EMPLOYMENT AGREEMENT
EXHIBIT
10.06
AGREEMENT,
dated as of September 10, 2007, by and between S&A Purchasing Corp., a New
York corporation, with its principal office located at 000 Xxxxxxx Xxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Company") and Xxxxx Xxxx, residing at 0
Xxxxxxxx Xxxxxx, Xxxxx Xxxxxxxxxx, 00000 (the "Employee").
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1.
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Employment:
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a)
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Upon
the terms and conditions hereinafter set forth, the Company hereby
employs
the Employee, and the Employee hereby accepts employment, as Vice
President of the Company.
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b)
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Employee
represents and warrants to the Company that he is free to enter into
this
Agreement in accordance with the terms hereof and is under no restriction,
contractual or otherwise, which would interfere with his execution
hereof
or performance hereunder.
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2.
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Term.
The Employee's employment hereunder shall be for a term (the "Term")
commencing as of this date (the "Commencement Date") and terminating
at
the close of business on December 31,
2010.
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3.
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Duties.
During the Term, the Employee shall report to the President of the
Company
or his designee and shall perform such duties, consistent with his
position hereunder, as may be assigned to him from time to time by
the
President of the Company. The Employee shall devote his best efforts
and
his entire time, attention and energies, during regular working hours,
to
the performance of his duties hereunder and to the furtherance of
the
business and interests of the Company, its subsidiaries and affiliate
companies. Employee shall engage in no other business
activities other than the passive supervision of his
investments.
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4.
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Compensation:
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a)
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Compensation.
For all services rendered by the Employee hereunder and all covenants
and
conditions undertaken by him pursuant to this Agreement, the Company
shall
pay, and the Employee shall accept a salary at the rate of $85,000
per
annum for the first full year of employment and said compensation
shall be
increased by CPI Index percentage increases annually. Compensation
shall
be payable not less frequently than in bi-weekly
installments.
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b)
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Additional
Incentive Compensation. For each year (twelve months) of
the Term of this Agreement, Employee shall receive, as additional
compensation, an incentive based on the Pre-tax Profit of S&A
Purchasing Corp. and will be as
follows:
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Compensation
Based on Pre-tax Profit of S&A Purchasing Corp.
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Pre-tax
Profit
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Incentive
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| $ |
320,000
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$ |
5,000
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| $ |
350,000
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$ |
10,000
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| $ |
380,000
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$ |
15,000
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| $ |
400,000
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$ |
20,000
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| $ |
450,000
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$ |
25,000
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$500,000
and up
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$ |
35,000
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i)
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The
Company may (but shall not be obligated to), at any time and from
time to
time, grant to the Employee an increase or increases in the incentive
compensation, otherwise payable pursuant to this Section, but such
increase or increases, if any, shall not be deemed to alter, modify,
waive
or otherwise affect any other term, covenant or condition of this
Agreement. Any incentive due, pursuant to the terms of this paragraph,
shall be paid by Company within 60 days of each anniversary of the
Commencement Date, subject to audit adjustments. The incentive
described above is exclusive and not additive, by way of example,
if the
pre-tax profit of the Company is $400,000, then the total incentive
earned
would be $20,000.
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c)
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Deductions. The
Company shall deduct from the compensation described in this Section
any
Federal, state or local withholding taxes, social security contributions
and any other amounts which may be required to be deducted or withheld
by
the Company pursuant to any Federal, state or city laws, rules or
regulations.
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5.
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Benefits;
Expenses:
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a)
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Fringe
Benefits. During the Term, the Employee shall be entitled
to participate in such group life, health, accident, disability or
hospitalization insurance plans as the Company may make available
to its
other employees.
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b)
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Automobile. The
Company shall provide Employee with an automobile for the Employee
to
utilize related to his employment activities. The automobile
shall be comparable in style and value to a 2006 GMC CK2500 HD XLT
CREW
CAB and shall be equipped with a snow
plow.
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2
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c)
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Expenses.
Upon presentation of an itemized account thereof, with such substantiation
as the Company shall require, the Company shall pay or reimburse
the
Employee for the reasonable and necessary expenses directly and properly
incurred by the Employee in connection with the performance of his
duties
hereunder, subject to guidelines established by the Board of
Directors. The Company also agrees to reimburse Employee for
reasonable club dues and expenses, as required by Employee to conduct
Company's business including, but not limited to, Company sales meetings,
employee meetings and other required matters relating to Company
business. Employee estimates these expenses to be approximately
$7,500 per annum.
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d)
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Vacations.
During the Term, the Employee shall be entitled to paid holidays
and paid
vacations in accordance with the policy of the Company as determined
by
the President of the Company provided, however, that the Employee
shall be
entitled to not less than three weeks paid vacation during each year
of
the Term, to be taken at times convenient to the Employee and to
the
Company.
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6.
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Location.
Notwithstanding anything which may be contained herein to the contrary,
the Employee's offices shall be located in the County of Berkshire,
State
of Massachusetts area and the performance of his duties hereunder
shall
not require his continued presence outside of such counties if the
Employee shall object thereto.
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7.
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Termination:
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a)
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The
employment of the Employee, and the obligations of the Employee and
the
Company hereunder, shall cease and terminate (except as otherwise
specifically provided in this Agreement) upon the first to occur
on the
following dates (the "Termination Date") described in this
Section:
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i)
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The
date of expiration by its terms of the
Term;
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ii)
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The
date of death of the Employee;
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iii)
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The
occurrence of a Disability Event; For purposes of this Agreement,
the
term, "Disability", shall mean Employee’s inability to perform his
material duties under this Agreement because of any illness or physical
or
mental disability, or their incapacity, as evidenced by a written
statement of a physician licensed to practice medicine in the State
of
Massachusetts selected by the Company, which disability, or other
incapacity, continues for a period in excess of six (6) consecutive
months
in any consecutive twelve-month
period.
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iv)
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The
Employee is terminated “For Cause” (as defined in Section
9).
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3
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b)
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Rights
after Termination;
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i)
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In
the event the Employee is terminated For Cause, the Employee shall
be
entitled to receive salary and benefits accrued to the date of
termination, and Employee shall not be entitled to any other payment,
including but not limited to, any portion of Additional Incentive
Compensation otherwise payable to
Employee.
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ii)
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In
the event the employment is terminated by reason of death or disability,
Employee shall be entitled to receive (i) salary and benefits accrued
to
the date of death or disability, and (ii) a pro rata share of any
additional Incentive Compensation in an amount obtained by multiplying
the
additional Incentive Compensation for the full year or period, as
the case
may be, in which death or disability occurred, by a fraction, the
numerator of which is the number of days in the year or period in
which
Employee was employed and the denominator of which is the number
of days
of the year (365).
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8.
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Restrictive
Covenants:
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a)
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Non-Disclosure. The
Employee shall not at any time during or after the term of this Agreement
disclose or furnish to any other person, firm or corporation (the
"Entity") except in the course of the performance of his duties hereunder,
the following:
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i)
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any
information relating to any process, technique or procedure used
by the
Company, including, without limitation, computer programs and methods
of
evaluation and pricing and marketing techniques;
or
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ii)
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any
information relating to the operations or financial status of the
Company,
including, without limitation, all financial data and sources of
financing, which is not specifically a matter of public record;
or
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iii)
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any
information of a confidential nature obtained as a result of his
prior,
present or future relationship with the Company, which is not specifically
a matter of public record; or
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iv)
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any
trade secrets of the Company; or
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v)
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the
name, address or other information relating to any customer or debtor
of
the Company; or
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vi)
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any
Confidential Information, or divulge, communicate, use to the detriment
of
the Company or for the benefit of any other person or persons, any
Confidential Information, or misuse in any way, Confidential Information
pertaining to the Business. Any confidential information or
data now known or hereafter acquired by the Employee with respect
to the
Business shall be deemed a valuable, special and unique asset of
the
Company that is received by the Employee, in confidence and as a
fiduciary, and the Employee shall remain a fiduciary to the Company
with
respect to all of such information.
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b)
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Non-Competition. The
Employee shall not, during the period (the “Restricted Period”) from the
date hereof until the later of one year after the termination of
his
employment with the Company or the third anniversary of the Closing
date
(as defined in the Asset Purchase Agreement dated September 10, 2007
by
and among the Company, Employee and other parties set forth on the
signatory page thereto (the
“APA”)):
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i)
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Without
the prior written consent of the Company (A) directly or indirectly
acquire or own in any manner any interest (whether through a debt
or
equity instrument) in any person, firm, partnership, corporation,
association or other entity (including the Company) which engages
or plans
to engage in any facet of the Business or which competes or plans
to
compete in any way with the Company or any of its subsidiaries or
Affiliates anywhere with the Territory. Territory means any state
(including the District of Columbia), territory or possession of
the
United States within which the Company presently or hereafter does
business or within a 50-mile radius of any of the Owned Premises,
Owned
Real Estate, Real Property and/or Leased Premises (as defined in
the APA),
(B) be employed by or serve as an employee, agent, officer, director
of,
or as a consultant to, any person, firm, partnership, corporation,
association or other entity which engages or plans to engage in any
facet
of the Business in which the Company now or hereafter engages or
which
competes or plans to compete in any way with the Company or any of
its
subsidiaries or Affiliates within the Territory, or (C) utilize his
special knowledge of the business of each Seller or the Company and
his
relationship with customers, suppliers and others to compete with
Company
and/or its Affiliates in any business which engages or plans to engage
in
any facet of the Business in which the Company now or hereafter engages
or
which competes or plans to compete in any way with the Company or
any of
its subsidiaries or Affiliates within the Territory; provided, however,
that nothing herein shall be deemed to prevent either Employee from
(x)
acquiring through market purchases and owning, solely as a passive
investment, less than one percent in the aggregate of the equity
securities of any class of any issuer whose shares are registered
under
§12(b) or 12(g) of the Securities Exchange Act of 1934, as amended,
and
are listed or admitted for trading on any United States national
securities exchange or are quoted on the National Association of
Securities Dealers Automated Quotation System, or any similar system
of
automated dissemination of quotations of securities prices in common
use,
so long as Employee is not a member of any “control group” (within the
meaning of the rules and regulations of the United States Securities
and
Exchange Commission) of any such issuer. Employee acknowledges
and agrees that the covenants provided for in this Section are reasonable
and necessary in terms of time, area and line of business to protect
the
trade secrets of the Company. Employee further acknowledges and
agrees that such covenants are reasonable and necessary in terms
of time,
area and line of business to protect the Company’s legitimate business
interests, which include its interests in protecting the Company’s (i)
valuable confidential business information, (ii) substantial relationships
with customers, and (iii) customer goodwill associated with the ongoing
Business. Employee hereby expressly authorizes the enforcement
of the covenants provided for in this Section by (A) the Company
and its
subsidiaries, (B) the Company’s permitted assigns, and (C) any successors
to the Company’s business. To the extent that the covenants
provided for in this Section may later be deemed by a court to be
too
broad to be enforced with respect to its duration or with respect
to any
particular activity or geographic area, the court making such
determination shall have the power to reduce the duration or scope
of the
provision, and to add or delete specific words or phrases to or from
the
provision. The provision as modified shall then be
enforced.
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ii)
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The
Employee shall not, directly or indirectly, for himself or for any
other
person, firm, corporation, partnership, association or other entity
(including the Company), (A) solicit any of the Sellers’ employees
employed in the Business, (B) call on or solicit any of the actual
customers or clients of the Business, nor shall Employee make known
the
names and addresses of such customers or any information relating
in any
manner to the Company’s or the Sellers’ trade or business relationships
with such customers, (C) in any manner, directly or indirectly, attempt
to
seek to cause any entity to refrain from dealing or doing business
with
the Company or assist any entity in doing so or attempting to do
so or (D)
employ any employees of Company.
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iii)
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Injunction. Employee
recognizes and hereby acknowledges that a breach or violation by
Employee
of any or all of the covenants and agreements contained in this Section
may cause irreparable harm and damage to the Company in a monetary
amount
which may be virtually impossible to ascertain. As a result,
Employee recognizes and hereby acknowledges that the Company shall
be
entitled (without the requirement of posting a bond) to an injunction
from
any court of competent jurisdiction enjoining and restraining any
breach
or violation of any or all of the covenants and agreements contained
in
this Section by the Employee, his, Affiliates, partners or agents,
either
directly or indirectly, and that such right to injunction shall be
cumulative and in addition to whatever other rights or remedies the
Company may possess hereunder, at law or in
equity. Nothing contained in this Section shall be construed to
prevent the Company from seeking and recovering from the Employee,
jointly
and severally, damages sustained by it as a result of any breach
or
violation by they Employee of any of the covenants or agreements
contained
herein.
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9.
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Termination
by the Company “For Cause.” At any time during the term of
this Agreement, the Company may discharge the Employee for cause
and
terminate this Agreement without any further liability hereunder
to the
Employee or his estate, except to pay any accrued, but unpaid, salary
but
not Incentive Compensation to him. In the event of such
termination, Employee agrees he shall also be deemed to have resigned
from
the Company and its Parent, as a Manager and Employee, effective
as of the
date of such termination. For purposes of this Agreement, a
"discharge for cause" shall mean termination of the Employee upon
written
notification to the Employee limited, however, to one or more of
the
following reasons:
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a)
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Fraud,
misappropriation or embezzlement by the Employee in connection with
the
Company; or
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b)
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Neglect
of duties or insubordination, after notice to the Employee of the
particular details thereof and a period of fifteen (15) days to correct
such actions or omissions, if any;
or
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c)
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Conviction
by a court of competent jurisdiction in the United States of a felony
or a
crime involving moral turpitude; or
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d)
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Willful
and unauthorized disclosure of confidential, or proprietary trade
secret
information of the Company; or
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e)
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The
Employee's breach of any material term or provision of this Agreement,
after notice to the Employee of the particular details thereof and
a
period of not less than thirty (30) days thereafter within which
to cure
such breach, if any.
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10.
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Miscellaneous:
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c)
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Assignment. This
Agreement shall not be assigned by either party, except that the
Company
shall have the right to assign its rights hereunder to any parent,
subsidiary and affiliate of, or successor to, the
Company.
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d)
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Binding
Effect. This agreement shall extend to and be binding upon
the Employee, his legal representatives, heirs and distributees,
and upon
the Company, its successors and
assigns.
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e)
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Notices.
Any notice, request, instruction, correspondence or other document
to be
given hereunder by any party hereto to another (herein collectively
called
“Notice”) shall be in writing and delivered personally or mailed by
registered or certified mail, postage prepaid and return receipt
requested, as follows:
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7
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IF
TO THE COMPANY:
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Xxxxxxx
Xxxxxx
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c/o
Universal Supply Group, Inc.
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000
Xxxxxxx Xxxx
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Xxxxxxxxx,
Xxx Xxxxxx 00000
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IF
TO THE EMPLOYEE:
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Xxxxx
Xxxx
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0
Xxxxxxxx Xxxxxx
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Xxxxx
Xxxxxxxxxx, 00000
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f)
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Waiver. A
waiver by a party hereto of a breach of any term, covenant or condition
of
this Agreement by the other party hereto shall not operate or be
construed
as waiver of any other or subsequent breach by such party of the
same or
any other term, covenant or condition
hereof.
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g)
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Prior
Agreements. Other than for that certain APA, any and all
prior agreements between the Company and the Employee, whether written
or
oral, between the parties, relating to any and all matters covered
by, and
contained or otherwise dealt within this Agreement are hereby canceled
and
terminated.
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h)
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Entire
Agreement. No waiver, modification, change or amendment of
any of the provisions of this Agreement shall be valid unless in
writing
and signed by the party against whom such claimed waiver, modification,
change or amendment is sought to be
enforced.
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i)
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Definitions.
All capitalized terms not defined herein shall have the meaning set
forth
in the APA.
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j)
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Authority.
The parties severally represent and warrant that they have the power,
authority and right to enter into this agreement and to carry out
and
perform the terms; covenants and conditions
hereof.
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k)
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Applicable
Law. THE
PARTIES AGREE
THAT THE FEDERAL COURTS IN SPRINGFIELD, MASSACHUSETTS AND STATE COURTS
IN
BERKSHIRE COUNTY, MASSACHUSETTS SHALL HAVE EXCLUSIVE JURISDICTION
ON ALL
MATTERS ARISING OUT OF OR CONNECTED IN ANY WAY WITH THIS AGREEMENT,
AND
EMPLOYEE FURTHER AGREES THAT THE SERVICE OF PROCESS OR OF ANY OTHER
PAPERS
UPON THEM IN THE MANNER PROVIDED FOR NOTICES HEREUNDER SHALL BE DEEMED
GOOD, PROPER AND EFFECTIVE SERVICE UPON
THEM.
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l)
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Severability. In
the event that any of the provisions of this Agreement, or any portion
thereof, shall be held to be invalid or unenforceable, the validity
and
enforceability of the remaining provisions shall not be affected
or
impaired, but shall remain in full force and
effect.
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m)
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Titles.
The titles of the Articles and Sections of this Agreement are inserted
merely for convenience and ease of reference and shall not affect
or
modify the meaning of any of the terms, covenants or conditions of
this
Agreement.
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8
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and date first above written.
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S&A
Purchasing Corp.
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BY:
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/s/
Xxxxxxx Xxxxxx
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Xxxxxxx
Xxxxxx
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BY:
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/s/
Xxxxx Xxxx
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Xxxxx
Xxxx, Employee
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