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EXHIBIT 10.1
FORM OF
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of ___________________
between PAYLESS CASHWAYS, INC., a Delaware corporation (the "Company"), and
___________________ (the "Executive").
WHEREAS, the Company desires to employ the Executive in the capacity of
____________________________, and the Executive desires to be employed by the
Company in such capacity and on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants of the parties
herein made, it is hereby agreed:
1. Term of Agreement. The term of this Agreement shall be one year,
commencing ____________________ and ending ___________________, unless sooner
terminated as provided in Paragraph 6 of this Agreement; PROVIDED, however, that
the Agreement shall be automatically renewed for an additional term of one year,
at the end of the initial one-year term and of each succeeding one-year term,
unless either the Company or the Executive shall serve notice on the other at
least ninety (90) days prior to the expiration of the term, in accordance with
the procedures set out in Paragraph 12 of this Agreement, that the party giving
notice intends to end the Agreement at the conclusion of the then-current term.
The Company shall not be required to show Cause, and the Executive shall not be
required to show Good Reason, to require the expiration of the Agreement under
the terms of this Paragraph.
2. Employment and Duties. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts employment, to perform such duties
and responsibilities of ____________________________ as are, from time to time,
assigned to the Executive by the Board of Directors or its designee. The
Executive agrees to devote full business time and effort to the diligent and
faithful performance of the Executive's duties under the direction of such
person as is designated by the Company's Board of Directors.
3. Compensation.
(a) Base Salary. As compensation for the Executive's services,
the Executive shall be paid a base salary at a minimum annual rate of
$__________ payable in equal bi-weekly installments, which salary shall be
reviewed annually and may be adjusted from time to time at the discretion of the
Board of Directors (the "Base Salary"); provided that the Base Salary shall not
be less than the amount stated in this Paragraph 3(a).
(b) Incentive Compensation. The Executive shall, in addition
to the Base Salary, also be eligible to receive incentive compensation under the
Company's Corporate Management Incentive Plan (the "CMIP"), or such other
program or plan for officers of the Company as from time to time may be in
effect, if any (the "Incentive Compensation"). The
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existence and terms of any such program or plan shall be determined solely at
the discretion of the Compensation Committee of the Board of Directors. For
fiscal year 1999, the Executive's "Annual Incentive Target Percentage of Base
Compensation," as used in the CMIP, shall be _______ percent (___%) of Base
Salary.
(c) Other Benefits. The Executive shall be entitled to
participate in the Company's regular health, life, pension, vacation and
disability plans in accordance with their respective terms. The Company will
also provide employee benefits to the Executive in respect of the Executive's
employment as the Company customarily provides, from time to time, to its
officers, as described in Exhibit A attached to this Agreement. Nothing herein
shall be construed to limit the Company's discretion to amend, terminate or
otherwise modify any such plans or benefits, subject to the Executive's rights
under Paragraph 6(c)(iii) below.
4. Confidentiality, Non-Solicitation, and Non-Disparagement.
(a) Confidentiality of Proprietary Information. The Executive
agrees that, at all times, both during the Executive's employment with the
Company and after the expiration or termination thereof for any reason, the
Executive shall not divulge to any person, firm, corporation, or other entity,
or in any way use for the Executive's own benefit, except as required in the
conduct of the Company's business or as authorized in writing on behalf of the
Company, any trade secrets or confidential information (the "Proprietary
Information") obtained during the course of the Executive's employment with the
Company. The Proprietary Information includes, but is not limited to, customer
or client lists (including the names and/or positions of persons employed by
such customers or clients who play a role in the decisions of such customers or
clients concerning products or services of the type provided by the Company),
financial matters, inventory techniques and programs, Company records of
accounts, business projections, Company contracts, sales, merchandising or
marketing plans and strategies, pricing information and formulas, matters
contained in unpublished records and correspondence, planned expansion programs
(including areas of expansion and potential customer lists) and any and all
information concerning the business or affairs of the Company which is not known
by or generally available to the public. All papers and records of every kind
relating to the Proprietary Information, including any such papers and records
which shall at any time come into the possession of the Executive, shall be the
sole and exclusive property of the Company and shall be surrendered to the
Company upon termination of the Executive's employment for any reason or upon
request by the Company at any time either during or after the termination of
such employment. All information relating to or owned by customers of the
Company of which the Executive becomes aware or with which the Executive becomes
familiar through the Executive's employment with the Company shall be kept
confidential and not disclosed to others or used by the Executive directly or
indirectly except in the course of the Company's business. It is agreed that
Proprietary Information as herein described shall be protected from disclosure
under the terms of this Agreement, to the maximum extent permitted by law,
whether or not entitled to protection as a trade secret.
(b) Solicitation Prohibition. During the Executive's
employment with the Company and for a period of one (1) year after the
expiration or termination of this Agreement or of the Executive's employment
with the Company for any reason, the Executive shall not
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directly or indirectly, whether as an individual for the Executive's own account
or on behalf of any other person, firm, corporation, partnership, joint venture
or entity whatsoever, solicit or endeavor to entice away from the Company any
employee who is employed by the Company. Additionally, during the Executive's
employment with the Company or for a period of one (1) year after the expiration
or termination of this Agreement or of Executive's employment with the Company
for any reason, the Executive shall not, directly or indirectly through any
other individual or entity, solicit the business of any customer of the Company,
or solicit, entice, persuade or induce any individual or entity to terminate,
reduce or refrain from forming, renewing or extending its relationship, whether
actual or prospective, with the Company.
(c) Disparagement Prohibition. The Executive acknowledges and
agrees that as a result of his position with the Company, disparaging or
critical statements made by the Executive may be uniquely detrimental to the
Company's interests and well-being. Therefore, the Executive agrees to use his
best efforts to assist the Company in promoting and preserving the good will and
other business interests of the Company. To this end, the Executive agrees to
refrain at all times, both during the Executive's employment and after the
termination thereof for any reason, from making disparaging comments or remarks
about the Company or its officers, employees, or directors.
(d) Definition of "Company". For the purposes of Paragraph 4,
the term "Company" shall mean the Company and any of its direct or indirect
parent or subsidiary organizations.
5. Covenant Not to Compete. During the Executive's employment with the
Company and for a period of one year after the expiration or termination of this
Agreement or of the Executive's employment with the Company (the "Noncompetition
Period"), if such termination is as a result of the expiration of this Agreement
under Paragraph 6(h), a termination for Good Reason by the Executive under
Paragraph 6(c), or a termination by the Company without Cause under Paragraph
6(d), the Executive agrees not to act as an owner or operator, officer or
director, employee, consultant or agent of any other person, firm, corporation,
partnership, joint venture or other entity which is engaged in the business of
building materials retailing in any state in which the Company is so engaged, or
has plans to be so engaged during the Noncompetition Period. The foregoing
provisions shall not prohibit the Executive from investing in any securities of
any corporation whose securities, or any of them, are listed on a national
securities exchange or traded in the over-the-counter market if the Executive
shall own less than one percent 1% of the outstanding voting stock of such
corporation. The Executive agrees that a breach of the covenants contained
herein will result in irreparable and continuing damage to the Company for which
there will be no adequate remedy at law, and in the event of any breach of such
agreement, the Company shall be entitled to injunctive and such other and
further relief, as may be proper, including damages, attorneys' fees, and
litigation costs.
6. Termination.
(a) Death or Disability. In the event of the Executive's death
or if the Executive should become unable to perform the essential functions of
the position of _________________________, with or without reasonable
accommodation by the Company,
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this Agreement, and the Company's obligation to make further Base Salary
payments under the Agreement, shall terminate, and Executive shall not be
entitled to receive severance benefits. Executive shall be entitled to receive
any Incentive Compensation which the Executive has earned, if any, prorated to
the date of the termination of the Executive's employment by reason of death or
the date of termination, due to disability, of Executive's performance as
_________________________ under this Agreement. The Executive's rights to other
compensation and benefits shall be determined under the Company's benefit plans
and policies applicable to Executive then in effect.
(b) Termination for Cause by the Company. By following the
procedure set forth in Paragraph 6(e) the Company shall have the right to
terminate this Agreement and the employment of the Executive for "Cause" in the
event Executive:
(i) has committed a significant act of dishonesty,
deceit or breach of fiduciary duty in the performance of the
Executive's duties as an employee of the Company;
(ii) has neglected or failed to perform substantially
the duties of the Executive's employment under this Agreement,
including but not limited to an act of insubordination;
(iii) has acted or failed to act in any other way
that reflects materially and adversely upon the Company, including but
not limited to the Executive's conviction of, guilty plea, or plea of
nolo contendere to (A) any felony, or any misdemeanor involving moral
turpitude, or (B) any crime or offense involving dishonesty with
respect to the Company; or
(iv) has knowingly failed to comply with the
covenants contained in Paragraphs 4 or 5 of this Agreement.
If the employment of the Executive is terminated by the
Company for Cause, this Agreement and the Company's obligation to make further
Base Salary and Incentive Compensation payments hereunder shall thereupon
immediately terminate, and the Executive shall not be entitled to receive
severance benefits. The Executive's rights to other compensation and benefits
shall be determined under the Company's benefit plans and policies applicable to
the Executive then in effect.
(c) Termination for Good Reason by the Executive. By following
the procedure set forth in Paragraph 6(e), the Executive shall have the right to
terminate this Agreement and the Executive's employment with the Company for
"Good Reason" in the event:
(i) the Executive is not at all times a duly elected
______________________ of the Company;
(ii) there is any material reduction in the scope of
the Executive's authority and responsibility (provided, however, in the
event of any illness or injury
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which prevents the Executive from performing the Executive's duties,
Good Reason shall not exist if the Company reassigns the Executive's
duties to one or more other employees until the Executive is able to
perform such duties);
(iii) there is a reduction in the Executive's Base
Salary below the minimum amount specified in Paragraph 3(a) above; a
material reduction in the Incentive Compensation opportunity of the
Executive, if any, under Paragraph 3(b) above; or a material reduction
in the other benefits to which Executive is entitled under Paragraph
3(c) above, as compared to the benefits available to Executive at the
time of execution of this Agreement.
(iv) the Company requires the Executive's principal
place of employment be relocated fifty (50) miles from its location as
of the date of this Agreement;
(v) the Company otherwise fails to perform its
material obligations under this Agreement.
If the employment of the Executive is terminated by the Executive for
Good Reason, the Executive shall be entitled to the severance benefits set forth
in Paragraph 6(f) below, but the Company's obligation to make further Base
Salary payments and incentive compensation payments shall cease on the effective
date of such termination. The Executive's rights to other compensation and
benefits shall be determined under the Company's benefit plans and policies
applicable to the Executive then in effect.
(d) Termination Without Cause or Without Good Reason. The
Company may terminate this Agreement and the Executive's employment without
Cause at any time, and in such event the Executive shall be entitled to the
severance benefits set forth in Paragraph 6(f) below. The Executive may
voluntarily terminate this Agreement and the Executive's employment without Good
Reason at any time, but in such event the Executive shall not be entitled to the
severance benefits set forth in Paragraph 6(f) below. If the Executive
voluntarily terminates this Agreement and the Executive's employment without
Good Reason, or if the Company terminates this Agreement and the Executive's
employment without Cause, then the Company's obligation to make further Base
Salary payments and Incentive Compensation payments shall cease on the effective
date of such termination. The Executive's rights to other compensation and
benefits shall be determined under the Company's benefit plans and policies
applicable to the Executive then in effect.
(e) Notice and Right to Cure. The party proposing to terminate
this Agreement and the employment of the Executive for Cause or Good Reason, as
the case may be, under Paragraph 6(b) or 6(c) above shall give written notice to
the other, specifying the reason therefor with particularity. In the case of a
termination pursuant to Paragraphs 6(b)(i), (iii) or (iv), or 6(c)(i), such
termination shall be effective immediately upon delivery of such notice. In the
case of any other proposed termination for Cause or Good Reason, as the case may
be, the notice shall be given with sufficient particularity so that the other
party will have an opportunity to correct any curable situation to the
reasonable satisfaction of the party giving the notice within
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the period of time specified in the notice, which shall not be less than thirty
(30) days. If such correction is not so made or the circumstances or situation
are not curable, the party giving such notice may, within thirty (30) days after
the expiration of the time fixed to correct such situation, give written notice
to the other party that the employment is terminated as of the date of that
writing. Where the Agreement and the Executive's employment are terminated by
the Executive without Good Reason or by the Company without Cause, the
termination date shall be the date on which notification of termination shall be
mailed in accordance with Paragraph 12 of this Agreement, unless a different
termination date shall be designated by the party giving notice or agreed upon
by the Executive and the Company.
(f) Severance Benefits. If this Agreement and the Executive's
employment with the Company are terminated by reason of the Executive's death or
disability, or by the Company with Cause or by the Executive without Good Reason
then the Executive shall receive no severance benefits. If this Agreement and
the Executive's employment with the Company are terminated due to the expiration
of the Agreement, by the Company without Cause, or by the Executive for Good
Reason, then the Executive shall be entitled to the following benefits (the
"Severance Benefits"):
(i) Base Salary. The Company shall continue to pay to
the Executive the Executive's Base Salary for a period of one (1) year
after the date the Executive's employment with the Company is
terminated (the "Severance Period"), when and as such Base Salary would
have been paid, and as if the Executive continued to be employed during
such period and regardless of the death or disability of the Executive
after the date of termination.
(ii) Incentive Compensation. In the event the
Compensation Committee of the Board of Directors determines that
Incentive Compensation is to be paid in the year in which the
Executive's employment and this Agreement are terminated under
circumstances in which this Agreement provides for the payment of
Severance Benefits, then the Executive will receive Incentive
Compensation prorated for the time during which services were rendered
in the year of termination, to the extent provided by the Compensation
Committee for the calculation of Incentive Compensation for that year.
(iii) Continuation of Benefits. During the Severance
Period, the Company shall provide the Executive with medical, dental,
vision, and regular and supplemental life insurance coverage
substantially similar to the coverage which the Executive was receiving
or entitled to receive immediately prior to the date of the termination
of the Executive's employment. In addition, during the Severance
Period, the Company shall pay on behalf of the Executive the cost of
one annual physical examination and the cost of the preparation of the
Executive's federal, state and local tax returns in accordance with the
terms set out in Exhibit A. The Company shall provide such benefits to
the Executive at Company expense, subject to the same cost-sharing
provisions, if any, applicable to the Executive immediately prior to
the date of the termination of employment. Notwithstanding the
foregoing, the Executive shall not be entitled to receive such benefits
to the extent that the Executive obtains other employment which
provides comparable benefits during the Severance Period.
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(iv) Outplacement Benefits. The Company, at its
expense, will provide to the Executive outplacement services, at a
maximum cost of $30,000, to be provided by an outplacement service
provider selected solely by the Company.
(v) Termination of Benefits. Notwithstanding any
other provision of this Agreement, in the event that the Executive at
any time violates the provisions of Paragraph 4(a), 4(b), 4(c), or 5 of
this Agreement, then the Company's obligations, if any, to provide base
salary continuation and other severance benefits as set out in
Paragraph 6(f) of this Agreement shall cease, and such payments and
benefits shall immediately cease.
(g) Change of Control. Subject to the Executive's compliance
with the terms and conditions of this Agreement, if during the term of the
Agreement the Executive's employment is terminated without Cause as a result of
a Change of Control (as defined below) of the Company, and if the Executive is
not offered a comparable position by the Company, then the Severance Period
shall be extended to the second anniversary of the date of the termination of
employment, and the Executive shall be entitled to receive continued payments of
Base Salary during the second year of the Severance Period. All Severance
Benefits other than continued payments of Base Salary shall cease on the first
anniversary of the termination of employment in the event of a Change of
Control. For purposes of this Paragraph 6(g), a Change of Control shall be
deemed to have occurred if:
(i) any "person" (as defined in Sections 13(d) and
14(d)(2) of the Exchange Act) become the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially
owned by such person any securities acquired directly from the Company
or its affiliates other than in connection with the acquisition by the
Company or its affiliates of a business) having 30% or more of the
voting power in the election of directors of the Company;
(ii) the occurrence within any twenty-four month
period of a change in the Board of Directors of the Company with the
result that the Incumbent Members (as defined below) do not constitute
a majority of the Company's Board of Directors. The term "Incumbent
Members" shall mean the members of the Board on the date immediately
preceding the commencement of such twenty-four month period, provided
that any person becoming a director during such twenty-four month
period whose election or nomination for election was approved by a
majority of the directors who, on the date of such election or
nomination for election, comprised the Incumbent Members shall be
considered one of the Incumbent Members in respect of such twenty-four
month period;
(iii) the stockholders of the Company approve a
merger or consolidation of the Company or approve the issuance of
voting securities of the Company in connection with a merger or
consolidation of the Company (or direct or indirect subsidiary of the
Company), other than (A) a merger or consolidation which
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would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding under an employee benefit plan of the Company, at least 66 2/3%
of the combined voting power of the voting securities of the Company or
such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as defined above) is or becomes the
"beneficial owner" (as defined above), directly or indirectly, of
securities of the Company (not including in the securities beneficially
owned by such person any securities acquired directly from the Company
or its subsidiaries other than in connection with the acquisition by
the Company or its subsidiaries of a business) representing 30% or more
of the voting power in the election of directors of the Company; or
(iv) the stockholders of the Company approve a plan a
complete liquidation or dissolution of the Company or a sale, lease,
exchange or other disposition of all or substantially all of the
Company's assets, other than a sale, lease, exchange or other
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 66 2/3% of the combined voting power of
the voting securities of which are owned by "persons" (as defined
above) in substantially the same proportion as their ownership of the
Company immediately prior to such sale.
(h) Expiration of Term of Agreement. At the expiration of the
term of this Agreement as defined in Paragraph 1 above, if the Agreement has not
been previously terminated under Paragraph 6(a), (b), (c) or (d) of this
Agreement, all duties and obligations of the parties under this Agreement,
except those set out in Paragraphs 4, 5 and 6(f), when applicable, shall cease.
(i) Survival of Certain Provisions. Notwithstanding
the expiration or termination of this Agreement, and the Executive's
employment with the Company for any reason under this Agreement, the
provisions of Paragraphs 4, 5 and 6(f), when applicable, to the extent
provided therein, survive any such termination and shall be binding
upon the Executive and the Company in accordance with the provisions of
Paragraphs 4, 5 and 6(f).
7. Arbitration. Except as otherwise provided in this Paragraph, the
parties hereby agree that any dispute arising under this Agreement or any claim
for breach or violation of any provision of this Agreement shall be submitted to
arbitration, pursuant to the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association ("AAA"), to a single arbitrator
selected by mutual agreement of the parties or, if the parties do not mutually
agree on the arbitrator, in accordance with the rules of the AAA. The award
determination of the arbitrator shall be final and binding upon the parties.
Either party shall have the right to bring an action in any court of competent
jurisdiction to enforce this Paragraph and to enforce any arbitrator's award
rendered pursuant to this Paragraph. The venue for all proceedings in
arbitration under this provision, and for any judicial proceedings related to
the arbitration, shall
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be in Kansas City, Missouri. Nothing in this Paragraph, however, shall prevent
the Company from seeking injunctive relief to preserve its rights under
Paragraph 4 or 5 of this Agreement.
8. Business Expenses. The Company shall reimburse the Executive for
entertainment and travel expenses related to the Company's business in
accordance with the policies of the Company applicable to the Executive on the
date of this Agreement, subject to the right of the Company to modify its
general policies relating to expense reimbursement for employees.
9. Severability. If any one or more of the provisions of this Agreement
shall be held invalid or unenforceable, the remaining provisions shall remain
valid and enforceable to the maximum extent permitted by law.
10. Entire Agreement. This Agreement contains a statement of all
agreements and understandings between the Executive and the Company on the
subject matters covered by the Agreement, and it replaces and supersedes all
prior contracts and agreements between the Executive and the Company concerning
such matters.
11. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the personal representatives, heirs and assigns of the Executive
and to any successors in interest and assigns of the Company.
12. Notices. All notices required or permitted to be given hereunder
shall be registered or certified mail addressed to the respective parties at
their addresses set forth below:
To the Executive: ____________________________
____________________________
____________________________
To the Company: Payless Cashways, Inc.
Two Pershing Square
2300 Main, P. 0. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Vice President - Human Resources
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
Two Pershing Square
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
or such other address as a party hereto may notify the other in writing.
13. Applicable Law. This Agreement, or any portion thereof, shall be
interpreted in accordance with the laws of the State of Missouri.
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14. Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company. Executive may not assign any of his rights or
delegate any of his duties or obligations under this Agreement without the
Company's express written consent.
15. Non-Waiver Provision. The failure of either party of this Agreement
to insist upon strict adherence to any term of this Agreement, or to object to
any failure to comply with any provision of this Agreement, shall not (a)
constitute or operate as a waiver of that terms or provision, (b) estop that
party from enforcing that term or provision, or (c) preclude that party from
enforcing that term or provision or any other term or provision. The receipt of
a party to this Agreement of any benefit from this Agreement shall not effect a
waiver or estoppel of the right of that party to enforce any provision of this
Agreement.
16. Golden Parachute Savings Provision. If, in the absence of this
provision, any amount received or to be received by the Executive pursuant to
this Agreement would be subject to the "Excise Tax" imposed on "excess parachute
payments" by Section 4999 of the Internal Revenue Code of 1986 or any
corresponding provision of any later Federal tax law, the Company shall, in its
reasonable discretion, reduce the amounts payable to the largest amount that
will result in elimination of any Excise Tax liability.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first written above.
[INDIVIDUAL] PAYLESS CASHWAYS, INC.
___________________________ By:___________________________
Name: ________________________
Title: _______________________
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Schedule for Exhibit 10.1
The following executive officers of Payless Cashways, Inc. have entered
into an employment agreement with Payless Cashways, Inc., in substantially the
form hereto:
Annual Incentive Target
Base Percentage of Base
Name Title Salary Compensation
-------------------- ---------------------------------------- -------- -----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President and Chief Executive Officer $550,000 75%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Senior Vice President - Finance, Chief $250,000 50%
Financial Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Senior Vice President - Merchandising $225,000 50%
and Marketing
▇▇▇▇▇ ▇. ▇▇▇▇▇ Vice President - Information Systems $175,000 50%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Vice President - Merchandising, Hardware $160,000 50%
Store Products
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Vice President - Human Resources $135,000 40%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Vice President - Store Operations $212,000 50%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Vice President - Treasury, Treasurer $160,000 40%
