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EXHIBIT 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement"),
effective as of November 1, 1997, by and between White Cap Industries, Corp., a
California corporation (the "Company"), and Xxxx Xxxxxx, an individual
("Executive"), amends and restates the Employment Agreement, entered into as of
February 25, 1997, by and between the Company and Executive.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive accepts
employment with the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on November 1, 1997 and ending as provided in
Section 6 hereof (the "Employment Period").
2. Position and Duties.
a. During the Employment Period, Executive shall serve as the
Chairman, President and Chief Executive Officer of the Company and shall have
the normal and reasonable duties, responsibilities and authority commensurate
with such position. Executive's services pursuant to this Agreement shall be
performed primarily at the Company's principal place of business in Orange
County, California, or at such other facilities of the Company as the Company
and the Executive may agree upon from time to time.
b. Executive shall report to the Board of Directors of the Company
(the "Board") and Executive shall devote Executive's reasonable best efforts and
Executive's full business time and attention (except for permitted vacation
periods and reasonable periods of illness or other incapacity) to the business
and affairs of the Company during the normal business hours of the executive
offices of the Company; provided, however, the foregoing shall not prevent
Executive from making and expending any time on passive personal investments,
and/or expending reasonable amounts of time for educational or charitable
activities. Executive shall perform Executive's duties and responsibilities to
the best of Executive's abilities in a reasonably diligent, trustworthy,
businesslike and efficient manner.
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3. Base Salary and Benefits.
a. During the Company's fiscal year ending March 31, 1998,
Executive's base salary shall be $300,000 (the "Base Salary"), which salary
shall be payable in regular installments in accordance with the Company's
general payroll practices, including those related to withholding for taxes,
insurance and similar items. Executive's Base Salary shall be increased to
$400,000 for the Company's fiscal year ending on March 31, 1999. Thereafter,
Executive's Base Salary shall be increased on April 1 of each fiscal year,
commencing April 1, 1999, by the Adjustment Percentage (as defined below) of the
Base Salary applicable to the previous fiscal year. As used herein, "Adjustment
Percentage" means the sum of (x) the Consumer Price Index for the State of
California, published by the Bureau of Labor Statistics of the United States
Department of Labor for the immediately preceding fiscal year, plus (y) three
percent (3%). In addition, during the Employment Period, Executive shall be
entitled to participate in all of the Company's employee benefit, profit
sharing, stock option, incentive compensation, vacation and other perquisite
plans and programs ("Benefits") for which key employees of the Company are
generally eligible; provided, however, in no event shall Executive's Benefits be
less than the Benefits described on EXHIBIT A hereto.
b. During the Employment Period, the Company shall reimburse
Executive for all reasonable expenses incurred by Executive in the course of
performing Executive's duties under this Agreement which are consistent with the
Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company's requirements
with respect to reporting and documentation of such expenses.
c. During the Employment Period, the Company shall pay for or
reimburse Executive for all fees and reasonable expenses of Executive's
participation in professional organizations, trade associations or other
organizations reasonably related to Executive's position and responsibilities as
an officer of the Company.
4. Bonuses. In addition to Base Salary, Executive shall be awarded an
annual bonus ("Bonus") based upon the Bonus Formula set forth on EXHIBIT B
hereto. The Bonus shall be payable within 95 days following the end of each
fiscal year.
5. Board and Committee Memberships. So long as Executive owns, directly or
indirectly, at least 5% of the issued and outstanding capital stock of White Cap
Holdings, Inc., a Delaware corporation and the parent of the Company
("Holdings"), Executive shall be entitled to serve as a member of the Board of
Directors of Holdings and as a member of the board of directors of the Company.
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6. Term.
a. The Employment Period shall end on March 31, 2002 ("Original
Term") unless extended pursuant to Section 6(b) below; provided that (i) the
Employment Period shall terminate prior to the Original Term upon Executive's
death or permanent disability or incapacity; (ii) the Employment Period may be
terminated by the Company at any time prior to such date for Cause (as
hereinafter defined) or without Cause at any time after the first anniversary of
the Original Term; and (iii) the Employment Period may be terminated by
Executive for Good Reason at any time or by his Voluntary Resignation after
March 31, 1999. For purposes of the foregoing, Executive's permanent disability
or incapacity shall be determined in accordance with the Company's disability
insurance policy, if such a policy is then in effect, or if no such policy is
then in effect, such permanent disability or incapacity shall be determined by
the Board in its good faith judgment based upon inability to perform the
essential functions of his position, with reasonable accommodation by the
Employer, for a period in excess of 180 days during any period of 365 calendar
days. For purposes of the foregoing, Executive's Voluntary Resignation shall
mean resignation by Employee other than for Good Reason.
b. The Employment Period shall automatically extend for successive
one year periods (each, a "Supplemental Term") following March 31, 2002 unless
either party delivers written notice to the other party no later than January
31, 2002 with respect to the Original Term or January 31 preceding the end of
any Supplemental Term, as the case may be, of intent not to renew.
c. If the Employment Period is terminated without Cause by the
Company or by Executive with Good Reason prior to the end of the Original Term
or Supplemental Term, as the case may be, the Executive shall be entitled to
receive his Base Salary (determined in accordance with Section 3(a)) during the
period that is the lesser of (i) three years, or (ii) the remainder of the
Original Term or the Supplemental Term, as the case may be, plus a supplemental
severance payment equal to the product of the number of years specified in (i)
or (ii) above (without diminution for any fraction of any year), multiplied by
the bonus determined in accordance with Section 4 for the calendar year
immediately preceding the year in which the termination occurred.
d. If the Employment Period is terminated by the Company for Cause
(as defined in Section 6(i)(3) hereof) prior to the end of the Original Term or
the Supplemental Term, as the case may be, Executive shall be entitled to
receive his Base Salary (determined in accordance with Section 3(a)) during the
period that is the lesser of (i) two years, or (ii) the remainder of the
Original Term or the Supplemental Term, as the case may be, plus a supplemental
severance payment equal to the product of the number of years specified in (i)
or (ii) above (without diminution for any fraction of any year), multiplied by
the bonus determined in accordance with Section 4 for the calendar year
immediately preceding the year in which the termination occurred, up to a
maximum supplemental severance payment equal to $375,000.
e. If the Employment Period is terminated by the Company for Cause
(as defined in Section 6(i)(1) or (2) hereof) or is terminated as a result of
Executive's Voluntary Resignation,
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Executive shall be entitled to receive Executive's Base Salary only through the
date of termination and a prorated portion of any Bonus earned through the date
of such termination for the calendar year in which the termination occurs.
f. If the Employment Period is terminated as a result of permanent
disability or incapacity, Executive or Executive's representatives or
beneficiaries shall be entitled to receive Executive's Base Salary through the
date of termination, plus twelve months of Executive's then Base Salary and the
Bonus (based on the number of days in such bonus period prior to the termination
date) deemed earned through such date of termination (as determined pursuant to
Section 4). If the Employment Period is terminated as a result of death,
Executive's representatives or beneficiaries shall be entitled to the proceeds
of the life insurance required to be maintained for Executive's benefit pursuant
to Section 11 hereof. If the Executive's employment is terminated by reason of
Executive's death or disability, the Company shall keep in force existing health
insurance covering the Executive and his dependents for a period of 18 months
from the date of termination on the basis in effect at the date of termination
of the Executive's employment. The Executive and his dependents shall also be
entitled to any continuation of coverage rights under any applicable law.
g. The amount of Base Salary payable pursuant to Section 6(c) or
Section 6(d) shall be payable in accordance with the Employer's normal payroll
procedures applied to Executive as if he remained an employee of Employer. The
amount of Base Salary payable pursuant to Sections 6(e) or (f) shall be paid
within 30 days following the termination of the Employment Period. The amount of
any bonus (or supplemental severance payment equivalent thereto) payable
pursuant to Section 6(c) which is based on the preceding calendar year shall be
paid within 30 days following the termination of the Employment Period. The
amount of any prorated bonus (or supplemental severance payment equivalent
thereto) payable pursuant to Sections 6(d), (e) or (f) shall be paid within 30
days following the end of the applicable bonus period (e.g., annual period
pursuant to the terms of such bonus arrangement) in accordance with the
Employer's normal payroll procedures applied to Executive as if he remained an
employee of Employer.
h. All of Executive's rights to any other employee benefit hereunder
(except as described above or pursuant to law) accruing after the termination of
the Employment Period shall cease upon such termination. Upon termination of
this Agreement for any reason whatsoever, Executive shall have the right to
receive any accrued but unused vacation time and any and all Benefits due
employee pursuant to Section 3(a) as of termination. This Section 6(h) shall
have no effect on Executive's equity ownership (including stock options) in
Holdings, which shall be governed by the terms of a Stockholders Agreement
between Executive, the Company and certain other parties.
i. For purposes of the Agreement, "Cause" shall mean (1) the
conviction of any act constituting a felony under the laws of any state or of
the United States, or a crime involving moral turpitude that causes material
harm to Company, (2) willful misconduct by Executive causing material harm to
Company, but only if Executive shall not have discontinued such misconduct
within 30 days after receiving written notice from the Company describing the
misconduct and stating that the Company will consider the continuation of such
misconduct as cause for termination of this
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Agreement, or (3) at any time after the first year of the Original Term,
substantial failure to perform the duties required by Section 2(a) hereof which
is not cured within 180 days after receiving written notice from the Company
describing the failure to perform and stating that the Company will consider the
continuation of such failure to perform as cause for termination of this
Agreement. Resignation with Good Reason shall mean (x) the assignment to
Executive of duties substantially and materially inconsistent with the position
and nature of Executive's employment as set forth in Section 2(a) of this
Agreement, (y) a reduction of compensation and benefits that would substantially
diminish the aggregate value of Executive's compensation and benefits without
Executive's consent, and (z) the failure by the Company to obtain from any
successor an agreement to assume and perform this Agreement.
j. Nothing in this Agreement shall be deemed to limit or otherwise
abrogate the Company's obligation to make the payments under Section 6(c) if
Executive is terminated without Cause following a merger, consolidation or sale
of the Company or following a change in the control of the Company's outstanding
voting securities. A "change in control" shall be deemed to have occurred if any
person or any persons acting together that would constitute a group (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) (other than
KRC or its affiliates or a group in which KRC and its affiliates are the
controlling participants) shall beneficially own at least 50% of the aggregate
voting power of all classes of capital stock (including shares convertible into
voting securities) entitled to vote on the election of directors to the Board.
Without limiting the foregoing, any sale of substantially all of the Company's
assets to another entity without an express assumption by such entity of the
Company's obligations under this Agreement shall be deemed to constitute
termination without Cause pursuant to Section 6(c) above and the Company shall
be obligated to make the specified payments pursuant to Section 6(c) upon
consummation of the transaction pursuant to which the Company is selling
substantially all of its assets.
7. Confidential Information. As used herein, the term "Confidential
Information" shall mean all information disclosed to Executive or known by
Executive as a consequence of or through Executive's employment by the Company
(including, without limitation, information belonging to third parties or
companies affiliated with or related to the Company in the Company's possession)
not generally known in the trade or industry in which such information is used,
about the Company's products, processes, services, customers, marketing strategy
and business plans. Executive agrees that Executive shall not disclose to any
unauthorized person or use for Executive's own account any Confidential
Information without the prior written consent of the Board, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public other than as a result of Executive's acts or omissions to
act. Executive shall deliver to the Company at the termination of the Employment
Period, or at any other time as the Company may request, all memoranda, notes,
plans, records, computer tapes and software and other documents and data (and
copies thereof) relating to the Confidential Information or the business of
Holdings, the Company or any subsidiary which Executive may then possess or have
under Executive's control.
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8. Non-Solicitation. During the five-year period commencing on the date of
this Agreement, Executive shall not directly or indirectly through another
entity (i) induce or attempt to induce any employee of the Company or any
subsidiary to leave the employ of the Company or such subsidiary, (ii) hire any
person who was an employee of the Company or any subsidiary of the Company at
any time during the Employment Period if such person was employed by the Company
or a subsidiary of the Company at any time during the one-year period prior to
such hiring, or (iii) induce or attempt to induce any customer, supplier,
licensee or other business relation of the Company or any subsidiary to
withdraw, curtail or cease doing business with the Company or such subsidiary.
9. Enforcement. If, at the time of enforcement of Sections 7 and 8 of this
Agreement, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area. Because Executive's services
are unique and because Executive has access to Confidential Information, the
parties hereto agree that money damages would be an inadequate remedy for any
breach of this Agreement. Therefore, in the event a breach or threatened breach
of this Agreement, the Company or its successors or assigns may, in addition to
other rights and remedies existing in their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violations of, the provisions hereof
(without posting a bond or other security).
10. Representations.
a. Executive hereby represents and warrants to the Company that (i)
the execution, delivery and performance of this Agreement by Executive does not
and will not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which Executive is
a party or by which Executive is bound, (ii) Executive is not a party to or
bound by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity, and (iii) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of Executive, enforceable in accordance with its terms.
b. Company hereby represents and warrants to the Executive that (i)
the execution, delivery and performance of this Agreement by the Company does
not and will not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which Executive is
a party or by which Executive is bound, and (ii) upon the execution and delivery
of this Agreement by the Executive, this Agreement shall be the valid and
binding obligation of the Company, enforceable in accordance with its terms.
11. Key Man Life Insurance. Executive agrees that, as a condition of
continued employment, Executive will apply for, or participate in the Company's
application for, a key man life insurance policy on Executive's life payable to
the Company, as directed by the Board. In addition, during the Employment
Period, the Company shall maintain an additional life insurance policy on
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Executive's life (or additional coverage under the key man life insurance policy
for the benefit of Executive's estate or other designee) in the aggregate amount
of $2 million payable to the Executive's estate or other designee of the
Executive. The Company will pay all premiums required to keep such policies in
force. Executive shall at the Company's request submit to all reasonable medical
examinations, supply all information and execute all documents reasonably
required by the insurance company or companies to whom the Company has applied
for insurance.
12. Indemnification. During Executive's term as a director and officer of
Holdings, the Company or its subsidiaries, the Company agrees to indemnify and
defend Executive to the fullest extent permitted by law, the Company's
Certificate of Incorporation and the Company's Bylaws against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by Executive in connection with such actions,
suits or proceedings to which Executive is, or is threatened to be made, a party
by reason of the fact that Executive is or was a director or officer of the
Company. The indemnification pursuant to the foregoing sentence shall be the
equivalent of indemnification provided to all directors and officers as a group
and shall not be deemed to be any greater than that provided to all of the
Company's directors and officers as a group. The Company will use its best
efforts to obtain any directors' and officers' liability insurance covering all
directors and officers as a group and to the extent Executive continues to serve
as a director and officer of the Company, the Company shall cause Executive to
be named as an insured party under such policy.
13. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
Executive's rights or delegate Executive's obligations hereunder without the
prior written consent of the Company. Without limiting the foregoing, the
Company may not, without Executive's prior written consent, assign rights or
delegate its obligations under this Agreement.
14. Survival. Sections 7, 8 and 9 shall survive and continue in full force
in accordance with their terms, notwithstanding any termination of the
Employment Period, unless the Company fails to make any payment owed to the
Executive under this Agreement, and any such failure continues for a period of
120 days after the date that any such payment is due.
15. Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered by nationally recognized overnight
courier service, or mailed by certified mail, return receipt requested, to the
recipient at the address indicated below.
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Notices to Executive:
Xxxx Xxxxxx
c/o White Cap Industries, Corp.
0000 Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Notices to the Company:
White Cap Industries, Corp.
c/o KRG Capital Partners, LLC
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxx
or such other address or to the attention of such person as the recipient party
shall leave specified by prior written notice to the sending party. Any notice
under this Agreement will be deemed to have been given when so delivered or
mailed. Any Notice of Termination of Executive's employment by the Company shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
16. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be elective and valid under applicable law
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity illegality or unenforceability will not affect any
other provision or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
17. Complete Agreement. This Agreement, together with the other agreements
referred to in the Recitals above, embodies the complete agreement and
understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
18. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
19. Choice of Law. This Agreement will be governed by the internal law,
and not the laws of conflicts, of the State of California.
20. Agreement to Arbitrate; Expenses. Except for the enforcement of any
covenant herein that would be the subject of specific performance contemplated
by Section 9, any controversy
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or claim arising out of or relating to this Agreement or the formation, breach
or interpretation hereof, will be settled by arbitration before one arbitrator
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association in Orange County, California. Judgment upon the award rendered by
the arbitration may be entered and enforced in the court with jurisdiction over
the appropriate party. All controversies not subject to arbitration or
contesting any arbitration will be litigated in the State of California, Orange
County Superior Court or a federal court in the Central District of California
(and each of the parties hereto hereby consent to the exclusive jurisdiction of
such courts and waive any objections thereto). The expenses (including
reasonable attorneys' fees) incurred by the prevailing party in any arbitration
or litigation related to this Agreement shall be borne by the non-prevailing
party in such arbitration or litigation.
21. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
WHITE CAP INDUSTRIES, CORP.
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By: Xxxx Xxxxxx
Its: President
WHITE CAP INDUSTRIES, INC.
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By: Xxxx X. Xxxx
Its: President
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XXXX XXXXXX
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EXHIBIT A
1. Five weeks' paid vacation;
2. Health and Dental Insurance in the plans of Executive's choice;
3. Participation in the Company's 401(k) Plan;
4. $1,000,000 Term Life Insurance;
5. Reimbursement once during each two years of consecutive employment with
the Company, up to $50,000 per automobile, for the purchase price of the
automobile of Executive's choice;
6. Seven paid holidays yearly;
7. Participation in the Disability Insurance Plan offered to other employees
of the Company; and
8. Health Club Membership, and associated expenses.
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EXHIBIT B
Executive's Annual Bonus shall be set at 50% of Base Salary and shall be paid in
the event White Cap Industries, Inc. (formerly White Cap Holdings, Inc.), a
Delaware corporation and the parent of the Company ("WCI"), meets its internal
projected pre-tax earnings per share target ("EPS Target") for a given fiscal
year giving effect to the accrual of the Annual Bonus. For fiscal years ended
March 31, 1998 and 1999, the EPS Target for purposes of this Agreement is
established at $0.57 and $0.84, respectively. For subsequent fiscal years
beginning with fiscal year ended March 31, 2000, the EPS Target shall be derived
from WCI's annual projected budget adopted by WCI's Board of Directors. The EPS
Target shall be adjusted by the Compensation Committee of the Board of Directors
of WCI to reflect acquisitions occurring during the year and adjustments to
WCI's internal estimates as a result of such acquisitions. The achievement of
the EPS Targets shall be based upon the determination of the Compensation
Committee following the release of WCI's annual results. In the event that WCI
does not meet an EPS Target in a given fiscal year, giving effect to the accrual
of the Annual Bonus, but would meet the EPS Target without giving effect to the
accrual of the Annual Bonus, Executive shall be entitled to a partial Annual
Bonus equal to the maximum amount that, when accrued, would still permit WCI to
meet the EPS Target. The EPS Target shall be adjusted to reflect any new stock
issuances during the given fiscal year which would otherwise be dilutive to
pre-tax earnings per share on a GAAP basis.
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