Exhibit 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made as of January 15, 2004, by and between Builders
FirstSource, Inc., a Delaware corporation (the "Company"), and Xxxxxx X.
XxXxxxxxx (the "Executive").
WHEREAS, the Company desires that Executive serve as the Senior Vice
President and General Counsel of the Company, and Executive desires to hold such
positions under the terms and conditions of this Agreement; and
WHEREAS, the Board of Directors of the Company (the "Company Board") has
approved and authorized the Company to enter into this Agreement with Executive.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and intending to be legally bound hereby, the parties agree as
follows:
1. Employment. The Company hereby employs Executive, and Executive hereby
accepts employment with the Company, upon the terms and subject to the
conditions set forth herein.
2. Term.
(a) Subject to Section 2(b) hereof, the term of employment by the
Company of Executive pursuant to this Agreement (as the same may be extended,
the "Term") shall commence on January 15, 2004 (the "Effective Date"), and
terminate on the first anniversary thereof.
(b) Commencing on the first anniversary of the Effective Date and on
each subsequent anniversary thereof, the Term shall automatically be extended
for one (1) additional year unless, not later than ninety days (90) prior to any
such anniversary date, either party hereto shall have notified the other party
hereto in writing that such extension shall not take effect.
3. Position. During the Term, Executive shall serve as the Senior Vice
President and General Counsel of the Company, supervising the legal matters and
affairs of the Company and performing such other duties as the Company Board
shall determine.
4. Duties. During the Term, Executive shall devote his full time and
attention during normal business hours to the business and affairs of the
Company, except vacations in accordance with the Company's policies and for
illness or incapacity, in accordance with Section 6 hereof.
5. Salary and Bonus.
(a) During the Term, the Company shall pay to Executive a base
salary at the rate of $320,000 per year (the "Base Salary"), subject to
adjustments pursuant to the terms of Section 5(b) hereof.
(b) On or prior to each anniversary hereof during the Term (assuming
the Term of the Agreement is extended pursuant to Section 2(b) hereof), the
Company Board or the Compensation Committee of the Company Board (the
"Compensation Committee") shall review the Base Salary and may, in its sole
discretion, increase the Base Salary based upon performance and merit.
Executive's Base Salary shall not be decreased below the amount set forth in
Section 5(a) hereof. The Base Salary shall be payable to Executive in
substantially equal installments in accordance with the Company's normal payroll
practices, but in no event less often than semi-monthly.
(c) For the Company's fiscal year ending December 31, 2004, and for
each fiscal year during the Term thereafter, Executive shall be eligible to
receive an annual cash bonus equal to the amount provided for in the Company's
Annual Cash Incentive Plan ("Annual Incentive Plan") (which currently provides
for a target bonus percentage of 100% of Executive's Base Salary), which Annual
Incentive Plan is approved by the Company Board or the Compensation Committee
thereof. Executive's target bonus percentage under the Annual Incentive Plan
shall not be reduced below 100% of his Base Salary.
6. Vacation, Holidays and Sick Leave. During the Term, Executive shall be
entitled to paid vacation, paid holidays and sick leave in accordance with the
Company's standard policies for its senior executive officers.
7. Business Expenses. Executive shall be reimbursed for all reasonable and
necessary business expenses incurred by him in connection with his employment,
including, without limitation, expenses for travel and entertainment incurred in
conducting or promoting business for the Company upon timely submission by
Executive of receipts and other documentation as required by the Internal
Revenue Code of 1986, as amended (the "Code"), and in accordance with the
Company's normal expense reimbursement policies.
8. Health, Welfare and Related Benefits. During the Term, Executive and
eligible members of his family shall be eligible to participate fully in all (a)
health and dental benefits and insurance programs; (b) life and short- and
long-term disability benefits and insurance programs; and (c) defined
contribution and equity compensation programs, all as available to senior
executive officers of the Company generally.
9. Confidentiality, Non-Competition.
(a) Executive acknowledges that: (I) the Executive has, and his
employment hereunder will require that Executive continue to have, access to and
knowledge of Confidential Information (as hereinafter defined); (ii) the direct
and indirect disclosure of any such Confidential Information to existing or
potential competitors of the Company or its subsidiaries would place the Company
at a competitive disadvantage and would do damage, monetary or otherwise, to the
Company's businesses; and (iii) the engaging by Executive in any of the
activities prohibited by this Section 9 may constitute improper appropriation
and/or use of such Confidential Information. Executive expressly acknowledges
that the Confidential Information constitutes a protectable business interest of
the Company. As used herein, the term "Confidential Information" shall mean
information of any kind, nature or description which is disclosed to or
otherwise known to the Executive as a direct or indirect consequence of his
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association with the Company, which information is not generally known to the
public or in the businesses in which such entities are engaged or which
information relates to specific investment opportunities within the scope of
their business which were considered by the Company during the Term; provided,
however, that "Confidential Information" shall not be deemed to include
information which (i) is or becomes generally available to the public other than
as a result of a disclosure by the Executive, (ii) becomes available to the
Executive on a non-confidential basis from a source other than the Company,
provided that such source is not bound by any contractual, legal or fiduciary
obligation with respect to such information or (iii) was in the Executive's
possession prior to being furnished by the Company.
(b) During the Term of this Agreement and for a period of one year
after the termination of Executive's employment hereunder (upon expiration of
the Term or otherwise), Executive shall not, directly or indirectly, whether
individually, as a director, stockholder, owner, manager, member, partner,
employee, consultant, principal or agent of any business, or in any other
capacity, use for his own account, utilize or make known, disclose, furnish or
make available to any person, firm or corporation any of the Confidential
Information, other than to authorized officers, directors and employees of the
Company in the proper performance of the duties contemplated herein, or as
required by a court of competent jurisdiction or other administrative or
legislative body; provided that, prior to disclosing any of the Confidential
Information to a court or other administrative or legislative body, Executive
shall promptly notify the Company so that the Company may seek a protective
order or other appropriate remedy. Executive agrees to return all Confidential
Information, including all photocopies, extracts and summaries thereof, and any
such information stored electronically on tapes, computer disks or in any other
manner to the Company at any time upon request by the Company and upon the
termination of his employment for any reason.
(c) During the Term of this Agreement and for a period of one year
after termination of Executive's employment hereunder (upon expiration of the
Term or otherwise), Executive shall not, directly or indirectly, own any
interest in, operate, join, control or participate as a partner, member,
director, manager, principal, officer, or agent of, enter into the employment
of, act as a consultant or advisor to, or perform any services for, any entity
(in those geographic areas in which the Company or any of its subsidiaries, as
of the date of termination of the Executive's employment hereunder, have
material operations) which entity is engaged in competition with the Company or
any of its subsidiaries. An entity shall be deemed to be engaged in competition
with the Company or its subsidiaries if it engages in a business which is the
same as or substantially similar to any business engaged in by the Company or
such subsidiary during the Term.
(d) During the Term of this Agreement and for a period of two years
after termination of Executive's employment hereunder (upon expiration of the
Term or otherwise), Executive shall not, directly or indirectly, hire, solicit
or recruit for hire any employee of the Company or any of its subsidiaries or
encourage any employee of the Company or any of its subsidiaries to terminate
his or her employment in order to obtain employment by any other person, firm or
corporation.
(e) Executive acknowledges that(A) in connection with rendering the
services to be rendered by Executive hereunder, Executive will have access to
and knowledge of
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Confidential Information, the disclosure of which would place the Company or its
subsidiaries at a competitive disadvantage, causing irreparable injury, and (B)
the services to be rendered by Executive hereunder are of a special and unique
character, which gives this Agreement a peculiar value to the Company, the loss
of which may not be reasonably or adequately compensated for by damages in an
action at law, and that a material breach or threatened breach by Executive of
any of the provisions contained in this Section 9 will cause the Company
irreparable injury. Executive, therefore, agrees that the Company shall be
entitled, in addition to any other right or remedy, to a temporary, preliminary
and permanent injunction, without the necessity of proving the inadequacy of
monetary damages or the posting of any bond or security, enjoining or
restraining Executive from any such violation or threatened violations.
(f) Executive further acknowledges and agrees that due to the
uniqueness of his services and confidential nature of the information he will
possess, the covenants set forth herein are reasonable and necessary for the
protection of the business and goodwill of the Company; and it is the intent of
the parties hereto that if, in the opinion of any court of competent
jurisdiction, any provision set forth in this Section 9 is not reasonable in any
respect, such court shall have the right, power and authority to modify any and
all such provisions in such a manner as to such court shall appear not
unreasonable and to enforce the remainder of this Section 9 as so modified.
10. Termination of Agreement. The employment by the Company of Executive
pursuant to this Agreement shall not be terminated prior to the end of the Term,
except as set forth in this Section 10.
(a) By Mutual Consent.
(i) The employment by the Company of Executive pursuant to
this Agreement may be terminated at any time by the mutual written
agreement of the Company and Executive.
(ii) In the event that (i) Executive's employment is
terminated by mutual consent pursuant to this Section 10(a), and (ii)
Executive and the Company determine at that time that it is in their
mutual best interest for Executive to continue to be bound after his
termination by the provisions of Section 9 of this Agreement for the
periods set forth therein, then the parties may enter into an agreement to
that effect, in exchange for which Executive would be entitled to the
compensation provided for in Section 10(e) hereof.
(b) Death. The employment by the Company of Executive pursuant to
this Agreement shall be terminated upon the death of Executive, in which event
Executive's spouse or heirs shall receive the following: (i) Executive's Base
Salary and benefits to be paid or provided to Executive under this Agreement
through the Date of Termination and (ii) continuation of Executive's Base Salary
and the health and welfare benefits provided for pursuant to Sections 8(a) and
8(b) hereof ("Health Benefits") for a period of one (1) year after the Date of
Termination.
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(c) Disability. The employment by the Company of Executive pursuant
to this Agreement may be terminated by written notice to Executive at the option
of the Company in the event that as a result of the Executive's incapacity due
to physical or mental illness (which physical or mental illness shall be
confirmed in writing by a physician or other medical expert acceptable to both
parties), the Executive is unable to perform his duties, services and
responsibilities hereunder or shall have been absent from his duties hereunder
on a full-time basis for ninety (90) consecutive days or for an aggregate of
ninety (90) days or more in any six (6) month period, and within thirty (30)
days after notice is given by the Company (which notice may be delivered no
earlier than thirty days prior to the expiration of such ninety (90) consecutive
days or six month period, as the case may be), the Executive shall not have
returned to the performance of his duties hereunder on a full-time basis. In the
event the employment by the Company of Executive is terminated pursuant to this
Section 10(c), Executive shall be entitled to receive the following: (i) all
Base Salary and benefits to be paid or provided to Executive under this
Agreement through the Date of Termination and (ii) continuation of his Base
Salary and Health Benefits for a period of one (1) year after the Date of
Termination; provided, however, that amounts payable to Executive under this
Section 10(c) shall be reduced by the proceeds of any short- and/or long-term
disability payments under the Company plans referred to in Section 8 hereof to
which Executive may be entitled during such period.
(d) By the Company for Cause. The employment of Executive pursuant
to this Agreement may be terminated by the Company by written notice to
Executive ("Notice of Termination") for Cause (as hereafter defined). In the
event the employment by the Company of Executive is terminated pursuant to this
Section 10(d), Executive shall be entitled to receive all Base Salary and
benefits to be paid or provided to Executive under this Agreement through the
Date of Termination and no more.
(e) By the Company Without Cause. The employment by the Company of
Executive pursuant to this Agreement may be terminated by the Company at any
time without Cause by delivery of a Notice of Termination to Executive. In the
event the employment by the Company of Executive is terminated pursuant to this
Section 10(e), Executive shall be entitled to receive the following: (i) all
Base Salary and benefits to be paid or provided to Executive under this
Agreement through the Date of Termination, (ii) continuation of his Base Salary
and Health Benefits for a period of one (1) year after the Date of Termination,
and (iii) an amount equal to his Average Bonus Compensation (as hereafter
defined).
(f) By Executive. The employment of Executive by the Company
pursuant to this Agreement may be terminated by Executive by written notice to
the Company of his resignation (a "Notice of Resignation") at any time. In the
event the employment by the Company of Executive is terminated pursuant to this
Section 10(f), Executive shall be entitled to receive all Base Salary and
benefits to be paid or provided to Executive under this Agreement through the
Date of Termination and no more; provided, however, that if Executive terminates
his employment due to (i) a material adverse diminution of Executive's job title
or responsibilities from those currently in effect; or (ii) a relocation of
Executive's principal place of employment more than 100 miles from its current
location without his consent, then Executive shall instead be entitled to the
compensation provided for in Section 10(e) hereof.
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(g) Non-Renewal. In the event that at any time during the Term (as
it may be extended) the Company notifies Executive of its intent not to renew
this Agreement pursuant to Section 2(b) hereof, and Executive then delivers a
Notice of Resignation to the Company within ninety (90) days of receipt of such
notice of non-renewal, Executive shall be entitled to receive the following: (i)
all Base Salary and benefits to be paid or provided to Executive under this
Agreement through the Date of Termination, (ii) continuation of his Base Salary
and Health Benefits for a period of one (1) year after the Date of Termination,
and (iii) an amount equal to his Average Bonus Compensation.
(h) Previously Earned Bonus. Notwithstanding any other provision of
this Section 10, in the event that Executive's employment pursuant to this
Agreement is terminated at a time when Executive shall have earned a bonus under
the Annual Incentive Plan for performance during the prior fiscal year which has
not yet been paid, Executive shall be paid such bonus in addition to the amounts
otherwise provided for in this Section 10. Such bonus shall be paid in
accordance with the Company's normal practices.
(i) Date of Termination. Executive's Date of Termination shall be:
(i) if the parties hereto mutually agree to terminate this Agreement pursuant to
Section 10(a) hereof, the date designated by the parties in such agreement; (ii)
if Executive's employment by the Company is terminated pursuant to Section
10(b), the date of Executive's death; (iii) if Executive's employment by the
Company is terminated pursuant to Section 10(c), the last day of the applicable
period referred to in Section 10(c) hereof; (iv) if Executive's employment by
the Company is terminated pursuant to Section 10(d), the date on which a Notice
of Termination is given; and (v) if Executive's employment by the Company is
terminated pursuant to Sections 10(e), 10(f) or 10(g), the date the Notice of
Termination or Notice of Resignation, as the case may be, is given.
(j) Payment of Post-Termination Compensation. After Executive's Date
of Termination, all payments of Base Salary and Average Bonus Compensation to
Executive pursuant to this Section 10 shall be paid in accordance with the
Company's normal payroll practices, but in no event less often than
semi-monthly. In the event of a breach by Executive of Section 9 of this
Agreement during the applicable period following his Date of Termination,
Executive agrees (i) that the Company shall have no further obligation to make
any payments to Executive under Section 10 of the Agreement and (ii) that any
payments of Base Salary or Average Bonus Compensation previously made to
Executive after his Date of Termination shall be returned to the Company.
11. Representations.
(a) The Company represents and warrants that this Agreement has been
authorized by all necessary corporate action of the Company and is a valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms.
(b) Executive represents and warrants that he is not a party to any
agreement or instrument which would prevent him from entering into or performing
his duties in any way under this Agreement and that this Agreement is a valid
and binding agreement of Executive enforceable against Executive in accordance
with its terms.
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12. Successors. This Agreement is a personal contract and the rights and
interests of Executive hereunder may not be sold, transferred, assigned,
pledged, encumbered, or hypothecated by him, except as otherwise expressly
permitted by the provisions of this Agreement. This Agreement shall inure to the
benefit of and be enforceable by Executive and his personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amount would still be
payable to him hereunder had Executive continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to his devisee, legatee or other designee or, if there is no such
designee, to his estate.
13. Entire Agreement. This Agreement contains all the understandings
between the parties hereto pertaining to the matters referred to herein, and
supersedes any other undertakings and agreements (other than any stock option
agreement between Executive and the Company), whether oral or in writing,
previously entered into by them with respect thereto. Executive represents that,
in executing this Agreement, he does not rely and has not relied upon any
representation or statement made by the Company not set forth herein with regard
to the subject matter or effect of this Agreement or otherwise.
14. Termination; Amendment or Modification; Waiver.
(a) This Agreement may be terminated at any time by mutual written
consent of the Company and Executive.
(b) No provision of this Agreement may be amended or waived unless
such amendment or waiver is agreed to in writing, signed by Executive and by a
duly authorized officer of the Company. No waiver by any party hereto of any
breach by another party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same time, any prior time or any
subsequent time.
15. Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be (i) delivered by hand, (ii)
delivered by a nationally recognized commercial overnight delivery service,
(iii) mailed postage prepaid by first class mail or (iv) transmitted by
facsimile transmitted to the party concerned at the address or telecopier number
set forth below:
To Executive at:
Builders FirstSource, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. XxXxxxxxx
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To the Company at:
Builders FirstSource, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
with copies to:
JLL Partners
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Such notices shall be effective: (i) in the case of hand deliveries when
received; (ii) in the case of an overnight delivery service, on the next
business day after being placed in the possession of such delivery service, with
delivery charges prepaid; (iii) in the case of mail, seven (7) days after
deposit in the postal system, first class mail, postage prepaid; and (iv) in the
case of facsimile notices, when electronic confirmation of receipt is received
by the sender. Any party may change its address and telecopy number by written
notice to the other given in accordance with this Section 15; provided, however,
that such change shall be effective when received.
16. Severability. If any provision or clause of this Agreement or the
application of any such provision or clause to any party or circumstances shall
be determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision or clause to such person or circumstances other than those to
which it is so determined to be invalid and unenforceable, shall not be affected
thereby, and each provision or clause hereof shall be validated and shall be
enforced to the fullest extent permitted by law.
17. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
18. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its
conflicts of law principles.
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19. Headings. All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience, and no provision of this
Agreement is to be construed by reference to the heading of any section or
paragraph.
20. Withholding. All payments to Executive under this Agreement shall be
reduced by all applicable withholding required by federal, state or local law.
21. Specific Performance. Each party hereto acknowledges that money
damages would be both incalculable and an insufficient remedy for any breach of
this Agreement by such party and that any such breach would cause the other
parties, irreparable harm. Accordingly, each party hereto also agrees that, in
the event of any breach or threatened breach of the provisions of this Agreement
by such party, the other parties shall be entitled to equitable relief without
the requirement of posting a bond or other security, including in the form of
injunctions and orders for specific performance, in addition to all other
remedies available to such other parties at law or in equity.
22. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
23. Definitions.
(a) "Cause" means the determination, in good faith, by the Company
Board, after notice to Executive that one or more of the following events has
occurred: (i) any act of gross negligence, fraud, willful misconduct or moral
turpitude by Executive materially injuring the interest, business or reputation
of the Company, or any of its parents, subsidiaries or affiliates; (ii)
Executive's conviction of any felony; (iii) violation by Executive of the
Company's Drug Policy; (iv) any misappropriation or embezzlement of the property
of the Company, or any of its parents, subsidiaries or affiliates; or (v) any
material breach by Executive of this Agreement, including, without limitation, a
material breach of Section 9 hereof, which breach, to the extent it is capable
of being cured, remains uncorrected for a period of thirty (30) days after
receipt by Executive of written notice from the Company setting forth such
breach.
(b) "Average Bonus Compensation" shall mean an amount equal to the
average of the annual bonus amounts earned by Executive under the Company's
Annual Incentive Plan during the two most recent fiscal years ended prior to
Executive's Date of Termination.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the date first above written.
BUILDERS FIRSTSOURCE, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------
Xxxxx Xxxxxxx
Chief Executive Officer
EXECUTIVE
/s/ Xxxxxx X. XxXxxxxxx
-----------------------
Xxxxxx X. XxXxxxxxx
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