable to tax-qualified retirement plans; and (5) reduction in amounts
allocated or accrued (whether or not funded) as a Company contribution on behalf
of Executive under the Company's SERP (or any successor plan) (“SERP Accrual”)
to an amount that is less than the highest SERP Accrual made on behalf of
Executive for any of the three fiscal years immediately preceding the year
in
which Good Reason Notice occurs;
10
(iii)
relocation to
any place more than twenty-five (25) miles from the office regularly occupied
by
the Executive as of the Effective Date, except for required travel by the
Executive on the Company's business to an extent substantially consistent with
the Executive's business travel obligations as of the Effective Date;
(iv)
any material
breach by the Company of any provision of this Agreement; or
(v)
the failure by
the Company or by any successor or assign of the Company (whether by operation
of law or otherwise, including any surviving company in a merger or similar
transaction involving the Company), within ten business days following a Change
in Control to deliver to the Executive an agreement expressly reaffirming its
obligations under or agreeing to assume and comply with the obligations of
the
Company under this Agreement.
8. Change
of Control.
8.1 Severance
Benefits.
Upon the
occurrence of a Change of Control, Executive shall be entitled to severance
payments as specified in Section 5 of the Building Materials Holding Corporation
Severance Plan for Certain Executive Officers, Senior Management and Key
Employees of the Company and its Subsidiaries, including any amendments thereto,
as of the Effective Date ("Severance Plan"); for avoidance of doubt, reference
to the provisions of the Severance Plan made herein shall be without regard
to
any amendments to the Severance Plan made after the Effective Date unless such
subsequent amendments have the effect of increasing any benefit pursuant to
the
Severance Plan. A copy of the Severance Plan in effect as of the Effective
Date
of this Agreement is attached as Exhibit 1. The multiple used to calculate
the
amount payable under Section 5(i), 5(ii) and 5(iii) of the Severance Plan shall
be the number of whole years remaining in the Employment Term plus a fraction
representing any partial year remaining in the Employment Term. The payments
to
Executive under the Severance Plan shall be increased as provided in Section
6
of the Severance Plan to the extent such payments trigger the provisions of
Section 6. For avoidance of doubt, Executive shall not participate in the
Severance Plan and shall not be entitled to severance benefits except as
expressly provided in this Section 8.
8.2 Severance
Calculation.
Notwithstanding
any provision of the Severance Plan to the contrary, the definition of “Cash
Compensation" shall include the sum of the highest Equity Bonus paid under
Section 3.4 hereunder to Executive or any annualized comparable bonus paid
to
Executive under any predecessor employment agreement (all such bonuses shall
be
referred to as “Equity Bonus”) with the Company during any of the three fiscal
years immediately preceding the year in which the Change of Control occurs
or,
if greater, the annualized value of any pro rata Equity Bonus paid during the
year in which the Change of Control occurs.
8.3 Code
Section
409A.
Notwithstanding
anything herein or in the Severance Plan to the contrary, to the extent that
the
Board determines, in its sole discretion, that any payment or benefit to be
provided under Section 8.1 to or for the benefit of Executive would be subject
to the additional tax imposed under Section 409A(a)(1)(B) of the Internal
Revenue Code of 1986, as amended (the "Code")
or a successor
or comparable provision, the commencement of such payments and/or benefits
shall
be delayed until the earlier of (x) the date that is six months following
the Date of Termination or (y) the date of Executive's death or disability
(within the meaning of Section 409A(a)(2)(C) of the Code) (such date is referred
to herein as the "Distribution Date"). In the event that the Board determines
that the commencement of any of the benefits to be provided under Section 8.1
are to be delayed pursuant to the preceding sentence, the Company shall require
Executive to bear the full cost of such benefits until the Distribution Date
at
which time the Company shall reimburse Executive for all such
costs.
11
8.4 Termination
of
Obligations.
Upon the
consummation of a Change of Control, Executive's obligations under this
Agreement shall terminate, except as otherwise provided in Sections 4 and
5.
8.5 Payment
of
Severance.
Payment of the
Severance benefit to Executive shall occur within 10 days of the Change of
Control notwithstanding Section 8.3 of this agreement or any provisions in
the
Severance Agreement.
9. Warranties
and Representations.
Executive hereby
represents and warrants to the Company that he is not now under any obligation
of a contractual or quasi-contractual nature known to him that is inconsistent
or in conflict with this Agreement or that would prevent, limit or impair the
performance by Executive of his obligations hereunder; and has been or has
had
the opportunity to be represented by legal counsel in the preparation,
negotiation, execution and delivery of this Agreement and understands fully
the
terms and provisions hereof
10. Notices
All
notices
required or permitted to be given by either party hereunder shall be in writing
and shall be deemed sufficiently given if mailed by registered or certified
mail, or personally delivered to the party entitled thereto at the address
stated below, or to such changed address as the addressee may have given by
a
similar notice:
|
To
the
Company:
|
Xxxx
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn:
Chairman of the Compensation Committee
Fax:
(000)
000-0000
|
|
With
a Copy
to:
|
000
Xxxx
Xxxx., Xxxxx 000
X.X.
Xxx
0000
Xxxxx,
Xxxxx,
00000
Fax:
(000)
000-0000
Attention:
Xxxx Street, Esq.
|
|
To
Executive:
|
Xxxxxxx
X.
Xxxxxx
Xxxx
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopier:
(000) 000-0000
|
12
11. General
Provisions
11.1 Waiver.
No waiver by any
party hereto of any failure of any other party to keep or perform any covenant
or condition of this Agreement shall be deemed to be a waiver of any preceding
or succeeding breach of the same, or any other covenant or
condition.
11.2 Amendments.
No provision of
this Agreement may be amended, modified or waived unless such amendment,
modification or waiver shall be agreed to in writing and signed by Executive
and
a duly authorized officer of the Company.
11.3 Severability.
If any provision
of this Agreement shall be determined to be invalid or unenforceable by a court
of competent jurisdiction, the remaining provisions of this Agreement shall
remain in full force and effect to the fullest extent permitted by
law.
11.4 Assignment.
No right to or
interest in any payments shall be assignable by either party; provided; however,
that this provision shall not preclude Executive from designating one or more
beneficiaries to receive any amount that may be payable after his death and
shall not preclude his executor or administrator from assigning any right
hereunder to the person or persons entitled hereto. Further, the Company may
assign this Agreement: (a) to an affiliate so long as such affiliate assumes
the
Company's obligations hereunder, or (b) in connection with a merger or
consolidation involving the Company or a sale of substantially all its assets
or
shares to the surviving corporation or purchaser as the case may be so long
as
such assignee assumes the Company's obligations hereunder.
11.5 Successors
and
Assigns.
This Agreement
and the obligations of the Company and Executive hereunder shall be binding
upon
and shall be assumed by their respective successors including, without
limitation, any corporation or corporations acquiring the Company, whether
by
merger, consolidation, sale or otherwise.
11.6 Governing
Law.
The validity,
interpretation, performance, and enforcement of this Agreement shall be governed
by the laws of the State of California without regard to the principles of
conflict of laws thereof.
11.7 Attorney's
Fees
and Costs.
If any action at
law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys'
fees,
costs, and necessary disbursements in addition to any other relief to which
that
party may be entitled, provided that in the case of any dispute involving
payment or calculation of the amount of payment under the Severance Plan and
as
provided for in Section 8 of this Agreement, the Company shall pay Executive’s
legal fees incurred including and costs incurred in enforcing the terms of
the
Severance Agreement and this Agreement. This provision shall be construed as
applicable to the entire contract.
13
11.8 No
Representation.
No officer,
employee or representative of the Company has any authority to make any
representation or promise in connection with this Agreement or the subject
matter hereto which is not contained herein, and Executive agrees that he has
not executed this Agreement in reliance upon any such representation or
promise.
11.9 Interpretation
of Agreement.
Each of the
parties has been represented by counsel in the negotiation and preparation
of
this Agreement. The parties agree that this Agreement is to be construed as
jointly drafted. Accordingly, this Agreement will be construed according to
the
fair meaning of its language, and the rule of construction that ambiguities
are
to be resolved against the drafting party will not be employed in the
interpretation of this Agreement.
11.10 Headings.
The headings of
sections and subsections are included solely for convenience of reference and
shall not control the meaning or interpretation of any of the provisions of
this
Agreement.
11.11 Entire
Agreement.
This document
constitutes the entire understanding and Agreement of the parties with respect
to the subject matter of this Agreement, and any and all prior agreements,
understandings and representations are hereby terminated and cancelled in their
entirety and are of no further force or effect.
11.12 Counterparts.
This Agreement
may be executed in two or more counterparts with the same effect as if the
signatures to all such counterparts was upon the same instrument, and all such
counterparts shall constitute but one instrument.
11.13 Remedies.
In view of the
position of confidence which Executive will enjoy with the Company and the
anticipated relationship with the clients, customers, and employees of the
Company and its affiliates pursuant to his employment hereunder, and recognizing
both the access to confidential financial and other information which Executive
will have pursuant to his employment, Executive expressly acknowledges that
the
restrictive covenants set forth in Section 5 are reasonable and necessary in
order to protect and maintain the proprietary interests and other legitimate
business interests of the Company and its affiliates. Executive further
acknowledges that (1) it would be difficult to calculate damages to the Company
and its affiliates from any breach of his obligations under this Section 5,
(ii)
that injury to the Company and its affiliates from any such breach would be
irreparable and impossible to measure, and (iii) that the remedy at law for
any
breach or threatened breach of Section 5 would therefore be an inadequate remedy
and, accordingly, the Company shall, in addition to all other available remedies
(including without limitation seeking such damages as it can show it and its
affiliates has sustained by reason of such breach and/or the exercise of all
other rights it has under this Agreement), be entitled to injunctive and other
similar equitable remedies.
11.14 No
Mitigation of
Damages.
Executive shall
not be required to mitigate damages or the amount of any payment provided for
under this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by Executive as a result of employment by another employer
or by retirement benefits after the Date of Termination, except as specifically
provided hereunder. The provisions of this Agreement, and any payment provided
for hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's then existing rights, or rights which would accrue
solely as a result of the passage of time, under any Company benefit plan or
other contract, plan or arrangement.
14
11.15 Dispute
Resolution and Binding Arbitration.
Executive and the
Company agree that in the event a dispute arises concerning or relating to
Executive's employment with the Company, such dispute shall be submitted to
binding arbitration in accordance with the employment arbitration rules of
Judicial Arbitration and Mediation Services ("JAMS")
by a single
impartial arbitrator selected as follows: if the Company and Executive are
unable to agree upon an impartial arbitrator within ten (10) days of a request
for arbitration, the parties shall request a panel of employment arbitrators
from JAMS and alternative strike names until a single arbitrator remains. The
arbitration shall take place in San Francisco, California, and both Executive
and the Company agree to submit to the jurisdiction of the arbitrator selected
in accordance with JAMS' rules and procedures. Except as set forth in
Section 10.13 hereof, Executive and the Company agree that the arbitration
procedure provided for in this section will be the exclusive avenue of redress
for any disputes relating to or arising from Executive's employment with the
Company, and that the award of the arbitrator shall be final and binding on
both
parties, and nonappealable. The arbitrator shall have discretion to award
monetary and other damages, or no damages, and to fashion such other relief
as
the arbitrator deems appropriate. The arbitration charges will be shared equally
by the parties up to the cost of a first appearance fee in state court; any
arbitration charge in excess of the first appearance fee shall be paid by the
Company. THE COMPANY AND EXECUTIVE ACKNOWLEDGE AND AGREE THAT BY AGREEING TO
ARBITRATE, THEY ARE WAIVING ANY RIGHT TO BRING AN ACTION AGAINST THE OTHER
IN A
COURT OF LAW, EITHER STATE OR FEDERAL, AND ARE WAIVING THE RIGHT TO HAVE CLAIMS
AND DAMAGES, IF ANY, DETERMINED BY A JURY.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first above written.
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Xxxxxxx
X.
Xxxxxx
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