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Exhibit 10.3
AGREEMENT
THIS AGREEMENT is made this the 13th day of August, 1998 by and among
SETECH, INC. ("Setech"), XXXXXXX X. XXXXXXX, XX. ("Xxxxxxx"), XXXXXX X. XXXXXXXX
("Xxxxxxxx") and XXXXX SUPPLY CO., INC. ("Xxxxx Supply").
RECITALS:
A. Setech has previously entered into a Stock Purchase Agreement dated June
26, 1997 (the "Stock Purchase Agreement") pursuant to which it purchased all the
shares of the capital stock of Xxxxx Supply.
B. In connection with the Stock Purchase Agreement, Setech, Xxxxx Supply
and Xxxxxxx entered into that certain Employment and Non-Compete Agreement dated
June 26, 1997 (the "Employment Agreement").
C. In connection with the Stock Purchase Agreement, Setech, Xxxxxxx and
Xxxxxxxx executed that certain Shareholders' Agreement dated June 26, 1997 (the
"Shareholders' Agreement") in order to make provision for certain matters
concerning Stock owned by Xxxxxxx and Xxxxxxxx.
D. By mutual agreement, Xxxxxxx and Xxxxx Supply are desirous of
terminating his employment with Xxxxx Supply under the terms set forth herein,
and in connection therewith the parties to the Shareholders' Agreement are
modifying the Shareholders' Agreement as set forth herein.
E. Terms not otherwise defined herein shall have the meanings ascribed to
such terms in the Shareholders' Agreement and the Employment Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. Termination of Employment; Independent Contractor Services. The parties
hereto agree that the employment of Xxxxxxx pursuant to the Employment
Agreement is terminated as of September 1, 1998. Xxxxxxx hereby resigns as
a director of Xxxxx Supply effective September 1, 1998. Xxxxxxx will be
paid on August 31, 1998 for services rendered through such date, excluding
the Bonus under Section 4 hereof which will be paid in accordance with its
terms. Commencing September 1, 1998, Xxxxxxx shall render services
(devoting reasonable time at locations which are reasonable) to Xxxxx
Supply as an independent contractor in order to effect the management
transition. In exchange for such services, Xxxxx Supply shall pay Xxxxxxx
commencing September 15, 1998, an amount equal to $5,458.33 on the
fifteenth day of each calendar month and on the last day of each calendar
month in accordance with
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Xxxxx Supply's standard payroll procedures. In addition, Xxxxx Supply shall
pay all reasonable out of pocket expenditures incurred by Xxxxxxx in
rendering such services. The term of Xxxxxxx'x employment as an independent
contractor under this Agreement shall expire on December 31, 1998. The
parties hereto agree and acknowledge that the early termination of
employment is not governed by the provisions of Section 5A, 5B or 5C of the
Employment Agreement.
2. Health Insurance. Xxxxx Supply agrees to continue existing health insurance
coverage through December 31, 1998 in the same manner as set forth under
Section 5.B(4) of the Employment Agreement, which are presently paid by
Xxxxx Supply.
3. Consulting Services. Commencing January 1, 1999, Xxxxxxx shall be paid
for consulting services (devoting reasonable time at locations which are
reasonable) requested by Xxxxx Supply or Setech at a rate equal to $250 per
hour. Consulting fees shall be invoiced by Xxxxxxx and shall be payable by
Xxxxx Supply or Setech within thirty (30) days following receipt of such
invoice. In addition, Xxxxx Supply and/or Setech shall pay all reasonable
out of pocket expenditures incurred by Xxxxxxx in connection with such
consulting services.
4. Bonus. The parties hereto agree and acknowledge that Xxxxxxx is fully
vested in his Bonus as set forth in Section 4.B of the Employment Agreement
for the fiscal year ending June 30, 1998. No amounts shall accrue to
Xxxxxxx under Section 4.B of the Employment Agreement for the period after
June 30, 1998.
5. Restrictive Covenants. The Employment Agreement is amended to the extent
that Section 6.A concerning "Competition" shall be effective through
December 31, 1998 and thereafter shall be null and void. All other
provisions of Section 6 of the Employment Agreement shall be in full force
and effect until September 1, 1999.
6. Shareholders' Agreement. The parties hereto agree that the Shareholders'
Agreement shall be modified and amended as follows:
(a) Right of Xxxxxxx. Xxxxxxx'x put option under Section 3 of the
Shareholders' Agreement (unless exercised prior to expiration) shall expire
in accordance with the provisions of subsection (z) of such Section.
Notwithstanding the foregoing sentence, in the event Xxxxxxx exercises his
rights under Section 3 of the Shareholders' Agreement for shares in excess
of those issued to date, Setech will also repurchase those additional
shares to be issued under the Stock Purchase Agreement.
(b) The provisions of Sections 4(b)(v) and 5 of the Shareholders'
Agreement concerning "Co-Sale" are hereby deleted.
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7. Communications and Releases. The parties hereto acknowledge that the
termination of employment by Xxxxxxx was by mutual agreement of the parties
hereto. Each of the parties hereto shall refrain from making any
disparaging communications about the other to any third parties. The
parties hereto shall use their best efforts to consult with one another in
making any public announcements of the termination of Xxxxxxx'x employment
with Xxxxx Supply.
8. Savings Clause. Except as set forth herein, the Shareholders' Agreement,
the Stock Purchase Agreement and those provisions of the Employment
Agreement which by their terms survive the termination of Xxxxxxx'x
employment, shall remain unamended and in full force and effect.
9. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of the
day and date first set forth above.
SETECH, INC.
By: /s/ Xxx Xxxxxxxx
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Title: President & CEO
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/s/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X. XXXXXXX, XX.
/s/ Xxxxxx X. Xxxxxxxx
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XXXXXX X. XXXXXXXX
XXXXX SUPPLY CO., INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: President
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